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As Of Filer Filing For·On·As Docs:Size Issuer Agent 3/09/01 Pultegroup Inc/MI 10-K405 12/31/00 3:852K Bowne - Bde |
Document/Exhibit Description Pages Size 1: 10-K405 Form 10-K HTML 852K 2: EX-21 Subsidiaries of the Registrant 4 19K 3: EX-23 Consent of Independent Auditors 1 5K
e10-k405 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-9804
PULTE CORPORATION
(Exact name of registrant as specified in its charter)
MICHIGAN |
38-2766606 |
|
(State or other jurisdiction of |
(I.R.S. Employer |
|
incorporation or organization) |
Identification No.) |
33 Bloomfield Hills Parkway, Suite 200
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:(248) 647-2750
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Name of each exchange on which registered |
|
Common Stock, par value $.01 |
New York Stock Exchange |
Securities registered pursuant to Section 12(g)of the Act:
NONE
(Title of class)
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 NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K .
Aggregate market value of voting stock held by nonaffiliates of the registrant as of February 28, 2001: $1,075,620,546
Number of shares of common stock outstanding as of February 28, 2001: 41,889,620
Documents Incorporated by Reference
Applicable portions of the Proxy Statement for the 2001 Annual Meeting of Shareholders are incorporated by reference in Part III of this Form.
1
Item | Page | |||||
No. | No. | |||||
Part I |
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1 |
Business
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3 | ||||
2 |
Properties
|
9 | ||||
3 |
Legal Proceedings
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10 | ||||
4 |
Submission of Matters to a Vote of Security Holders
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11 | ||||
4A |
Executive Officers of the Registrant
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12 | ||||
Part II |
||||||
5 |
Market for the Registrant’s Common Equity and Related Stockholder Matters |
13 | ||||
6 |
Selected Financial Data
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13 | ||||
7 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||||
7A |
Quantitative and Qualitative Disclosures About Market Risk
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26 | ||||
8 |
Financial Statements and Supplementary Data
|
28 | ||||
9 |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
65 | ||||
Part III |
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10 |
Directors and Executive Officers of the Registrant
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65 | ||||
11 |
Executive Compensation
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65 | ||||
12 |
Security Ownership of Certain Beneficial Owners and Management
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65 | ||||
13 |
Certain Relationships and Related Transactions
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65 | ||||
Part IV |
||||||
14 |
Exhibits, Financial Statement Schedules and Reports on Form 8-K |
65 | ||||
Signatures |
73 |
2
ITEM 1. BUSINESS
Pulte Corporation
Pulte Corporation (the “Company” or “Pulte”) is a publicly held holding company whose subsidiaries engage in the homebuilding and financial services businesses. Its assets consist principally of the capital stock of its subsidiaries, cash and investments. Its income primarily consists of dividends from its subsidiaries and interest on investments. The Company’s significant subsidiaries include Pulte Diversified Companies, Inc. (PDCI) and other subsidiaries which are engaged in the homebuilding business. PDCI’s operating subsidiaries include Pulte Home Corporation (PHC), Pulte International Corporation (International) and other subsidiaries which are engaged in the homebuilding business. PDCI’s non-operating thrift subsidiary, First Heights Bank, fsb (First Heights), is classified as a discontinued operation (See Note 4 of Notes to Consolidated Financial Statements). The Company also has a mortgage banking company, Pulte Mortgage Corporation (PMC), which is a subsidiary of PHC.
The Company has three reportable business segments: Homebuilding, Financial Services and Corporate. The Company’s Homebuilding segment consists of the following two business units:
• | Domestic Homebuilding, the Company’s core business, 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. | |
• | International Homebuilding is primarily engaged in the acquisition and development of land primarily for residential purposes, and the construction of housing on such land in Mexico, Puerto Rico and Argentina. |
The Company’s Financial Services segment consists principally of mortgage banking operations conducted through PMC and its subsidiaries.
Corporate is a non-operating business segment whose primary purpose is to support the operations of the Company’s subsidiaries as the internal source of financing, to develop and implement strategic initiatives centered on new business development and operating efficiencies, and to provide the necessary administrative functions to support the Company as a publicly traded entity.
Financial information, including revenue, pre-tax income and identifiable assets of each of the Company’s business segments is included in Note 2 of Notes to Consolidated Financial Statements.
3
Homebuilding Operations
Years Ended December 31, | |||||||||||||||||||||||
($000 omitted) | |||||||||||||||||||||||
2000 | 1999 | 1998 | 1997 | 1996 | |||||||||||||||||||
Pulte/Pulte-affiliate Homebuilding revenues: |
|||||||||||||||||||||||
Domestic |
$ | 4,083,816 | $ | 3,713,332 | $ | 2,883,612 | $ | 2,461,706 | $ | 2,308,210 | |||||||||||||
International |
175,957 | 127,310 | 64,590 | 41,196 | 16,163 | ||||||||||||||||||
Total Homebuilding |
$ | 4,259,773 | $ | 3,840,642 | $ | 2,948,202 | $ | 2,502,902 | $ | 2,324,373 | |||||||||||||
Pulte/Pulte-affiliate settlements — units: |
|||||||||||||||||||||||
Domestic: |
|||||||||||||||||||||||
Pulte |
19,799 | 19,569 | 16,051 | 15,068 | 14,422 | ||||||||||||||||||
Pulte-affiliated entity |
— | 279 | 460 | — | — | ||||||||||||||||||
Total Domestic |
19,799 | 19,848 | 16,511 | 15,068 | 14,422 | ||||||||||||||||||
International: |
|||||||||||||||||||||||
Pulte |
264 | 262 | 166 | 254 | 191 | ||||||||||||||||||
Pulte-affiliated entities |
7,718 | 6,512 | 3,682 | 1,651 | 415 | ||||||||||||||||||
Total International |
7,982 | 6,774 | 3,848 | 1,905 | 606 | ||||||||||||||||||
Total Pulte/Pulte-affiliate settlements
- units |
27,781 | 26,622 | 20,359 | 16,973 | 15,028 | ||||||||||||||||||
Unit sales (settlements) and net new orders in any year are strongly influenced by local, regional and national market economic conditions.
Domestic Homebuilding
Pulte builds a wide variety of homes, including detached units, townhouses, condominium apartments and duplexes, with varying prices, models, options and lot sizes, all sold for use as principal residences. Since 1990, Pulte has more than tripled its annual unit closings, unit orders and unit backlog levels. Including 2000 sales of nearly 20,000 homes, the Company has closed over 275,000 homes since its inception.
During 1998, the Company acquired two homebuilders: Tennessee-based Radnor Homes and Florida-based DiVosta & Company. From March 25, 1998, through July 1, 1999, the Company conducted a joint venture for the building of active adult-style communities with Blackstone Real Estate Advisors (BRE), an affiliate of the Blackstone Group. Effective July 1, 1999, the Company purchased BRE’s interest in the net assets of the joint venture. In accordance with its operational strategy, the Company will continue to evaluate available strategic acquisition opportunities which coincide with its long-range goals.
As of December 31, 2000, Pulte’s Domestic Homebuilding operations offered homes for sale in 396 communities at sales prices ranging from $70,000 to over $1,200,000. Sales prices of homes currently offered for sale in 75% of Pulte’s communities fall within the range of $100,000 to $300,000 with a 2000 average unit selling price of $206,000. Sales of single-family detached homes, as a percentage of total unit sales, were 82%, 79% and 76% in 2000, 1999 and 1998, respectively. Pulte’s Domestic Homebuilding operations are geographically diverse to better insulate the Company from demand changes in individual markets. As of December 31, 2000, Pulte’s Domestic Homebuilding business operated in 41 markets spanning 25 states.
International Homebuilding
International Homebuilding operations are primarily conducted through subsidiaries of Pulte International Corporation in Puerto Rico and Mexico. During the fourth quarter of 2000, these operations expanded into Argentina; initial closings are expected during 2001. International Homebuilding product offerings focus on the demand of first-time buyers and social interest housing in Mexico and Puerto Rico, and also offer product for middle-to-upper income consumers in Puerto Rico and Argentina.
4
Homebuilding Operations (continued)
International Homebuilding (continued)
In Mexico, the Company conducts business through five joint ventures. The largest of these ventures, Condak-Pulte S. de R.L. de C.V., is located in the city of Juarez. This Juarez-based venture is currently developing communities in several northern Mexican cities including Juarez, Chihuahua, Nuevo Laredo, Reynosa, Matamoros, Saltillo and Monterrey, under agreements with Delphi Automotive Systems, Sony Magneticos de Mexico, S.A. de C.V., an affiliate of Sony Electronics, and Centros Comerciales Soriana, S.A. de C. V. It also constructs housing for the general public.
Desarrollos Residenciales Turisticos, S.A. de C.V. another of the Company’s joint ventures in Mexico, is constructing primarily social interest housing in Central Mexico. The Queretaro-based venture is developing housing projects in the Bajio region surrounding Mexico City, including the cities of Puebla, Queretaro, San Jose Iturbide, San Juan del Rio and Zamora.
In Puerto Rico, homebuilding operations are principally conducted in the greater metropolitan San Juan submarkets and certain communities located in Caguas, Gurabo and Ponce. In September 1999, the Company entered into a joint venture agreement with Desarrolladores Urbanos (Canovanas), S. E., an established Puerto Rican special partnership created for the acquisition and development of 121 acres located in the municipality of Canovanas, Puerto Rico.
Land Acquisition and Development
Locations for development of homebuilding communities are selected after completing extensive market research, enabling Pulte to match the location and product offering with its targeted consumer group. Factors considered include proximity to developed areas, population and job growth patterns and, if applicable, estimated development costs. Pulte has historically managed the risk of controlling its land positions through use of option contracts and outright acquisition. Pulte typically controls land with the intent to complete sales of housing units within 24 months from the date of opening a community, except in the case of certain active-adult developments for which the completion of housing unit sales may require as much as 60 months from the date of opening a community. As a result, land is generally controlled after it is properly zoned and developed or is ready for development. In addition, Pulte disposes of owned land not required in its business. Where Pulte develops land, it engages directly in many phases of the development process, including land and site planning, obtaining environmental and other regulatory approvals, as well as constructing roads, sewers, water and drainage facilities, and other amenities. Pulte uses its staff and the services of independent engineers and consultants in its land development activities. Land development work is performed primarily by subcontractors and local government authorities which construct sewer and water systems in some areas. At December 31, 2000, Pulte’s Domestic and Puerto Rican Homebuilding operations owned approximately 40,000 lots in active communities and had approximately 34,100 lots under option.
Sales and Marketing
Pulte is dedicated to improving the quality and value of its Domestic homes through innovative proprietary architectural and community designs and state-of-the-art customer marketing techniques. Analyzing various qualitative and quantitative data obtained through extensive market research, Pulte segments its potential customers into well-defined buyer profiles. Once the demands of potential buyers are understood, Pulte links its home design and community development efforts to the specific lifestyle of each targeted consumer group.
In 2000, J.D. Power and Associates recognized Pulte’s Las Vegas and Chicago markets for ranking the highest in these respective markets in customer satisfaction in the J.D. Power and Associates 2000 New Home Builder Customer Satisfaction Study. The survey of six U.S. markets noted quality of workmanship/materials and the effectiveness of customer service representatives as the two factors that most heavily influenced the customer’s overall level of satisfaction. Building on the quality foundation is the Company’s recently launched brand development program with its “Three I’s on Quality” platform. In creating the homebuilding industry’s first national brand, the campaign supports the Company’s strategic direction and strengthens market visibility. The principles of Quality, Involvement, Integrity and Innovation establish the foundation for all customer contact, provide a focus for the Company’s activities and help create a consistency in all communications. A strong national brand will help Pulte further distinguish itself from the competition. Brand development projects have included a national home sweepstakes and sponsorship of a parade float at Macy’s Thanksgiving Day Parade™.
5
Homebuilding Operations (continued)
Sales and Marketing (continued)
To meet the demands of its various domestic customers, Pulte has established a solid design expertise for a wide array of product lines. Pulte believes that it is an innovator in the design of its homes, and it views its design capacity as an integral aspect of its marketing strategy. Pulte’s in-house architectural services teams and management, supplemented by outside consultants, are successful in creating distinctive design features, both in exterior facades, and interior options and features. One of Pulte’s strategies in certain markets is to offer “the complete house” in which all features shown in the home are included in the sales price. Standard features typically offered include vaulted ceilings, appliances, and a selection of flooring and carpet, which is chosen by the buyer.
The Company’s commitment to quality construction and resource efficiency is evident in all of its everyday business practices. The Company’s Tucson division was recently awarded the Energy Value Award from the National Association of Home Builders Research Center. In Tucson, the homes are “system engineered” to provide guaranteed heating and cooling costs. The homes feature optimum value engineering; R-20 walls; minimized ductwork runs, all kept within conditioned space; drought-resistant landscaping; and special windows to prevent solar heat gain.
Typically, Pulte’s own domestic sales team, together with outside sales brokers, are responsible for managing the customer through the sales process. Pulte has been committed to industry-leading customer service through a variety of quality initiatives, including the customer care program, which ensures that homeowners are comfortable at every stage of the building process. Using a seven-step, interactive process, homeowners are kept informed during their homebuilding and home owning experience. The steps include 1) a pre-construction meeting with the superintendent; 2) pre-dry wall frame walk; 3) quality assurance inspection; 4) first homeowner orientation; 5) 30-day follow-up after the close of the home; 6) three-month follow-up; and 7) an 11-month quality list after the close of the home. Fully furnished and landscaped model homes are used to showcase Pulte’s homes and their distinctive design features. Pulte has great success with the first-time buyer in the low to moderate price range; in such cases, financing under United States Government-insured and guaranteed programs is often used and is facilitated through PMC. Pulte also enjoys strong sales to the move-up buyer and, in certain markets, offers semi-custom homes in higher price ranges.
In addition, Pulte’s Homeowner for Life™ strategy and philosophy has increased its business from those who have previously owned a Pulte home or been referred by a Pulte homeowner. In 2000, Pulte saw an increase to 31 percent of these repeat/referral buyers. That represents approximately $1 billion in revenues in 2000. Pulte introduces its homes to prospective buyers through a variety of media advertising, illustrated brochures and other advertising displays. Customers are also obtained through referrals from other Pulte customers. In addition, Pulte’s website, www.pulte.com, enables users to search for their home, obtain details regarding the local schools, services and other features, examine mortgage options using an online calculator, learn more about Pulte and communicate directly with the organization. Already, 2.5 million users have visited www.pulte.com in 2000.
Pulte’s international sales and marketing efforts focus on the identification of regions throughout Mexico, Puerto Rico and Argentina which are experiencing population and industrial growth. In Mexico and Puerto Rico, the demand for affordable and social interest housing is strong. In Mexico, the Juarez-based joint venture has entered into three separate agreements to construct affordable social interest housing with Delphi Automotive Systems, Sony Magneticos de Mexico, S. A. de C.V., an affiliate of Sony Electronics, Inc., and Centrol Comerciales Soriana, S. A. de C.V. In Puerto Rico, the strongest customer demand is for single-family detached homes, but affordable alternative product offerings include two story attached units (townhomes) and three-story condominium units with exterior stairs (walk-ups). The Argentine market offers a stable, growing economy, the highest per capita GDP in Latin America, low levels of competition and a very large residential market in Buenos Aires with available land and mortgage financing.
Construction
The construction process for Pulte’s domestic homes begins with the in-house design of the homes it sells. The building phase is conducted under the supervision of its on-site construction superintendents. The construction work is usually performed by subcontractors under contracts which, in many instances, cover both labor and materials on a fixed-price basis. Pulte believes that Pulte Preferred Partnerships (P³), an extension of its quality assurance program, continues to establish new standards for contractor relations. Using a selective process, Pulte has teamed up with what it believes are premier contractors and suppliers to improve all aspects of the land development and house construction processes.
6
Homebuilding Operations (continued)
Construction (continued)
Pulte maintains efficient construction operations by using standard materials and components from a variety of sources and, when possible, by building on contiguous lots. To minimize the effects of changes in construction costs, the subcontracting and purchasing of building supplies and materials are generally negotiated at or near the time when related sales contracts are signed. In addition, Pulte utilizes the leverage its size affords by actively negotiating its materials needs on a national or regional basis to minimize component production cost. The Company is also working to establish a more integrated system that can effectively link suppliers, contractors and the production schedule through various strategic business partnerships.
International housing consists primarily of reinforced poured concrete, concrete and ceramic block and/or brick construction with flat roofs and public water, electric and sanitary system connections. Building materials, supplies and components are sourced locally and the construction work is performed by general contractors and/or subcontractors under contracts, which in many cases, include both labor and materials.
Pulte cannot determine the extent to which necessary building materials will be available at reasonable prices in the future and has, on occasion, experienced shortages of skilled labor in certain trades and of building materials in some markets.
Competition and Other Factors
Pulte’s dedication to customer satisfaction is evidenced by its consumer and value-based brand approach to product development, and is something that the Company believes enables it to distinguish itself in the homebuilding industry and contributes to its long-term competitive advantage. The housing industry in the United States, however, is highly competitive. In each of Pulte’s market areas, there are numerous homebuilders with which it competes. Any provider of housing units, for-sale or to rent, including apartment builders, may be considered a competitor of the Company. Conversion of apartments to condominiums further provides certain segments of the population an alternative to traditional housing, as does the emergence and acceptance of manufactured housing. Pulte competes primarily on the basis of price, reputation, design, quality of its homes and location. The housing industry is cyclical and is affected by a number of economic and other factors including: (1) significant national and world events, which impact consumer confidence; (2) changes in interest rates; (3) changes in other costs associated with home ownership, such as property taxes and energy costs; (4) various demographic factors; (5) changes in federal income tax laws; and (6) changes in government mortgage financing programs. In addition to these factors, Pulte’s business and operations could be affected by unanticipated shifts in demand for new homes.
Pulte’s operations are subject to building, environmental and other regulations of various state, local and foreign governing authorities. For its homes to qualify for Federal Housing Administration (FHA) or Veterans Administration (VA) mortgages, Pulte must satisfy valuation standards and site, material and construction requirements of those agencies. Compliance by Pulte with federal, state and local laws relating to protection of the environment has had, to date, no material effect upon capital expenditures, earnings or the competitive position of Pulte. More stringent requirements could be imposed in the future on homebuilders and developers, thereby increasing the cost of compliance.
Financial Services Operations
The Company’s financial services operations are conducted by its mortgage banking and other financial subsidiaries.
Mortgage Banking
PMC is a mortgage bank which arranges financing through the origination of mortgage loans primarily for the benefit of Pulte’s domestic home buyers, but also to the general public. PMC also engages in the sale of such loans and the related servicing rights. PMC is a lender approved by the FHA and VA and is a seller/servicer approved by Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and other investors. In its conventional mortgage lending activities, PMC generally follows underwriting guidelines established by FNMA and FHLMC.
7
Financial Services Operations (continued)
Mortgage Banking (continued)
PMC’s mortgage underwriting, processing and closing functions are centralized in Denver, Colorado using a mortgage operations center (MOC) concept. PMC also uses a centralized telephone loan officer concept where the loan officers are centrally located at a mortgage application center (MAC) in Denver. Pulte sales representatives, who are the mortgage customers’ main contact, forward the loan applications to a MAC loan officer who calls the customer to complete the loan application and then forwards it to the MOC for processing. PMC believes both the MOC and the MAC improve the speed and efficiency of its mortgage operations, thereby improving profitability and allowing PMC to focus on creating mortgage opportunities with Pulte customers.
In originating mortgage loans, PMC initially uses its own funds and borrowings made available to it pursuant to various credit arrangements. Subsequently, PMC sells such mortgage loans and mortgage-backed securities to outside investors.
During the years ended December 31, 2000, 1999 and 1998, PMC originated mortgage loans for 56%, 55% and 56%, respectively, of the homes sold by Pulte. Such originations represented 83%, 79% and 73%, respectively, of PMC originations.
PMC sells its servicing rights on a flow basis through fixed price servicing sales contracts to reduce the risks inherent in servicing loans. This strategy results in PMC owning the servicing rights for only a short period of time, usually two to three months after the loan is originated, which substantially reduces impairment issues with respect to the fair value of these reported assets.
The mortgage industry in the United States is highly competitive. PMC competes with other mortgage companies and financial institutions to provide attractive mortgage financing to both Pulte customers and the general public. PMC, in originating and servicing mortgage loans, is subject to rules and regulations of the FHA, VA, GNMA, FNMA and FHLMC. The Internet is also becoming an increasingly important resource for homebuyers in obtaining financing as a number of companies now provide online approval for their customers. These Internet-based mortgage companies may also be considered competitors of PMC.
Discontinued Operations
During the first quarter of 1994, the Company adopted a plan of disposal for First Heights and announced its strategy to exit the thrift industry and increase its focus on housing and related mortgage banking. First Heights sold all but one of its 32 bank branches and related deposits to two unrelated purchasers. The sale was substantially completed during the fourth quarter of 1994. Although the Company in 1994, expected to complete the plan of disposal within a reasonable period of time, contractual disputes with the Federal Deposit Insurance Corporation (FDIC) prevented the prepayment of the Federal Savings and Loan Insurance Corporation Resolution Fund (FRF) notes, thereby precluding the Company from completing the disposal in accordance with its original plan. To provide liquidity for the sale, First Heights liquidated its investment portfolios and its single-family residential loan portfolio and, as provided in the Assistance Agreement, entered into a Liquidity Assistance Note (LAN) with the FDIC acting in its capacity as manager of the FRF notes. The LAN is collateralized by the FRF notes and bears interest at a rate indexed to the Texas Cost of Funds plus a spread. The LAN matured in September 1998; however, payment of this liability is temporarily withheld by First Heights pending resolution of all open matters with the FDIC. As discussed in Note 10 of Notes to Consolidated Financial Statements, the Company is involved in litigation with the FDIC and as part of this litigation, the parties have asserted various claims with respect to obligations under promissory notes issued by each of the parties in connection with the thrift acquisition and activities.
Since December 31, 1998, First Heights has no longer held any deposits, nor maintained an investment portfolio. First Heights’ day-to-day activities are principally devoted to supporting residual regulatory compliance matters and the litigation with the FDIC, and are not reflective of the active operations of the former thrift, such as maintaining traditional transaction accounts, (e.g., checking and savings accounts) or making loans. Accordingly, such operations are being presented as discontinued.
8
Corporate
Corporate is a non-operating segment that is comprised of the Company and PDCI, both of which are holding companies. The primary purpose of Corporate is to support the operations of the Company’s subsidiaries as the internal source of financing, and to develop and implement strategic initiatives centered around new business development and operating efficiencies. Business development activities include the pursuit of additional domestic and international opportunities as well as the development of innovative building components and processes. Corporate also includes the activities associated with supporting a publicly traded company listed on the New York Stock Exchange.
Corporate assets include equity investments in its subsidiaries, short-term financial instruments and affiliate advances. Liabilities include senior and subordinated debt and income taxes. Corporate revenues consist primarily of investment earnings of excess funds, while its expenses include costs associated with supporting a publicly traded company and its subsidiaries’ operations, and investigating strategic initiatives.
Organization/Employees
All subsidiaries and operating units operate independently with respect to daily operations. Homebuilding real estate purchases and other significant homebuilding, mortgage banking, financing activities and similar operating decisions must be approved by the business unit and/or corporate senior management.
At December 31, 2000, the Company employed approximately 5,200 persons. Employees of the Company and its subsidiaries are not represented by any union. Subcontracted work, however, may be performed by union subcontractors. Homebuilding and mortgage banking management personnel are paid performance bonuses and incentive compensation. Performance bonuses are based on individual performance while incentive compensation is based on the performance of the applicable division or subsidiary. The Company’s corporate management personnel are paid incentive compensation based on overall performance of the Company (see Note 7 of Notes to Consolidated Financial Statements). Each subsidiary is given autonomy regarding employment of personnel, although the Company’s senior corporate management acts in an advisory capacity in the employment of subsidiary officers. The Company considers its employee and subcontractor relations to be satisfactory.
ITEM 2. PROPERTIES
The Company’s homebuilding and corporate headquarters are located at 33 Bloomfield Hills Parkway, Suite 200, Bloomfield Hills, Michigan 48304, where 34,559 square feet of office space is leased. The Company also leases 21,612 square feet of office space at 165 Kirts Boulevard, Troy, Michigan 48084 for certain centralized business support services. PMC’s corporate offices are located at 7475 South Joliet Street, Englewood, Colorado 80112. At this location, 51,000 square feet of office space is leased. Pulte homebuilding markets and PMC branch operations generally lease office space for their day-to-day operations. First Heights’ administrative office is located in 918 square feet of leased space at 2010 North Loop West, Suite 220, Houston, Texas 77018.
Because of the nature of Pulte’s homebuilding operations, significant amounts of property are held as inventory in the ordinary course of its homebuilding business. Such properties are not included in response to this Item.
9
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various litigation incidental to its continuing business operations. Management believes that none of this litigation will have a material adverse impact on the results of operations or the financial position of the Company.
First Heights-related litigation
The Company is a party to three lawsuits relating to First Heights’ 1988 acquisition from the Federal Savings and Loan Insurance Corporation (FSLIC) and First Heights’ ownership of five failed Texas thrifts. The first lawsuit (the “District Court Case”) was filed on July 7, 1995, in the United States District Court, Eastern District of Michigan, by the Federal Deposit Insurance Corporation (FDIC) against the Company, PDCI and First Heights (collectively, the “Pulte Parties”). The second lawsuit (the “Court of Federal Claims Case”) was filed on December 26, 1996, in the United States Court of Federal Claims (Washington, D.C.) by the Pulte Parties against the United States. The third lawsuit was filed by First Heights on January 10, 2000, in the United States District Court, Eastern District of Michigan against the FDIC regarding the amounts, including interest, the FDIC is obligated to pay First Heights on two promissory notes which had been executed by the FDIC’s predecessor, the FSLIC. The FDIC filed a motion to dismiss the case and on April 12, 2000, the District Court dismissed First Heights’ complaint. First Heights has appealed the Court’s ruling to the Sixth Circuit Court of Appeals and that appeal remains pending.
In the District Court Case, the FDIC seeks a declaration of rights and other relief related to the Assistance Agreement entered into between First Heights and the FSLIC. The FDIC is the successor to the FSLIC. The FDIC and the Pulte Parties disagree about the proper interpretation of provisions in the Assistance Agreement which provide for sharing of certain tax benefits achieved in connection with First Heights’ 1988 acquisition and ownership of the five failed Texas thrifts. The District Court Case also includes certain other claims relating to the foregoing, including claims resulting from the Company’s and First Heights’ amendment of a tax sharing and allocation agreement between the Company and First Heights. The Pulte Parties dispute the FDIC’s claims and believe that a proper interpretation of the Assistance Agreement limits the FDIC’s participation in the tax benefits. The Pulte Parties filed an answer and a counterclaim, seeking, among other things, a declaration that the FDIC has breached the Assistance Agreement in numerous respects. On December 24, 1996, the Pulte Parties voluntarily dismissed without prejudice certain of their claims in the District Court Case and on December 26, 1996, initiated the Court of Federal Claims Case.
On March 5, 1999, the United States District Court (the Court), entered a “Final Judgment” against First Heights and PDCI (the Court had previously ruled that Pulte Corporation was not liable for monetary damages to the FDIC) resolving by summary judgment in favor of the FDIC most of the FDIC’s claims against the Pulte Parties. The Final Judgment requires PDCI and First Heights to pay the FDIC monetary damages totaling approximately $221.3 million, including interest but excluding costs (such as attorneys fees) to be determined in the future by the District Court and post-judgment interest. However, the FDIC acknowledged that it has already paid itself or withheld from assistance its obligation to pay to First Heights approximately $105 million, excluding interest thereon. The Company believes that it is entitled to a credit or actual payment of such amount plus interest. The Final Judgment does not address this issue. The Company disagreed with the District Court’s rulings and appealed the decision to the Sixth Circuit Court of Appeals. The Company had previously disclosed that if the District Court’s final judgment were upheld in its entirety on appeal, the potential after-tax charge against Discontinued Operations, after giving effect to interest owed by the FDIC to First Heights, would approximate $88 million plus post judgment interest.
On October 12, 2000, the Sixth Circuit Court of Appeals rendered its opinion in which it affirmed in part, reversed in part and remanded the case to the District Court for further proceedings. The Sixth Circuit affirmed most of the District Court’s adverse liability rulings, including as to the sharing of certain tax benefits achieved in connection with First Heights’ 1988 acquisition and ownership of the five failed Texas thrifts and regarding the Company’s and First Heights’ amendment of a tax sharing and allocation agreement and rescission of a warrant assumption agreement between PDCI and First Heights. The Sixth Circuit, however, vacated the District Court’s damage calculations as to a number of issues, vacated the District Court’s pre-judgment interest award, and remanded to the District Court for a proper recalculation of all such amounts. The Sixth Circuit denied both the Company’s and the FDIC’s petition for rehearing. Since the Sixth Circuit opinion leaves certain significant issues to be resolved through further Court proceedings the Company is currently unable to precisely calculate the final amount it may owe. Based upon its reading of the Sixth Circuit opinion, however, the Company determined that an after-tax charge of $30 million to Discontinued Operations was appropriate in the third quarter. The final settlement with the FDIC may be more or less than amounts provided because the outcome of the remaining litigation issues is uncertain.
10
ITEM 3. LEGAL PROCEEDINGS (continued)
First Heights-related litigation (continued)
The Company does not believe that the claims in the Court of Federal Claims Case are in any way prejudiced by the rulings in the District Court Case. The Company is considering seeking relief in the Court of Federal Claims Case that would, if granted, recoup portions of the damages awarded in the District Court Case should they be upheld.
The Court of Federal Claims Case contains similar claims as those that were voluntarily dismissed from the District Court Case. In their complaint, the Pulte Parties assert breaches of contract on the part of the United States in connection with the enactment of section 13224 of the Omnibus Budget Reconciliation Act of 1993. That provision repealed portions of the tax benefits that the Pulte Parties claim they were entitled to under the contract to acquire the failed Texas thrifts. The Pulte Parties also assert certain other claims concerning the contract, including claims that the United States (through the FDIC as receiver) has improperly attempted to amend the failed thrifts’ pre-acquisition tax returns and that this attempt was made in an effort to deprive the Pulte Parties of tax benefits they had contracted for, and that the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 breached the Government’s obligation not to require contributions of capital greater than those required by the contract.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
This Item is not applicable.
11
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information with respect to all officers (including executive officers) of the Company as of December 31, 2000.
Year Became | |||||||||||
Name | Age | Position | An Officer | ||||||||
William J. Pulte Robert K. Burgess Mark J. O’Brien Roger A. Cregg Michael A. O’Brien John R. Stoller Vincent J. Frees Gregory M. Nelson Bruce E. Robinson |
68 56 57 44 48 52 50 45 39 |
Chairman of the Executive Committee of the
Board of Directors Chairman of the Board and Chief Executive Officer President and Chief Operating Officer Senior Vice President and Chief Financial Officer Senior Vice President — Corporate Development Senior Vice President, General Counsel and Secretary Vice President and Controller Vice President and Assistant Secretary Vice President and Treasurer |
1956 1984 1997 1997 1993 1990 1995 1993 1998 |
The following is a brief account of the business experience during the past five years through December 31, 2000, of each officer:
Mr. Pulte was appointed Chairman of the Executive Committee of the Board of Directors in December 1998. Previously, Mr. Pulte served as Chairman of the Board since 1991.
Mr. Burgess was appointed Chairman of the Board in December 1998. Previously, Mr. Burgess served as President since October 1985, and was appointed Chief Executive Officer in January 1993.
Mr. Mark O’Brien was appointed President in December 1998. Prior to that date, he served as Executive Vice President and Chief Operating Officer since August 1997 and had served in various capacities with Company subsidiaries, most notably as President of Pulte Home East, an operating unit of Pulte.
Mr. Cregg was appointed Senior Vice President in December 1997 and was named Chief Financial Officer effective January 31, 1998. Before joining the Company, Mr. Cregg was Executive Vice President and Chief Financial Officer of Zenith Electronics Corporation since 1996, and Vice President and Chief Financial Officer of Sweetheart Cup Company from 1990 to 1996.
Mr. Michael O’Brien became Senior Vice President in December 1994.
Mr. Stoller was appointed Senior Vice President in September 1999. Prior to that date, he served as Vice President and General Counsel since October 1990.
Mr. Frees has been Vice President and Controller since May 1995.
Mr. Nelson has been Vice President since August 1993.
Mr. Robinson was appointed Treasurer in July 1998 and was named Vice President and Treasurer effective January 20, 1999. Mr. Robinson has served in various capacities with the Company since 1988, most recently as Director of Research and Analysis.
There is no family relationship between any of the officers. Each officer serves at the pleasure of the Board of Directors.
12
ITEM 5. | MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
The Company’s common stock is listed on the New York Stock Exchange (Symbol: PHM). The table below sets forth, for the quarterly periods indicated, the range of high and low closing prices and cash dividends declared per share.
2000 | 1999 | |||||||||||||||||||||||
Declared | Declared | |||||||||||||||||||||||
High | Low | Dividends | High | Low | Dividends | |||||||||||||||||||
1st Quarter |
$ | 21.13 | $ | 15.69 | $ | .04 | $ | 31.25 | $ | 20.25 | $ | .04 | ||||||||||||
2nd Quarter |
23.38 | 20.44 | .04 | 25.63 | 19.81 | .04 | ||||||||||||||||||
3rd Quarter |
34.25 | 20.31 | .04 | 24.13 | 20.38 | .04 | ||||||||||||||||||
4th Quarter |
43.75 | 28.06 | .04 | 23.00 | 17.00 | .04 |
At December 31, 2000, there were 641 shareholders of record.
ITEM 6. SELECTED FINANCIAL DATA
Set forth below is selected consolidated financial data for each of the past five fiscal years. The selected financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s Consolidated Financial Statements and Notes thereto included elsewhere in this report.
Years Ended December 31, | ||||||||||||||||||||
($000's omitted) | ||||||||||||||||||||
2000 | 1999 | 1998 | 1997 | 1996 | ||||||||||||||||
OPERATING DATA: |
||||||||||||||||||||
Homebuilding: |
||||||||||||||||||||
Sales (settlements) |
$ | 4,110,975 | $ | 3,677,716 | $ | 2,810,151 | $ | 2,479,171 | $ | 2,319,734 | ||||||||||
Income before income taxes |
$ | 392,383 | $ | 316,561 | $ | 173,346 | $ | 106,178 | (a) | $ | 106,391 | |||||||||
Financial services: |
||||||||||||||||||||
Revenues |
$ | 47,443 | $ | 49,873 | $ | 43,678 | $ | 34,038 | $ | 50,197 | ||||||||||
Income before income taxes |
$ | 19,009 | $ | 20,828 | $ | 15,194 | $ | 5,014 | (b) | $ | 13,941 | |||||||||
Corporate: |
||||||||||||||||||||
Revenues |
$ | 633 | $ | 2,748 | $ | 12,692 | $ | 10,782 | $ | 14,352 | ||||||||||
Loss before income taxes |
$ | (56,296 | ) | $ | (50,984 | ) | $ | (22,726 | ) | $ | (30,217 | )(c) | $ | (17,869 | ) | |||||
Consolidated results: |
||||||||||||||||||||
Revenues |
$ | 4,159,051 | $ | 3,730,337 | $ | 2,866,521 | $ | 2,523,991 | $ | 2,384,283 | ||||||||||
Income from continuing operations before
income taxes |
$ | 355,096 | $ | 286,405 | $ | 165,814 | $ | 80,975 | (d) | 102,463 | ||||||||||
Income taxes |
136,712 | 108,118 | 64,666 | 31,175 | 39,252 | |||||||||||||||
Income from continuing operations |
218,384 | 178,287 | 101,148 | 49,800 | 63,211 | |||||||||||||||
Income (loss) from discontinued operations |
(29,871 | ) | (122 | ) | 1,035 | 2,961 | 116,432 | |||||||||||||
Net income |
$ | 188,513 | $ | 178,165 | $ | 102,183 | $ | 52,761 | $ | 179,643 | ||||||||||
(a) | Includes one-time restructuring charge of $14,800. | |
(b) | Includes one-time restructuring charge of $2,100. | |
(c) | Includes one-time restructuring charge of $3,100. | |
(d) | Includes one-time restructuring charge of $20,000. |
13
ITEM 6. SELECTED FINANCIAL DATA (continued)
Years Ended December 31, | ||||||||||||||||||||||
2000 | 1999 | 1998 | 1997 | 1996 | ||||||||||||||||||
PER SHARE DATA | ||||||||||||||||||||||
Earnings per share-basic: | ||||||||||||||||||||||
Income from continuing operations | $ | 5.29 | $ | 4.12 | $ | 2.35 | $ | 1.14 | (a) | $ | 1.27 | |||||||||||
Income (loss) from discontinued operations | (.73 | ) | — | .03 | .07 | 2.33 | ||||||||||||||||
Net income | $ | 4.56 | $ | 4.12 | $ | 2.38 | $ | 1.21 | (a) | $ | 3.60 | |||||||||||
Weighted-average common shares outstanding (000’s omitted) | 41,310 | 43,246 | 42,984 | 43,510 | 49,852 | |||||||||||||||||
Earnings per share — assuming dilution: | ||||||||||||||||||||||
Income from continuing operations | $ | 5.18 | $ | 4.07 | $ | 2.30 | $ | 1.13 | (a) | $ | 1.26 | |||||||||||
Income (loss) from discontinued operations | (.71 | ) | — | .03 | .07 | 2.31 | ||||||||||||||||
Net income | $ | 4.47 | $ | 4.07 | $ | 2.33 | $ | 1.20 | (a) | $ | 3.57 | |||||||||||
Weighted-average common shares | ||||||||||||||||||||||
outstanding and effect of dilutive securities (000’s omitted) | 42,146 | 43,823 | 43,884 | 43,908 | 50,304 | |||||||||||||||||
Shareholders’ equity | $ | 30.32 | $ | 25.27 | $ | 21.35 | $ | 19.10 | $ | 17.82 | ||||||||||||
Cash dividends declared | $ | .16 | $ | .16 | $ | .15 | $ | .12 | $ | .12 | ||||||||||||
(a) | Earnings per share amounts include $ .28 per share attributable to one-time restructuring charge, net of income taxes. |
December 31, | ||||||||||||||||||||||
($000's omitted) | ||||||||||||||||||||||
2000 | 1999 | 1998 | 1997 | 1996 | ||||||||||||||||||
BALANCE SHEET DATA: | ||||||||||||||||||||||
House and land inventories | $ | 1,880,263 | $ | 1,792,733 | $ | 1,455,208 | $ | 1,141,952 | $ | 1,017,262 | ||||||||||||
Total assets | 2,886,483 | 2,487,351 | 2,262,561 | 2,060,436 | 1,906,009 | |||||||||||||||||
Total long-term indebtedness | 677,602 | 525,965 | 570,114 | 584,313 | 436,587 | |||||||||||||||||
Shareholders’ equity | 1,247,931 | 1,093,319 | 921,442 | 812,837 | 829,273 | |||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||
2000 | 1999 | 1998 | 1997 | 1996 | ||||||||||||||||||
OTHER DATA: | ||||||||||||||||||||||
Domestic Homebuilding operations: | ||||||||||||||||||||||
Total markets, at year-end | 41 | 41 | 41 | 40 | 40 | |||||||||||||||||
Total active communities, at year-end | 396 | 388 | 403 | 398 | 391 | |||||||||||||||||
Total settlements — units | 19,799 | 19,569 | 16,051 | 15,068 | 14,422 | |||||||||||||||||
Total net new orders — units | 19,844 | 19,367 | 18,193 | 15,226 | 14,248 | |||||||||||||||||
Backlog units, at year-end | 5,477 | 5,432 | 5,415 | 3,507 | 3,349 | |||||||||||||||||
Average unit selling price | $ | 206,000 | $ | 187,000 | $ | 174,000 | $ | 162,000 | $ | 160,000 | ||||||||||||
Gross profit margin % | 18.8 | % | 17.8 | % | 16.1 | % | 14.9 | % | 14.8 | % | ||||||||||||
Pulte and Pulte-affiliate settlements — units: | ||||||||||||||||||||||
Domestic | 19,799 | 19,848 | 16,511 | 15,068 | 14,422 | |||||||||||||||||
International | 7,982 | 6,774 | 3,848 | 1,905 | 606 | |||||||||||||||||
Total Pulte and Pulte-affiliate settlements — units | 27,781 | 26,622 | 20,359 | 16,973 | 15,028 | |||||||||||||||||
14
Overview:
A summary of the Company’s operating results by business segment for the years ended December 31, 2000, 1999 and 1998 is as follows:
Years Ended December 31, | |||||||||||||
2000 | 1999 | 1998 | |||||||||||
Pre-tax income (loss): |
|||||||||||||
Homebuilding operations |
$ | 392,383 | $ | 316,561 | $ | 173,346 | |||||||
Financial Services operations |
19,009 | 20,828 | 15,194 | ||||||||||
Corporate |
(56,296 | ) | (50,984 | ) | (22,726 | ) | |||||||
Income from continuing operations before income taxes |
355,096 | 286,405 | 165,814 | ||||||||||
Income taxes |
136,712 | 108,118 | 64,666 | ||||||||||
Income from continuing operations |
218,384 | 178,287 | 101,148 | ||||||||||
Income (loss) from discontinued operations |
(29,871 | ) | (122 | ) | 1,035 | ||||||||
Net income |
$ | 188,513 | $ | 178,165 | $ | 102,183 | |||||||
Per share data — assuming dilution: |
|||||||||||||
Income from continuing operations |
$ | 5.18 | $ | 4.07 | $ | 2.30 | |||||||
Income (loss) from discontinued operations |
(.71 | ) | — | .03 | |||||||||
Net income |
$ | 4.47 | $ | 4.07 | $ | 2.33 | |||||||
A comparison of pre-tax income (loss), for the years ended December 31, 2000, 1999 and 1998 is as follows:
• | Pre-tax income of the Company’s homebuilding business segment increased 24% in 2000 and 83% in 1999. Compared to 1999, 2000 results primarily reflect a 10% increase in domestic average selling price to $206, and a 100 basis point improvement in gross margins. 1999 results, as compared with 1998, primarily reflect a 22% increase in Domestic Homebuilding unit sales volume and a 170 basis point improvement in gross margins. | |
• | Pre-tax income of the Company’s financial services business segment decreased 9% in 2000 to $19,009. Pre-tax income for 2000 was impacted by competitive market conditions due to higher interest rates early in the year which reduced profitability. Results for 1999 also reflect a net gain of approximately $1,700 in connection with the sale of the mortgage-backed securities by Pulte Financial Companies, Inc. (PFCI), a subsidiary of the Company. The increase in pre-tax income in 1999, as compared with 1998, is attributable to the Company’s mortgage banking operations which in 1999 benefited from substantial increases in mortgage origination volume, origination fees and pricing and marketing gains. | |
• | Pre-tax loss of the Company’s corporate business segment increased $5,312 in 2000 and $28,258 in 1999. The increase in 2000 primarily reflects an increase in net interest expense. The increase in pre-tax loss in 1999 resulted from higher net interest expense, higher costs associated with compensation, insurance, business development costs, and the write-down of a commercial land position. In addition, during 1998, the Company realized a one-time gain of $5,000 on the sale of its interest in a manufactured housing venture. |
15
Homebuilding Operations:
The Company has organized its homebuilding operations into two distinct business units: Domestic and International.
• | Domestic Homebuilding operations are conducted in 41 markets, located throughout 25 states. Domestic Homebuilding offers a broad product line to meet the needs of the first-time, first and second move-up, and active adult homebuyers. During 1998, the Company acquired two homebuilders, Tennessee-based Radnor Homes and Florida-based DiVosta & Company. From March 25, 1998, through July 1, 1999, the Company conducted a joint venture for the building of Active Adult style communities with Blackstone Real Estate Advisors (BRE), an affiliate of the Blackstone Group. Effective July 1, 1999, the Company purchased BRE’s interest in the net assets of the Active Adult joint venture. | |
• | International Homebuilding operations are conducted through subsidiaries of Pulte International Corporation in Mexico, Puerto Rico and Argentina. International Homebuilding product offerings focus on the demand of first-time buyers, and social interest housing in Mexico and Puerto Rico. Housing for middle-to-upper income consumer groups is also available in Puerto Rico and Argentina. The Company has agreements in place with multi-national corporations to provide social interest housing in Mexico. |
Certain operating data relating to the Company’s homebuilding operations and joint ventures are as follows:
Years Ended December 31, | ||||||||||||||||
2000 | 1999 | 1998 | ||||||||||||||
Pulte/Pulte-affiliate Homebuilding revenues: |
||||||||||||||||
Domestic |
$ | 4,083,816 | $ | 3,713,332 | $ | 2,883,612 | ||||||||||
International |
175,957 | 127,310 | 64,590 | |||||||||||||
Total Homebuilding |
$ | 4,259,773 | $ | 3,840,642 | $ | 2,948,202 | ||||||||||
Pulte/Pulte-affiliate settlements — units: |
||||||||||||||||
Domestic: |
||||||||||||||||
Pulte |
19,799 | 19,569 | 16,051 | |||||||||||||
Pulte-affiliated entity |
— | 279 | 460 | |||||||||||||
Total Domestic |
19,799 | 19,848 | 16,511 | |||||||||||||
International: |
||||||||||||||||
Pulte |
264 | 262 | 166 | |||||||||||||
Pulte-affiliated entities |
7,718 | 6,512 | 3,682 | |||||||||||||
Total International |
7,982 | 6,774 | 3,848 | |||||||||||||
Total Pulte/Pulte-affiliate settlements — units |
27,781 | 26,622 | 20,359 | |||||||||||||
16
Homebuilding Operations (continued):
Domestic Homebuilding:
The Domestic Homebuilding business unit represents the Company’s core business. Operations are conducted in 41 markets, located throughout 25 states, and are organized into five groups as follows:
Northeast: |
Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Virginia |
|
Southeast: |
Florida, Georgia, North Carolina, South Carolina, Tennessee |
|
Midwest: |
Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Ohio |
|
Central: |
Colorado, Texas |
|
West: |
Arizona, California, Nevada |
The Metropolitan Atlanta market accounted for 10% of the total unit settlements in 2000. No other individual market within the 41 markets represented more than 10% of total Domestic Homebuilding net new orders, unit settlements or revenues during the three years ended December 31, 2000.
The following table presents selected unit information for Pulte’s Domestic Homebuilding operations:
Years Ended December 31, | |||||||||||||
2000 | 1999 | 1998 | |||||||||||
Unit settlements: |
|||||||||||||
Northeast |
2,000 | 2,486 | 2,348 | ||||||||||
Southeast |
7,820 | 7,607 | 5,568 | ||||||||||
Midwest |
2,903 | 3,044 | 2,443 | ||||||||||
Central |
3,622 | 3,337 | 2,752 | ||||||||||
West |
3,454 | 3,095 | 2,940 | ||||||||||
19,799 | 19,569 | 16,051 | |||||||||||
Net new orders — units: |
|||||||||||||
Northeast |
1,970 | 2,511 | 2,485 | ||||||||||
Southeast |
7,815 | 7,920 | 6,530 | ||||||||||
Midwest |
2,818 | 3,166 | 2,799 | ||||||||||
Central |
3,644 | 2,956 | 3,268 | ||||||||||
West |
3,597 | 2,814 | 3,111 | ||||||||||
19,844 | 19,367 | 18,193 | |||||||||||
Net new orders — dollars |
$ | 4,211,000 | $ | 3,784,000 | $ | 3,207,000 | |||||||
Backlog at December 31 — units: |
|||||||||||||
Northeast |
810 | 840 | 810 | ||||||||||
Southeast |
2,141 | 2,146 | 1,833 | ||||||||||
Midwest |
907 | 992 | 870 | ||||||||||
Central |
814 | 792 | 1,173 | ||||||||||
West |
805 | 662 | 729 | ||||||||||
5,477 | 5,432 | 5,415 | |||||||||||
Backlog at December 31 — dollars |
$ | 1,307,000 | $ | 1,180,000 | $ | 999,000 | |||||||
17
Homebuilding Operations (continued):
Domestic Homebuilding (continued):
Net new orders increased for the twelfth consecutive year to an all-time Company record of 19,844 units in 2000, a 2% increase over 1999 order levels. Contributing to this strong performance were markets in the Central and West groups offset by softer performance in the Northeast and Midwest groups. Order growth in the Northeast, Southeast and Midwest groups, tempered by lower net new orders in the Central and West groups, contributed to a 6% increase in 1999 orders as compared with 1998. 1999 results also reflect an entire year’s results for Radnor Homes and DiVosta & Company, (the “acquired operations”) which were acquired in mid-1998 and contributed net new orders of 1,564 in 1999, compared with 1,182 in 1998.
Unit settlements in 2000 also hit a record-setting high, to 19,799 units. These results reflect strong performance in the Southeast, Central and West groups offset by a decline in the Northeast. Unit settlement activity in 1999 increased 22% over 1998 levels due to increases across all groups. In addition, the acquired operations contributed 1,456 unit settlements in 1999, compared with 683 in 1998. The average home sales price increased from $174 in 1998 to $187 in 1999 and to $206 in the current year. Changes in average selling price reflect a number of factors, including price increases, the mix of product closed during a period and the number of options purchased by customers. Overall, strong demand, supported by favorable economic conditions continued to drive increased order activity and record levels of backlog. These factors contributed to the solid settlement activity during 2000 and 1999.
The Company’s ending backlog was up slightly to 5,477 homes, while the dollar value was up 11% to $1.3 billion. Unit backlog at December 31, 1999, was slightly higher than that noted at the end of 1998 while the dollar value was up 18%.
The following table presents a summary of pre-tax income for Pulte’s Domestic Homebuilding operations:
Years Ended December 31, | ||||||||||||
2000 | 1999 | 1998 | ||||||||||
Revenues |
$ | 4,083,816 | $ | 3,655,775 | $ | 2,797,999 | ||||||
Cost of sales |
(3,315,106 | ) | (3,003,504 | ) | (2,347,253 | ) | ||||||
Selling, general and administrative expenses |
(365,704 | ) | (314,463 | ) | (248,045 | ) | ||||||
Interest † |
(28,019 | ) | (25,187 | ) | (20,164 | ) | ||||||
Other income (expense), net |
14,047 | (1,598 | ) | (4,157 | ) | |||||||
$ | 389,034 | $ | 311,023 | $ | 178,380 | |||||||
Average sales price |
$ | 206 | $ | 187 | $ | 174 | ||||||
† | The Company capitalizes interest cost into homebuilding inventories and charges the interest to homebuilding interest expense when the related inventories are closed. |
18
Homebuilding Operations (continued):
Domestic Homebuilding (continued):
Gross profit margins in 2000 increased to 18.8%, up 100 basis points over 1999. Gross profit margins in 1999 increased to 17.8%, up 170 basis points over 1998. Factors which continue to contribute to this favorable trend include strong customer demand, positive home pricing, the benefits of leverage-buy purchasing activities and effective production and inventory management.
For the year ended December 31, 2000, selling, general and administrative expenses (SG&A), as a percentage of sales, increased to 9.0% after decreasing 30 basis points to 8.6% in 1999. The increase reflects higher sales and marketing expenses, and startup costs associated with the opening of new communities.
Other income (expense) net, includes net land activity and other homebuilding-related expenses. The increase in other income in 2000 was mainly a result of increased net land activity. Net land activity amounted to $18,000 in 2000 compared to $2,000 in 1999. Net land activity relates to gains/losses on the sale of land, the impact of decisions not to pursue land acquisitions and options, the write-off of related pre-acquisition costs and land inventory valuation reserves on land held for sale. The increase in net land activity represents the Company’s efforts to rationalize certain existing land positions to ensure the most effective use of invested capital. The decrease in other expense for the year ended December 31, 1999 compared to 1998, is due to the wind down of operations and transaction costs related to the sale of Builders Supply and Lumber which are included in 1998.
Pulte’s Domestic Homebuilding operations controlled approximately 76,000 and 70,200 lots, of which approximately 42,600 and 43,000 lots were owned, and approximately 34,100 and 27,200 lots were controlled through option agreements at December 31, 2000 and 1999, respectively. Domestic Homebuilding inventory at December 31, 2000, was approximately $1,828,100 of which $1,293,800 is related to land and land development. At December 31, 1999, inventory was approximately $1,743,400 of which $1,244,200 was related to land and land development. Included in other assets is approximately $88,300 in land held for disposition as of December 31, 2000, as compared to $10,100 in the prior year.
As a component of the Company’s business strategies, the Company acquired all of the outstanding stock of Tennessee-based Radnor Homes and the net assets of an affiliated company on May 27, 1998, for an aggregate purchase price of approximately $58,000. Consideration for this acquisition included approximately $51,000 of cash paid, approximately $3,000 of assumed liabilities and the issuance of 153,570 shares of the Company’s common stock. This transaction was accounted for as a purchase and, as such, the operating results of Radnor Homes since the acquisition date are included in the Company’s results of operations.
On July 1, 1998, the Company acquired the outstanding stock and membership interests in certain closely-held businesses of Florida-based DiVosta & Company for an aggregate purchase price of approximately $155,000. Consideration for this acquisition, which was recorded using the purchase method of accounting, included approximately $109,000 of cash paid, approximately $25,000 of liabilities assumed and $21,000 in the form of a seller-financed note. The purchase price was allocated to the assets acquired and liabilities assumed based on relative fair value estimates. Goodwill of approximately $47,000 represents the excess of the purchase price over these fair value estimates and is amortized using the straight-line method over a seven-year period. The Company has included the operating results of DiVosta & Company since the acquisition date in its consolidated results of operations. Goodwill amortization was $6,600, $6,600 and $3,400 for the years ended December 31, 2000, 1999 and 1998, respectively.
From March 25, 1998, through July 1, 1999, the Company conducted a joint venture for the building of active adult-style communities with Blackstone Real Estate Advisors (BRE), an affiliate of the Blackstone Group. Effective July 1, 1999, the Company purchased BRE’s interest in the net assets of the joint venture for an aggregate cash purchase price of $26 million. The purchase price was allocated to assets acquired and liabilities assumed using the purchase method of accounting. As a result of this purchase, Pulte owns 100% of the operations, and effective July 1, 1999, the operations are fully consolidated with the operating results of Pulte’s other homebuilding operations. Prior to this purchase, and since March 25, 1998, Pulte’s 50% interest in this joint venture was accounted for as an equity investment. The impact of acquiring the additional 50% interest was immaterial to the Company’s 1999 consolidated revenues, pre-tax income from operations, net income and earnings per share (both basic and diluted).
19
Homebuilding Operations (continued):
International Homebuilding:
International Homebuilding operations are primarily conducted through subsidiaries of Pulte International Corporation in Mexico, Puerto Rico and Argentina.
The Company’s aggregate net investment in its five homebuilding joint ventures located throughout Mexico approximated $35,600 at December 31, 2000. The largest of these ventures, Condak-Pulte S. de R.L. de C.V., (Condak) is located in the city of Juarez. The Juarez-based venture is currently developing communities in cities including Juarez, Chihuahua, Nuevo Laredo, Monterrey, Reynosa and Matamoros, under agreements with Delphi Automotive Systems, Sony Magneticos de Mexico, S.A. de C.V., an affiliate of Sony Electronics, Inc., and Centro Comerciales Soriana, S.A. de C.V. As of December 31, 2000, the Company’s net investment in Condak approximated $26,900.
Desarrollos Residenciales Turisticos, S.A. de C.V., another of the Company’s joint ventures in Mexico, is constructing primarily social interest housing in Central Mexico. Current development plans for this venture include housing projects in the Bajio region surrounding Mexico City, targeting the cities of Puebla, Queretaro, San Jose du Iturbide, San Juan del Rio and Zamora. At December 31, 2000, the Company’s net investment in this joint venture approximated $7,100.
Desarrolladores Urbanos (Canovanas), S.E., the Company’s Puerto Rican joint venture is developing 121 acres located in Metropolitan San Juan. At December 31, 2000, the Company’s net investment in this joint venture approximated $3,900.
In December 2000, the Company announced its expansion into Argentina through Pulte SRL, its 100%-owned Argentine subsidiary. Its first project is in Pilar, a northern suburb of Buenos Aires. Closings in this new project are not expected to occur until the third quarter of 2001.
The following table presents selected financial data for Pulte’s International Homebuilding operations for the years ended December 31, 2000, 1999 and 1998.
Years Ended December 31, | ||||||||||||||
2000 | 1999 | 1998 | ||||||||||||
Revenues |
$ | 27,159 | $ | 21,941 | $ | 12,152 | ||||||||
Cost of sales |
(24,611 | ) | (20,337 | ) | (12,000 | ) | ||||||||
Selling, general and administrative expense |
(5,621 | ) | (4,588 | ) | (4,639 | ) | ||||||||
Other income (expense), net |
967 | 2,522 | (85 | ) | ||||||||||
Equity in income (loss) of Mexico operations |
5,455 | 6,000 | (462 | ) | ||||||||||
Pre-tax income (loss) |
$ | 3,349 | $ | 5,538 | $ | (5,034 | ) | |||||||
Unit settlements: |
||||||||||||||
Pulte |
264 | 262 | 166 | |||||||||||
Pulte-affiliated entities |
7,718 | 6,512 | 3,682 | |||||||||||
7,982 | 6,774 | 3,848 | ||||||||||||
Puerto Rico closed 264 homes in 2000, almost identical to the 262 closings recorded during the prior year. However, average sales prices and average gross margin increased by 23% and 58% respectively, reflecting a change in strategy to convert from a builder of primarily social interest housing to one serving middle-to-upper income consumer groups.
Eliminating the impact of a $2,400 land sale gain recorded in the fourth quarter of 1999, Puerto Rico’s operating results improved in 2000 over the prior year.
20
Homebuilding Operations (continued):
International Homebuilding (continued):
The Company’s Mexican joint venture operations recorded 7,718 closings, representing an 19% increase over comparable 1999 results. The Company’s share of pre-tax income of $5,455 for the year for the Mexican joint ventures is slightly lower than the $6,000 recorded in 1999, however, the prior year’s earnings included currency gains of $1,702 versus currency losses of $78 for the current year. Eliminating the impact of the currency gains and losses, operating income for our Mexican operations increased by approximately 29% in 2000.
Financial Services Operations:
The Company conducts its financial services operations principally through Pulte Mortgage Corporation (PMC), the Company’s mortgage banking subsidiary and, during 1999 and prior years, through Pulte Financial Companies, Inc. (PFCI). Pre-tax income (loss) of the Company’s financial services operations is as follows:
Years Ended December 31, | |||||||||||||
2000 | 1999 | 1998 | |||||||||||
Pre-tax income (loss): |
|||||||||||||
Mortgage banking |
$ | 19,009 | $ | 19,017 | $ | 15,268 | |||||||
Financing activities |
— | 1,811 | (74 | ) | |||||||||
Pre-tax income |
$ | 19,009 | $ | 20,828 | $ | 15,194 | |||||||
Mortgage Banking:
Years Ended December 31, | |||||||||||||
2000 | 1999 | 1998 | |||||||||||
Total originations: |
|||||||||||||
Loans |
13,415 | 13,728 | 12,772 | ||||||||||
Principal |
$ | 1,957,300 | $ | 1,908,200 | $ | 1,687,000 | |||||||
Originations for Pulte customers: |
|||||||||||||
Loans |
11,109 | 10,858 | 9,295 | ||||||||||
Principal |
$ | 1,697,600 | $ | 1,558,400 | $ | 1,265,000 | |||||||
PMC sells its servicing rights on a flow basis through fixed price servicing sales contracts. Due to the short period of time the servicing rights are held, usually two to three months, the Company does not amortize the servicing asset. Since the servicing rights are recorded at the value in the servicing sales contracts, there are no impairment issues related to these assets. PMC also originates mortgage loans using its own funds or borrowings made available to it pursuant to various credit arrangements, and then sells such mortgage loans to outside investors.
Mortgage origination principal volume for the year ended December 31, 2000, increased 3% over 1999, which increased 13% over 1998, due to increases in year-to-date unit sales and higher average selling prices realized in Pulte’s Domestic Homebuilding operations. However, the number of loans for 2000 was down 2% from 1999 levels due to competitive market conditions and rising mortgage interest rates during the last six months of 1999 and first three quarters of 2000. Pulte customers continue to account for the majority of total loan production, representing 83% of total unit production for 2000, compared with 79% in 1999 and 73% in 1998. Refinancings represented less than 2% of total loan production in 2000, compared with 4% in 1999 and almost 10% during 1998. At December 31, 2000, loan application backlog increased 7% to $536,000 as compared to $499,000 and $460,000 at December 31, 1999 and 1998, respectively.
21
Financial Services Operations (continued):
Mortgage Banking (continued):
Pre-tax income for the year ended December 31, 2000, was unchanged from 1999, as increases in origination fees and other income were offset by decreases in pricing and marketing gains and net interest income. During 2000, origination fees increased $1,605, or 23%, over the prior year due primarily to an increase in brokered loans. Pricing and marketing gains decreased $3,559, or 13%, from the same period in 1999, primarily due to competitive market conditions for much of 2000. As compared with 1999, net interest income decreased 17% to $1,815 during 2000 as a result of a drop in funded production and a higher cost of funds due to a new warehouse line that became effective March 31, 2000. During 2000, PMC recognized increased equity income from its minority interest in a Mexican mortgage banking company, and also recognized income from mortgage reinsurance operations.
For the year ended December 31, 1999, pre-tax income increased 25% over 1998. Mortgage origination fees increased by $2,029, or 41% due to increases in non-funded loans and higher revenues per loan. Pricing and marketing gains increased $2,289, or 9%, from the same period in 1998, due primarily to an 11% increase in funded mortgage originations. Net interest income in 1999 increased 59% from 1998 to $2,186. This increase was due to higher funded production, a widening of the yield curve and slightly higher average shareholder’s equity. During 1999, PMC recognized increased equity income from its Mexican mortgage banking operations, and also recorded income from the final settlement of a private mortgage insurance bankruptcy. These increases in income were partially offset by general and administrative expenses, which increased $2,946, or 16%, from 1998 due primarily to higher loan production and Year 2000-related expenditures.
In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS Nos. 137 and 138, which is required to be adopted for years beginning after June 15, 2000. This Statement requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. To the extent the derivative is effectively hedged, changes in the fair value of the derivative will be recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. PMC, in the normal course of business, uses derivative financial instruments to meet the financing needs of its customers and reduce its own exposure to fluctuations in interest rates. The Company will adopt this Statement effective January 1, 2001. Based on the Company’s derivative positions as of December 31, 2000, the Company believes that any effects of SFAS No. 133 will not be material to its earnings or financial position.
Financing Activities:
The Company’s secured financing operations, which were conducted by a limited-purpose subsidiary of PFCI, ceased operations during 1999. During the first quarter of 1999, PFCI recognized a net gain of approximately $1,700 in connection with the sale of its remaining mortgage-backed securities portfolio.
22
Corporate:
Corporate is a non-operating business segment whose primary purpose is to support the operations of the Company’s subsidiaries as the internal source of financing, to develop and implement strategic initiatives centered on new business development and operating efficiencies, and to provide the administrative support associated with being a publicly traded entity. As a result, the corporate segment’s operating results will vary from year to year as these strategic initiatives evolve.
The following table presents this segment’s results of operations:
Years Ended December 31, | ||||||||||||
2000 | 1999 | 1998 | ||||||||||
Net interest expense |
$ | 28,987 | $ | 22,824 | $ | 14,269 | ||||||
Other corporate expenses, net |
27,309 | 28,160 | 8,457 | |||||||||
Loss before income taxes |
$ | 56,296 | $ | 50,984 | $ | 22,726 | ||||||
The increase in 2000 of the pre-tax loss to $56,296 was primarily a result of an increase in net interest expense. Increases in net interest expense are attributed to higher average use of the Company’s unsecured revolving credit facility in addition to the April 2000 issuance of $175,000 Senior Notes, primarily related to increased working capital requirements of the Homebuilding Operations. Interest incurred for the years ended December 31, 2000, 1999, and 1998, excluding interest incurred by the Company’s financial services operations, was approximately $62,800, $49,500 and $41,400, respectively. The increase in pre-tax loss of $28,258 in 1999, as compared with 1998 resulted from higher net interest expense due to increased short-term borrowings to fund working capital needs; higher costs associated with compensation due to increased profitability, insurance settlements, business development costs; and the write-down of a commercial land position.
Corporate net interest expense is net of amounts capitalized into homebuilding inventories. Amounts capitalized are charged to homebuilding interest expense when the related inventories are closed. Information related to Corporate interest capitalized into inventory is as follows:
Years Ended December 31, | ||||||||||||
2000 | 1999 | 1998 | ||||||||||
Interest in inventory at beginning of year |
$ | 19,092 | $ | 16,356 | $ | 14,719 | ||||||
Interest capitalized |
33,129 | 27,923 | 21,801 | |||||||||
Interest expensed |
(28,019 | ) | (25,187 | ) | (20,164 | ) | ||||||
Interest in inventory at end of year |
$ | 24,202 | $ | 19,092 | $ | 16,356 | ||||||
Liquidity and Capital Resources :
Continuing Operations:
The Company’s net cash provided by operating activities for the year ended December 31, 2000 amounted to $23,322, compared with $15,113 for the prior year. Increases in inventory, other assets, accounts payable and accrued liabilities during 2000 were less than during 1999, and were offset by a larger increase in residential mortgage loans available-for-sale. Net cash used in investing activities was $5,185 for 2000. 1999 included the effects of PFCI’s sale of the underlying collateral of its mortgage-backed securities portfolio and the purchase of BRE’s interest in the net assets of the Company’s Active Adult joint venture. Net cash provided by financing activities for the year ended December 31, 2000, was $114,051 in 2000, as compared to a use of cash of $87,642 in 1999. These increased cash flows primarily reflect the Company’s issuance of $175,000 Senior Notes in April 2000 and issuance of common stock pursuant to the Company’s employee stock option plans, offset by stock repurchases.
23
Liquidity and Capital Resources (continued):
Continuing Operations(continued):
The Company finances homebuilding land acquisition, development and construction activities from internally generated funds and existing credit agreements. The Company had no borrowings under its $415,000 unsecured revolving credit facilities at December 31, 2000. PMC provides mortgage financing for many of its home sales and uses its own funds and borrowings made available pursuant to various committed and uncommitted credit arrangements which, at December 31, 2000, amounted to $325,000, an amount deemed adequate to cover foreseeable needs. There were approximately $234,000 of borrowings outstanding under the $325,000 PMC arrangement at December 31, 2000. Mortgage loans originated by PMC are subsequently sold, principally to outside investors. The Company anticipates that there will be adequate mortgage financing available for purchasers of its homes.
The Company’s income tax liabilities are affected by a number of factors. In 2000, the Company’s effective tax rate was 38.5% compared to 37.75% in 1999 and 39% in 1998. The Company’s lower effective income tax rate in 1999 resulted from a lower effective state tax rate and the favorable resolution of various state income tax matters. Management anticipates that the Company’s effective tax rate for 2001 will range between 38% and 39%.
At December 31, 2000, the Company had cash and equivalents of $183,985 and total long-term indebtedness of $677,602. The Company’s total long-term indebtedness includes $659,296 of unsecured Senior Notes, a $7,000 unsecured promissory note and other Pulte limited recourse debt of $11,306. The Company also has other non-recourse short-term notes payable of $42,885 and First Heights advances of $760.
In March 2000, the Company entered into a $25,000 uncommitted revolving credit facility which expires February 28, 2001. In April 2000 the Company sold, in a private placement, 9 1/2%, $175,000 Senior Notes due 2003 and subsequently filed an S-4 Registration Statement with the Securities and Exchange Commission in May 2000. The net proceeds from the sale of the Senior Notes were used to repay short-term borrowings under the Company’s revolving bank credit arrangements and for general corporate purposes. In August 2000, the Company canceled two revolving credit facilities totaling $375,000 and replaced them with one $375,000 committed five-year revolving credit facility. This facility was subsequently increased to $390,000. As of December 31, 2000, the Company’s unsecured credit facilities totaled $415,000.
In the normal course of business, Pulte acquires rights under options or option-type agreements to purchase land to be used in homebuilding operations at future dates. The total purchase price applicable to land under option at December 31, 2000, approximated $1,100,900.
At December 31, 2000, the Company also had outstanding letters of credit and performance bonds of $154,100 and $471,000 respectively.
In January 2000, the Company’s Board of Directors approved a stock repurchase plan of up to $100,000. Shares will be purchased from time-to-time in the open market, depending upon market conditions. As of December 31, 2000, the Company had purchased 3,331,600 shares at an average price of $19.90. The Company anticipates that it would fund any repurchases under the plan through cash flows from operations.
Sources of the Company’s working capital at December 31, 2000, include its cash and equivalents, and its $415,000 committed unsecured revolving credit facilities. The Company routinely monitors current operational requirements and financial market conditions to evaluate the use of available financial sources, including securities offerings.
Subsequent to December 31, 2000, the Company sold 8 1/8%, $200,000 Senior Notes due 2011. The net proceeds from the sale of the Senior Notes were used to repay short-term borrowings under the Company’s revolving bank credit arrangements and for general corporate purposes.
24
Liquidity and Capital Resources (continued):
Discontinued Operations:
The Company’s remaining investment in First Heights at December 31, 2000, approximated $31,400. The Company’s thrift assets are subject to regulatory restrictions and a court order and thus are not available for general corporate purposes. The final liquidation of the Company’s thrift operations is dependent on the final resolution of outstanding matters with the Federal Deposit Insurance Corporation (FDIC), manager of the FSLIC Resolution Fund. As discussed in Note 10 of Notes to Consolidated Financial Statements, the Company vigorously disagrees with the final judgment entered by the United States District Court and has appealed to the Sixth Circuit Court of Appeals. The Company has posted bonds in the amount of $117,000. Based upon the Company’s assessment of its legal position in the District Court litigation with the FDIC, as well as the expected duration of the legal process in this case, the Company does not currently believe that the judgment ordered by the District Court against Pulte Diversified Companies, Inc. and First Heights will have a material impact on the Company’s liquidity.
Inflation:
The Company, 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 the Company’s financing, labor and material costs. In addition, higher mortgage interest rates significantly affect the affordability of permanent mortgage financing to prospective homebuyers. The Company attempts to pass through to its customers any increases in its costs through increased sales prices and, to date, inflation has not had a material adverse effect on the Company’s results of operations. However, there is no assurance that inflation will not have a material adverse impact on the Company’s future results of operations.
25
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to interest rate risk on its long term debt to the extent long-term rates decline. The following tables set forth, as of December 31, 2000 and 1999, the Company’s long term debt obligations, principal cash flows by scheduled maturity, weighted-average interest rates and estimated fair market value.
As of December 31, 2000 for the | ||||||||||||||||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||||||||||||||||
There- | Fair | |||||||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | after | Total | Value | |||||||||||||||||||||||||||
Rate sensitive liabilities: |
||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Fixed interest rate debt: |
||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Pulte Corporation public
debt instruments |
$ | — | $ | — | $ | 275,000 | $ | 112,000 | $ | 125,000 | $ | 150,000 | $ | 662,000 | $ | 635,855 | ||||||||||||||||||
Average interest rate |
— | — | 8.59% | 8.38% | 7.30% | 7.63% | 8.09% | — | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Pulte Diversified |
||||||||||||||||||||||||||||||||||
Companies, Inc.,unsecured |
||||||||||||||||||||||||||||||||||
promissory note |
$ | 7,000 | — | — | — | — | — | $ | 7,000 | $ | 7,000 | |||||||||||||||||||||||
Average interest rate |
8.00% | — | — | — | — | — | 8.00% | — | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Pulte Home Corporation |
||||||||||||||||||||||||||||||||||
other non-recourse
debt |
$ | 10,878 | $ | 428 | — | — | — | — | $ | 11,306 | $ | 11,306 | ||||||||||||||||||||||
Average interest rate |
7.51% | 3.00% | — | — | — | — | 7.34% | — |
As of December 31, 1999 for the | ||||||||||||||||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||||||||||||||||
There- | Fair | |||||||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | after | Total | Value | |||||||||||||||||||||||||||
Rate sensitive liabilities: |
||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Fixed interest rate debt: |
||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Pulte Corporation public
debt instruments |
$ | — | $ | — | $ | — | $ | 100,000 | $ | 115,000 | $ | 275,000 | $ | 490,000 | $ | 452,208 | ||||||||||||||||||
Average interest rate |
— | — | — | 7.00% | 8.38% | 7.48% | 7.61% | — | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Pulte Diversified |
||||||||||||||||||||||||||||||||||
Companies, Inc., |
||||||||||||||||||||||||||||||||||
unsecured promissory
note |
$ | 14,000 | $ | 7,000 | — | — | — | — | $ | 21,000 | $ | 21,000 | ||||||||||||||||||||||
Average interest rate |
8.00% | 8.00% | — | — | — | — | 8.00% | — | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Pulte Home Corporation other non-recourse debt | $ | 11,066 | $ | 5,782 | $ | 427 | — | — | — | $ | 17,275 | $ | 17,275 | |||||||||||||||||||||
Average interest rate |
8.98% | 8.00% | 8.50% | — | — | — | 8.64% | — |
26
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (continued)
PMC, operating as a mortgage banker, is also subject to interest rate risk. Interest rate risk begins when PMC commits to lend money to a customer at agreed upon terms (i.e., commits to lend at a certain interest rate for a certain period of time). The interest rate risk continues through the loan closing and until the loan is sold to an investor. During 1999 and 2000, this period of interest rate exposure averaged approximately 60 days. In periods of rising interest rates, the length of exsposure will generally increase due to customers locking in an interest rate sooner as opposed to letting the interest rate float.
PMC minimizes interest rate risk by (i) financing the loans via a variable rate borrowing agreement tied to the Federal Funds rate and (ii) hedging its loan commitments and closed loans through derivative financial instruments with off-balance sheet risk. These financial instruments include cash forward placement contracts on mortgage-backed securities, whole loan investor commitments, options on treasury future contracts and options on cash forward placement contracts on mortgage-backed securities. PMC does not use any derivative financial instruments for trading purposes.
Hypothetical changes in the fair values of PMC’s financial instruments arising from immediate parallel shifts in long-term mortgage rates of plus 50, 100 and 150 basis points would not be material to the Company’s financial results.
The Company’s aggregate net equity investment in Mexico approximated $42,600 at December 31, 2000. This investment, which is exposed to foreign currency exchange risk, could devalue by as much as $5,100 in 2001, assuming a hypothetical 18% annualized devaluation of the Mexican peso against the U.S. dollar during 2001. During the second quarter of 1998, the three-year cumulative rate of inflation in Mexico fell below 100%. As a result, the Mexican economy ceased to be considered hyperinflationary effective January 1, 1999. Based on this change in economic status and under current accounting rules, a majority of the Company’s translation adjustments in 2000 and 1999 were not included in the determination of net income for the Company’s international operations, but rather were reported separately and accumulated in a separate component of equity and included in the determination of other comprehensive income.
SPECIAL NOTES CONCERNING FORWARD-LOOKING STATEMENTS
As a cautionary note, except for the historical information contained herein, certain matters discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 7A, “Quantitative & Qualitative Disclosures About Market Risk,” are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such matters involve risks and uncertainties, including, but not limited to: the Company’s exposure to certain market risks, changes in economic conditions, tax and interest rates, increases in raw material and labor costs, issues and timing surrounding land entitlement and development, weather conditions, and general competitive factors that may cause actual results to differ materially and its ability to resolve all outstanding matters related to First Heights (including the outcome of the Company’s appeal in the District Court litigation with the FDIC).
27
2000 | 1999 | ||||||||||||||
Cash and equivalents |
$ | 183,985 | $ | 51,797 | |||||||||||
Unfunded settlements |
83,147 | 53,544 | |||||||||||||
House and land inventories |
1,880,263 | 1,792,733 | |||||||||||||
Residential mortgage loans available-for-sale |
259,239 | 218,062 | |||||||||||||
Other assets |
423,277 | 313,991 | |||||||||||||
Deferred income taxes |
56,572 | 57,224 | |||||||||||||
$ | 2,886,483 | $ | 2,487,351 | ||||||||||||
| |||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||||||||
| |||||||||||||||
Liabilities: |
|||||||||||||||
Accounts payable, including book overdrafts of $111,211 and |
|||||||||||||||
$113,335 in 2000 and 1999, respectively |
$ | 220,916 | $ | 207,354 | |||||||||||
Accrued liabilities |
487,262 | 434,985 | |||||||||||||
Unsecured short-term borrowings |
— | 7,000 | |||||||||||||
Collateralized short-term debt, recourse solely to applicable |
|||||||||||||||
subsidiary assets |
242,603 | 206,959 | |||||||||||||
Income taxes |
10,169 | 11,769 | |||||||||||||
Subordinated debentures and Senior Notes |
677,602 | 525,965 | |||||||||||||
Total liabilities |
1,638,552 | 1,394,032 | |||||||||||||
Shareholders’ Equity: |
|||||||||||||||
Preferred stock, $.01 par value; 25,000,000 shares authorized, |
|||||||||||||||
none issued |
— | — | |||||||||||||
Common stock, $.01 par value; 100,000,000 shares authorized, |
|||||||||||||||
41,566,960 and 43,263,780 shares issued and outstanding |
|||||||||||||||
in 2000 and 1999, respectively |
416 | 433 | |||||||||||||
Additional paid-in capital |
109,593 | 77,070 | |||||||||||||
Accumulated other comprehensive income (loss), net of income |
|||||||||||||||
taxes of $59 and $52 in 2000 and 1999, respectively |
185 | (259 | ) | ||||||||||||
Retained earnings |
1,137,737 | 1,016,075 | |||||||||||||
Total shareholders’ equity |
1,247,931 | 1,093,319 | |||||||||||||
$ | 2,886,483 | $ | 2,487,351 | ||||||||||||
28
2000 | 1999 | 1998 | ||||||||||||||
Revenues: |
||||||||||||||||
Homebuilding |
$ | 4,110,975 | $ | 3,677,716 | $ | 2,810,151 | ||||||||||
Financial services, interest and other |
47,443 | 49,873 | 43,678 | |||||||||||||
Corporate |
633 | 2,748 | 12,692 | |||||||||||||
Total revenues |
4,159,051 | 3,730,337 | 2,866,521 | |||||||||||||
Expenses: |
||||||||||||||||
Homebuilding, principally cost of sales |
3,724,047 | 3,367,971 | 2,636,653 | |||||||||||||
Financial services, principally interest and other |
28,434 | 29,045 | 28,484 | |||||||||||||
Corporate, net |
56,929 | 53,732 | 35,418 | |||||||||||||
Total expenses |
3,809,410 | 3,450,748 | 2,700,555 | |||||||||||||
Other income (expense): |
||||||||||||||||
Equity in profit (loss) of Pulte-affiliates |
5,455 | 6,816 | (152 | ) | ||||||||||||
Income from continuing operations before income taxes |
355,096 | 286,405 | 165,814 | |||||||||||||
Income taxes |
136,712 | 108,118 | 64,666 | |||||||||||||
Income from continuing operations |
218,384 | 178,287 | 101,148 | |||||||||||||
Income (loss) from discontinued operations |
(29,871 | ) | (122 | ) | 1,035 | |||||||||||
Net income |
$ | 188,513 | $ | 178,165 | $ | 102,183 | ||||||||||
| ||||||||||||||||
Per share data: |
||||||||||||||||
Basic: |
||||||||||||||||
Income from continuing operations |
$ | 5.29 | $ | 4.12 | $ | 2.35 | ||||||||||
Income (loss) from discontinued operations |
(.73 | ) | — | .03 | ||||||||||||
Net income |
$ | 4.56 | $ | 4.12 | $ | 2.38 | ||||||||||
Assuming dilution: |
||||||||||||||||
Income from continuing operations |
$ | 5.18 | $ | 4.07 | $ | 2.30 | ||||||||||
Income (loss) from discontinued operations |
(.71 | ) | — | .03 | ||||||||||||
Net income |
$ | 4.47 | $ | 4.07 | $ | 2.33 | ||||||||||
Cash dividends declared |
$ | .16 | $ | .16 | $ | .15 | ||||||||||
Number of shares used in calculation: |
||||||||||||||||
Basic: |
||||||||||||||||
Weighted-average common shares outstanding |
41,310 | 43,246 | 42,984 | |||||||||||||
Assuming dilution: |
||||||||||||||||
Effect of dilutive securities — stock options |
836 | 577 | 900 | |||||||||||||
Adjusted weighted-average common shares |
||||||||||||||||
and effect of dilutive securities |
42,146 | 43,823 | 43,884 | |||||||||||||
29
Accumulated | |||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||
Common | Paid-in | Comprehensive | Retained | ||||||||||||||||||||
Stock | Capital | Income (Loss) | Earnings | Total | |||||||||||||||||||
Shareholders’ Equity, December 31, 1997 |
$ | 213 | $ | 61,835 | $ | 1,687 | $ | 749,102 | $ | 812,837 | |||||||||||||
| |||||||||||||||||||||||
Exercise of stock options |
4 | 9,162 | — | — | 9,166 | ||||||||||||||||||
Cash dividends declared — $.15 per share |
— | — | — | (6,456 | ) | (6,456 | ) | ||||||||||||||||
Stock dividend declared |
214 | (214 | ) | — | — | — | |||||||||||||||||
Shares issued in business acquisition |
1 | 4,268 | — | — | 4,269 | ||||||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||
Net income |
— | — | — | 102,183 | 102,183 | ||||||||||||||||||
Change in unrealized gains on securities |
|||||||||||||||||||||||
available-for-sale, net of income taxes |
|||||||||||||||||||||||
of ($334) |
— | — | (557 | ) | — | (557 | ) | ||||||||||||||||
Total comprehensive income |
101,626 | ||||||||||||||||||||||
Shareholders’ Equity, December 31, 1998 |
432 | 75,051 | 1,130 | 844,829 | 921,442 | ||||||||||||||||||
| |||||||||||||||||||||||
Exercise of stock options |
1 | 2,019 | — | — | 2,020 | ||||||||||||||||||
Cash dividends declared — $.16 per share |
— | — | — | (6,919 | ) | (6,919 | ) | ||||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||
Net income |
— | — | — | 178,165 | 178,165 | ||||||||||||||||||
Change in unrealized gains on securities |
|||||||||||||||||||||||
available-for-sale, net of income taxes |
|||||||||||||||||||||||
of ($722) |
— | — | (1,130 | ) | — | (1,130 | ) | ||||||||||||||||
Foreign currency translation adjustments, |
|||||||||||||||||||||||
net of income taxes of $52 |
— | — | (259 | ) | — | (259 | ) | ||||||||||||||||
Total comprehensive income |
176,776 | ||||||||||||||||||||||
Shareholders’ Equity, December 31, 1999 |
433 | 77,070 | (259 | ) | 1,016,075 | 1,093,319 | |||||||||||||||||
| |||||||||||||||||||||||
Exercise of stock options |
16 | 38,605 | 38,621 | ||||||||||||||||||||
Cash dividends declared — $.16 per share |
— | — | — | (6,583 | ) | (6,583 | ) | ||||||||||||||||
Stock repurchases |
(33 | ) | (6,082 | ) | — | (60,268 | ) | (66,383 | ) | ||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||
Net income |
— | — | — | 188,513 | 188,513 | ||||||||||||||||||
Foreign currency translation adjustments, |
|||||||||||||||||||||||
net of income taxes of $7 |
— | — | 444 | — | 444 | ||||||||||||||||||
Total comprehensive income |
188,957 | ||||||||||||||||||||||
Shareholders’ Equity, December 31, 2000 |
$ | 416 | $ | 109,593 | $ | 185 | $ | 1,137,737 | $ | 1,247,931 | |||||||||||||
30
2000 | 1999 | 1998 | |||||||||||||
Cash flows from operating activities: |
|||||||||||||||
Net income |
$ | 188,513 | $ | 178,165 | $ | 102,183 | |||||||||
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities: |
|||||||||||||||
Amortization, depreciation and other |
14,230 | 13,497 | 5,044 | ||||||||||||
Deferred income taxes |
652 | 23,161 | 24,274 | ||||||||||||
Gain on sale of securities |
— | (1,664 | ) | — | |||||||||||
Increase (decrease) in cash due to: |
|||||||||||||||
Inventories |
(210,025 | ) | (258,196 | ) | (224,812 | ) | |||||||||
Residential mortgage loans available-for-sale |
(41,177 | ) | 16,912 | (49,956 | ) | ||||||||||
Other assets |
(14,141 | ) | (60,559 | ) | (13,701 | ) | |||||||||
Accounts payable and accrued liabilities |
77,034 | 101,245 | 46,934 | ||||||||||||
Income taxes |
8,236 | 2,552 | 4,541 | ||||||||||||
Net cash provided by (used in) operating activities |
23,322 | 15,113 | (105,493 | ) | |||||||||||
Cash flows from investing activities: |
|||||||||||||||
Proceeds from sale of securities available-for-sale |
— | 27,886 | 11,276 | ||||||||||||
Principal payments on mortgage-backed securities |
— | 1,490 | 32,467 | ||||||||||||
Purchases of securities available-for-sale |
— | — | (21,809 | ) | |||||||||||
(Increase)/decrease in covered assets and FRF receivables |
(3,862 | ) | — | 33,603 | |||||||||||
Cash paid for acquisitions, net of cash acquired |
— | (24,714 | ) | (158,832 | ) | ||||||||||
Proceeds from sale of business operations |
— | — | 90,602 | ||||||||||||
Other, net |
(1,323 | ) | (5,665 | ) | 14,269 | ||||||||||
Net cash provided by (used in) investing activities |
(5,185 | ) | (1,003 | ) | 1,576 | ||||||||||
Cash flows from financing activities: |
|||||||||||||||
Payment of long-term debt and bonds |
(19,969 | ) | (50,480 | ) | (10,672 | ) | |||||||||
Proceeds from borrowings |
209,930 | 18,717 | 91,998 | ||||||||||||
Repayment of borrowings |
(32,161 | ) | (49,989 | ) | (57,614 | ) | |||||||||
Decrease in deposit liabilities |
— | — | (37,462 | ) | |||||||||||
Issuance of common stock |
28,784 | 1,646 | 6,952 | ||||||||||||
Stock repurchases |
(66,383 | ) | — | — | |||||||||||
Dividends paid |
(6,583 | ) | (6,919 | ) | (6,456 | ) | |||||||||
Other, net |
433 | (617 | ) | (4,808 | ) | ||||||||||
Net cash provided by (used in) financing activities |
114,051 | (87,642 | ) | (18,062 | ) | ||||||||||
Net increase (decrease) in cash and equivalents |
132,188 | (73,532 | ) | (121,979 | ) | ||||||||||
Cash and equivalents at beginning of year |
51,797 | 125,329 | 247,308 | ||||||||||||
Cash and equivalents at end of year |
$ | 183,985 | $ | 51,797 | $ | 125,329 | |||||||||
31
1. Basis of presentation and significant accounting policies
Basis of presentation |
The consolidated financial statements include the accounts of Pulte Corporation (the “Company” or “Pulte”), and all of its significant subsidiaries. The Company’s direct subsidiaries include Pulte Diversified Companies, Inc. (PDCI) and other subsidiaries which are engaged in the homebuilding business. PDCI’s operating subsidiaries include Pulte Home Corporation (PHC), Pulte International Corporation (International) and other subsidiaries which are engaged in the homebuilding business. PDCI’s non-operating thrift subsidiary, First Heights Bank, fsb (First Heights), is classified as a discontinued operation (See Note 4). The Company also has a mortgage banking company, Pulte Mortgage Company (PMC), which is a subsidiary of PHC. |
Certain amounts related to discontinued operations previously reported in the 1999 financial statements and notes thereto were reclassified to conform to the 2000 presentation. |
Significant accounting policies |
Use of estimates | |
| |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. | |
Cash and equivalents | |
For purposes of the Statements of Cash Flows, commercial paper and time deposits with a maturity of three months or less when acquired are classified as cash equivalents. | |
Stock based compensation | |
The Company grants stock options to key employees for a fixed number of shares with an exercise price not less than the fair value of the shares at the date of grant. The Company accounts for the stock option grants in accordance with Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees.” No compensation expense is recognized because all stock options granted have exercise prices equal to the market value of the Company’s stock on the date of the grant. The pro forma disclosures required by Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” are included in Note 7. | |
Foreign investments | |
The Company has investments in Mexico and Puerto Rico which are accounted for using the equity method. Gains and losses resulting from the change in Mexican peso exchange rates are recognized in accordance with SFAS No. 52, “Foreign Currency Translation.” For the year ended December 31, 1998, the Mexican economy was considered hyperinflationary; accordingly, SFAS No. 52 required that the U.S. dollar be the assumed functional currency of the Company’s investments in Mexico. During 1998, the three-year cumulative rate of inflation in Mexico fell below 100%, resulting in the Mexican economy no longer being considered hyperinflationary. Effective January 1, 1999, the functional currency of the Company’s investments in Mexico is the Mexican peso. The Company recorded a $78 loss and a $1,702 gain on foreign currency transactions for the years ended December 31, 2000 and 1999, respectively. Foreign currency transaction and translation losses aggregated $2,798 for the year ended December 31, 1998. |
32
1. Basis of presentation and significant accounting policies (continued)
Foreign investments (continued) | |
The Company’s investments primarily include the Mexican homebuilding joint ventures of Condak-Pulte S. De R.L. De C.V. and Desarrollos Residenciales Turisticos, S.A. de C.V., the net investments of which comprise $26,900 and $7,100, respectively at December 31, 2000. The Company recorded income of $5,455 and $6,000 related to its Mexican homebuilding operations in 2000 and 1999, as compared to a loss of $462 in 1998. To support homebuilding activities in Mexico, the Company also has a minority ownership interest (approximately 22.9%) in a Mexican mortgage banking company, the balance of which approximated $7,000 at December 31, 2000. The Company’s aggregate net equity investment in the Mexican joint ventures is approximately $42,600 as of December 31, 2000. | |
Income per share | |
Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares (the denominator) for the period. Computing diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the dilutive effects of options, warrants and convertible securities. Any options that have an exercise price greater than the average market price are excluded from the diluted income per share calculation. For the years ended December 31, 2000, 1999 and 1998, 873,000, 2,623,000 and 29,000 respectively, of the outstanding stock options were excluded from this calculation. Earnings per share amounts, both basic and diluted, are disclosed for all periods presented and reflect the impact of the Company’s 2-for-1 stock split effective June 1, 1998. | |
Fair values of financial instruments | |
The estimated fair values of financial instruments were determined by management using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret the market data and develop the estimated fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. | |
The carrying amounts of cash and equivalents approximate their fair values due to their short-term nature. | |
The fair value of residential mortgage loans available-for-sale is estimated using the quoted market prices for securities backed by similar loans. | |
The fair values of subordinated debentures and Senior Notes are based on quoted market prices, when available. If quoted market prices are not available, fair values are based on quoted market prices of similar issues. | |
Disclosures about the fair value of financial instruments are based on pertinent information available to management as of December 31, 2000. Although management is not aware of any factors that would significantly affect the reasonableness of the fair value amounts, such amounts were not comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein. | |
Advertising cost | |
The Company expenses advertising costs as they are incurred. For the years ended December 31, 2000, 1999 and 1998, the Company incurred advertising costs of approximately $40,440, $31,800 and $25,300, respectively. |
33
1. Basis of presentation and significant accounting policies (continued)
Employee benefits | |
The Company maintains the Pulte Home Corporation Investment Savings Plus (the “Plan”) which covers substantially all of the Company’s employees. Company contributions to the Plan are expensed as paid and are based on the employees’ years of service. The total Company contributions pursuant to the Plan were approximately $2,300, $2,100 and $2,200 for the years ended December 31, 2000, 1999 and 1998, respectively. | |
Derivative instruments and hedging activities | |
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS Nos. 137 and 138, which is required to be adopted for years beginning after June 15, 2000. This Statement requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. To the extent the derivative is effectively hedged, changes in the fair value of the derivative will be recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. PMC, in the normal course of business, uses derivative financial instruments to meet the financing needs of its customers and reduce its own exposure to fluctuations in interest rates. The Company will adopt this Statement effective January 1, 2001. Based on the Company’s derivative positions as of December 31, 2000, the Company believes that any effects of SFAS No. 133 will not be material to its earnings or financial position. |
Homebuilding
Allowance for warranties | |
Home purchasers are provided with warranties against certain building defects. Estimated warranty cost is provided in the period in which the sale is recorded. | |
Start-up costs | |
Costs and expenses associated with entry into new homebuilding markets and opening new communities in existing markets are expensed when incurred. | |
Revenues | |
Homebuilding revenues are recorded when the sales of homes are completed and ownership has transferred to the customer. Unfunded settlements are deposits in transit on homes for which the sale was completed. | |
Inventories | |
Finished inventories are stated at the lower of accumulated cost or fair value less costs to sell. Inventories under development or held for development are stated at accumulated cost, unless such cost would not be recovered from the cash flows generated by future disposition. In this instance, such inventories are measured at fair value. | |
Sold units are expensed on a specific identification basis as cost of sales. Included in inventories is related interest and property taxes. The Company capitalized interest in the amount of $33,129, $27,923 and $21,801 and expensed to homebuilding interest expense $28,019, $25,187 and $20,164 in 2000, 1999 and 1998, respectively. |
34
1. Basis of presentation and significant accounting policies (continued)
Financial Services |
Mortgage servicing rights | |
The Company sells its servicing rights on a flow basis through fixed price servicing sales contracts. Due to the short period of time the servicing rights are held, usually two to three months, the Company does not amortize the servicing asset. Since the servicing rights are recorded at the value in the servicing sales contracts, there are no impairment issues related to these assets. The Company could be required to repurchase loans found to be defective. Reserves for such future repurchases or indemnifications are reflected in accounts payable and accrued liabilities. During 2000, 1999, and 1998 total servicing rights recognized were $33,048, $38,290 and $35,995, respectively. | |
Residential mortgage loans available for sale | |
Residential mortgage loans available-for-sale are stated at the lower of aggregate cost or market value. Unamortized net mortgage discounts totaled $1,119 and $947 at December 31, 2000 and 1999, respectively. | |
Gains and losses from sales of mortgage loans are recognized when the loans are sold. The Company hedges its residential mortgage loans available-for-sale (see Note 11). Gains and losses from closed commitments and futures contracts are matched against the related gains and losses on the sale of mortgage loans. | |
Mortgage servicing, origination and commitment fees | |
Mortgage servicing fees represent fees earned for servicing loans for various investors. Servicing fees are based on a contractual percentage of the outstanding principal balance and are credited to income when the related mortgage payments are received. Loan origination fees, commitment fees and certain direct loan origination costs are deferred as an adjustment to the cost of the related mortgage loan until such loan is sold. |
2. Segment information
The Company’s operations are classified into three reportable segments: Homebuilding, Financial Services and Corporate. | |
The Company’s Homebuilding segment consists of the following two business units: |
• | Domestic Homebuilding, the Company’s core business, 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. | ||
• | International Homebuilding is primarily engaged in the acquisition and development of land principally for residential purposes, and the construction of housing on such land in Mexico, Puerto Rico and Argentina. |
The Company’s Financial Services segment consists principally of mortgage banking operations conducted through PMC and its subsidiaries. | |
Corporate is a non-operating business segment whose primary purpose is to support the operations of the Company’s subsidiaries as the internal source of financing, to develop and implement strategic initiatives centered on new business development and operating efficiencies, and to provide the necessary administrative functions to support the Company as a publicly traded entity. |
35
2. Segment information (continued)
Operating Data by Segment
Years Ended December 31, | ||||||||||||||
2000 | 1999 | 1998 | ||||||||||||
Revenues: |
||||||||||||||
Homebuilding |
$ | 4,110,975 | $ | 3,677,716 | $ | 2,810,151 | ||||||||
Financial Services |
47,443 | 49,873 | 43,678 | |||||||||||
Corporate |
633 | 2,748 | 12,692 | |||||||||||
Total revenues |
4,159,051 | 3,730,337 | 2,866,521 | |||||||||||
Cost of sales: |
||||||||||||||
Homebuilding |
3,339,717 | 3,023,841 | 2,359,253 | |||||||||||
Selling, general and administrative: |
||||||||||||||
Homebuilding |
371,325 | 319,051 | 252,684 | |||||||||||
Financial Services |
20,906 | 21,391 | 19,241 | |||||||||||
Corporate |
12,372 | 12,682 | 6,695 | |||||||||||
Total selling, general and administrative |
404,603 | 353,124 | 278,620 | |||||||||||
Interest: |
||||||||||||||
Homebuilding |
28,019 | 25,187 | 20,164 | |||||||||||
Financial Services |
7,478 | 7,404 | 9,043 | |||||||||||
Corporate |
29,620 | 24,224 | 21,910 | |||||||||||
Total interest |
65,117 | 56,815 | 51,117 | |||||||||||
Other (income) expense, net: |
||||||||||||||
Homebuilding |
(15,014 | ) | (108 | ) | 4,552 | |||||||||
Financial Services |
50 | 250 | 200 | |||||||||||
Corporate |
14,937 | 16,826 | 6,813 | |||||||||||
Total other (income) expense, net |
(27 | ) | 16,968 | 11,565 | ||||||||||
Total costs and expenses |
3,809,410 | 3,450,748 | 2,700,555 | |||||||||||
Equity in income (loss) of joint ventures: |
||||||||||||||
Homebuilding |
5,455 | 6,816 | (152 | ) | ||||||||||
Income before income taxes: |
||||||||||||||
Homebuilding |
392,383 | 316,561 | 173,346 | |||||||||||
Financial Services |
19,009 | 20,828 | 15,194 | |||||||||||
Corporate |
(56,296 | ) | (50,984 | ) | (22,726 | ) | ||||||||
Total income before income taxes |
$ | 355,096 | $ | 286,405 | $ | 165,814 | ||||||||
36
2. Segment information (continued)
Supplemental Operating Data by Geographic Region
Years Ended December 31, | ||||||||||||||
2000 | 1999 | 1998 | ||||||||||||
Revenues: |
||||||||||||||
Domestic United States |
$ | 4,131,892 | $ | 3,707,048 | $ | 2,850,349 | ||||||||
International |
27,159 | 23,289 | 16,172 | |||||||||||
Total revenues |
4,159,051 | 3,730,337 | 2,866,521 | |||||||||||
Cost of sales: |
||||||||||||||
Domestic United States |
3,315,106 | 3,003,504 | 2,347,253 | |||||||||||
International |
24,611 | 20,337 | 12,000 | |||||||||||
Total cost of sales |
3,339,717 | 3,023,841 | 2,359,253 | |||||||||||
Selling, general and administrative: |
||||||||||||||
Domestic United States |
399,323 | 349,633 | 274,778 | |||||||||||
International |
5,280 | 3,491 | 3,842 | |||||||||||
Total selling, general and administrative |
404,603 | 353,124 | 278,620 | |||||||||||
Interest: |
||||||||||||||
Domestic United States |
65,117 | 56,815 | 51,117 | |||||||||||
International |
— | — | — | |||||||||||
Total interest |
65,117 | 56,815 | 51,117 | |||||||||||
Other (income) expense, net: |
||||||||||||||
Domestic United States |
1,666 | 19,490 | 5,460 | |||||||||||
International |
(1,693 | ) | (2,522 | ) | 6,105 | |||||||||
Total other expense, net |
(27 | ) | 16,968 | 11,565 | ||||||||||
Total costs and expenses |
3,809,410 | 3,450,748 | 2,700,555 | |||||||||||
Equity in income (loss) of joint ventures |
5,455 | 6,816 | (152 | ) | ||||||||||
Income before income taxes |
$ | 355,096 | $ | 286,405 | $ | 165,814 | ||||||||
37
2. Segment information (continued)
Asset Data by Segment | ||||||||||||||||||
Financial | ||||||||||||||||||
Homebuilding | Services | Corporate | Total | |||||||||||||||
Inventory |
$ | 1,880,263 | $ | — | $ | — | $ | 1,880,263 | ||||||||||
Identifiable assets |
2,443,540 | 283,265 | 159,678 | $ | 2,886,483 | |||||||||||||
Inventory |
$ | 1,792,733 | $ | — | $ | — | $ | 1,792,733 | ||||||||||
Identifiable assets |
2,157,395 | 237,318 | 92,638 | $ | 2,487,351 | |||||||||||||
Inventory |
$ | 1,455,208 | $ | — | $ | — | $ | 1,455,208 | ||||||||||
Identifiable assets |
1,765,431 | 274,488 | 222,642 | $ | 2,262,561 | |||||||||||||
Supplemental Asset Data by Geographic Region | ||||||||||||||||||
Domestic | ||||||||||||||||||
United States | International | Total | ||||||||||||||||
Inventory |
$ | 1,852,534 | $ | 27,729 | $ | 1,880,263 | ||||||||||||
Identifiable assets |
2,821,490 | 64,993 | $ | 2,886,483 | ||||||||||||||
Inventory |
$ | 1,760,581 | $ | 32,152 | $ | 1,792,733 | ||||||||||||
Identifiable assets |
2,422,066 | 65,285 | $ | 2,487,351 | ||||||||||||||
Inventory |
$ | 1,431,245 | $ | 23,963 | $ | 1,455,208 | ||||||||||||
Identifiable assets |
2,201,127 | 61,434 | $ | 2,262,561 | ||||||||||||||
38
3. Acquisitions
Effective July 1, 1999, the Company purchased Blackstone Real Estate Advisors’ interest in the net assets of its active adult joint venture for an aggregate cash purchase price of $26,000. The purchase price was allocated to assets acquired and liabilities assumed using the purchase method of accounting. As a result of this purchase, Pulte owns 100% of the operations, and effective July 1, 1999, the operations are fully consolidated with the operating results of Pulte’s other homebuilding operations. Prior to this purchase, and since March 25, 1998, Pulte’s 50% interest in this joint venture was accounted for as an equity investment. |
On July 1, 1998, the Company acquired the outstanding stock and membership interests in certain closely-held businesses of Florida-based, DiVosta & Company for an aggregate purchase price of approximately $155,000. Consideration for this acquisition, which was recorded using the purchase method of accounting, included approximately $109,000 of cash paid, approximately $25,000 of liabilities assumed and $21,000 in the form of a seller-financed note. The purchase price was allocated to the assets acquired and liabilities assumed based on relative fair value estimates. Goodwill of approximately $47,000 represents the excess of the purchase price over these fair value estimates and is amortized using a straight-line method over a seven-year period. The Company has included the operating results of DiVosta & Company since the acquisition date in its consolidated results of operations. Goodwill amortization was $6,600, $6,600 and $3,400 for the years ended December 31, 2000, 1999 and 1998, respectively. |
On May 27, 1998, the Company acquired all of the outstanding stock of Tennessee-based Radnor Homes and the net assets of an affiliate for an aggregate purchase price of approximately $58,000. Consideration for this acquisition, which was recorded using the purchase method of accounting, included $51,000 of cash paid, approximately $3,000 of liabilities assumed and the issuance of 153,570 shares of the Company’s common stock. The purchase price was allocated to the tangible assets acquired and liabilities assumed based on relative fair value estimates. The Company has included the operating results of Radnor Homes since the acquisition in its consolidated results of operations. |
The effect of these transactions, had they occurred at the beginning of 1999 and 1998, is not material to the operations of the Company as a whole. |
4. Discontinued operations
In September 1988, substantially all of the assets, business operations and certain liabilities of five Texas-based insolvent thrifts were acquired by First Heights. Assistance with each acquisition was provided by the Federal Savings and Loan Insurance Corporation (FSLIC) pursuant to an Assistance Agreement. |
The FSLIC issued promissory notes representing the estimated negative net worth of the acquired associations at the date of acquisition, the balances of which, including accrued interest, were $81,035 and $77,555 at December 31, 2000 and 1999, respectively. The notes had a weighted-average interest rate of 5.6% and 5.1% at December 31, 2000 and 1999, respectively. The notes, bearing interest at rates indexed to the Texas Cost of Funds plus a spread, were due in September 1998; notwithstanding this maturity, the Federal Deposit Insurance Corporation (FDIC) has chosen to temporarily withhold payment. The notes were subject to annual prepayments, which were limited to 10% of the total original note balances. The FSLIC Resolution Fund (FRF) exercised its right to prepay the notes by $31,560 in each year from 1992 through 1998. The FRF is entitled to payments of up to 25% of certain tax benefits which may be derived as a result of the assistance transactions. |
During the first quarter of 1994, the Company adopted a plan of disposal for First Heights and announced its strategy to exit the thrift industry and increase its focus on housing and related mortgage banking. First Heights sold all but one of its 32 bank branches and related deposits to two unrelated purchasers. The sale was substantially completed during the fourth quarter of 1994, although the Company held brokered deposits which were not liquidated until 1998. |
39
4. Discontinued operations (continued)
Although the Company in 1994, expected to complete the plan of disposal within a reasonable period of time, contractual disputes with the FDIC prevented the prepayment of the FRF notes, thereby precluding the Company from completing the disposal in accordance with its original plan. To provide liquidity for the sale, First Heights liquidated its investment portfolios and its single-family residential loan portfolio and, as provided in the Assistance Agreement, entered into a Liquidity Assistance Note (LAN) with the FDIC acting in its capacity as manager of the FRF notes. The LAN is collateralized by the FRF notes and bears interest at a rate indexed to the Texas Cost of Funds plus a spread. The LAN matured in September 1998; however, payment of this liability is also temporarily withheld by First Heights pending resolution of all open matters with the FDIC. As discussed in Note 10, the Company is involved in litigation with the FDIC and as part of this litigation, the parties asserted various claims with respect to obligations under promissory notes issued by each of the parties in connection with the thrift acquisition and activities. |
Since December 31, 1998, First Heights has no longer held any deposits, nor has it maintained an investment portfolio. First Heights’ day-to-day activities are principally devoted to supporting residual regulatory compliance matters and the litigation with the FDIC, and are not reflective of the active operations of the former thrift, such as maintaining traditional transaction accounts (e.g., checking and savings accounts) or making loans. Accordingly, such operations are being presented as discontinued. |
Included in accounts payable and accrued liabilities are litigation-related accruals recorded by the Company, offset by accounts and notes receivable due from the FRF, of $30,250 and $3,611 as of December 31, 2000 and 1999, respectively. |
Revenues of discontinued operations were $3,685, $3,677 and $6,412 for the years ended December 31, 2000, 1999 and 1998, respectively. For the years ended December 31, 2000, 1999 and 1998, discontinued thrift operations resulted in income (loss) of $(29,871) (including income tax provision of $149), $(122) and $1,035 (including income tax benefit of $1,386), respectively. 2000 includes a $30,000 charge for related litigation as discussed in Note 10. |
The Company has previously recognized, as part of discontinued thrift operations, after-tax income of approximately $110,000. Such income relates to tax benefits associated with net operating losses (NOLs). Although the Company has computed its NOLs and reported them to the Internal Revenue Service (the “IRS”) in a manner that it believes will comply with applicable law and that indicates that they generally are available to offset the Company’s taxable income, there is no assurance that the IRS will agree with the Company’s determination of the amount of NOLs, in which case, if the IRS were to prevail, the use of a portion or all of the Company’s NOLs could be disallowed. |
40
5. Short-term credit arrangements
Short-term financing for the Company on an operating segment basis is as follows: |
Corporate/Homebuilding |
In March 2000, the Company entered into an uncommitted $25,000 revolving credit facility which expires February 28, 2001. |
In August 2000, the Company, PDCI and PHC entered into a $375,000 committed unsecured revolving credit facility under which a variety of interest rates are available to the Company. This facility, which was subsequently expanded to $390,000 during 2000, expires August 31, 2005. This facility, which includes an option to expand the facility size to $600,000, replaces two revolving credit facilities of $170,000 and $205,000. The bank credit agreements contain restrictive covenants. Under the most restrictive of the covenants, the Company is required to maintain a minimum tangible net worth of $800,000 plus 50% of consolidated net income earned subsequent to March 31, 2000. The following is aggregate borrowing information: |
2000 | 1999 | 1998 | ||||||||||
Available credit lines at year-end |
$ | 415,000 | $ | 375,000 | $ | 220,000 | ||||||
Unused credit lines at year-end |
$ | 415,000 | $ | 368,000 | $ | 220,000 | ||||||
Maximum amount outstanding at the end of any month |
$ | 245,000 | $ | 200,000 | $ | — | ||||||
Average monthly indebtedness |
$ | 137,000 | $ | 107,000 | $ | 202 | ||||||
Range of interest rates during the year |
5.19 to | 4.87 to | 5.00 to | |||||||||
9.50% | 9.25% | 8.50% | ||||||||||
Weighted-average daily interest rate |
6.86% | 6.26% | 5.12% |
Financial Services |
Notes payable to banks (collateralized short-term debt) are secured by residential mortgage loans available-for-sale. The carrying amounts of such borrowings approximate fair values. |
At December 31, 2000, PMC had a committed bank credit line of $125,000 and a discretionary credit line of $125,000. The bank credit agreements require PMC to pay a fee for the committed credit lines. The committed line expires March 31, 2003 while the discretionary line has no expiration date. PMC also has a $75,000 annual asset-backed commercial paper program, which can be extended to December 22, 2003, subject to approval by the administrative agent. During 2000, 1999 and 1998, PMC provided compensating balances, in the form of escrows and other custodial funds, in order to further reduce interest rates. The bank credit agreements each contain certain restrictions, including the maintenance of levels of equity. Under the most restrictive of the agreements, PMC is required to maintain a minimum tangible net worth of $10,000. |
The following is aggregate borrowing information: | 2000 | 1999 | 1998 | |||||||||
Available credit lines at year-end |
$ | 325,000 | $ | 345,000 | $ | 250,000 | ||||||
Unused credit lines at year-end |
$ | 91,000 | $ | 147,000 | $ | 40,000 | ||||||
Maximum amount outstanding at the end of any month |
$ | 234,000 | $ | 198,000 | $ | 210,000 | ||||||
Average monthly indebtedness |
$ | 117,000 | $ | 122,000 | $ | 114,000 | ||||||
Range of interest rates during the year |
0.45 to | 0.60 to | 0.60 to | |||||||||
8.15% | 8.15% | 7.67% | ||||||||||
Weighted-average daily interest rate |
6.86% | 5.58% | 5.92% | |||||||||
Weighted-average rate at year-end |
7.31% | 7.11% | 5.51% |
41
6. Long-term debt
Long-term debt is summarized as follows: | At December 31, | |||||||||||
2000 | 1999 | |||||||||||
Corporate |
||||||||||||
9.5% unsecured Senior Notes, issued by Pulte Corporation, due 2003, not |
||||||||||||
redeemable prior to maturity, guaranteed on a senior basis by Pulte |
||||||||||||
and certain wholly-owned subsidiaries of Pulte. See Note 13 |
$ | 174,409 | $ | — | ||||||||
7% unsecured Senior Notes, issued by Pulte Corporation, due 2003, not |
||||||||||||
redeemable prior to maturity, guaranteed on a senior basis by Pulte |
||||||||||||
and certain wholly-owned subsidiaries of Pulte. See Note 13 |
99,880 | 99,840 | ||||||||||
8.375% unsecured Senior Notes, issued by Pulte Corporation, due 2004, not |
||||||||||||
redeemable prior to maturity, guaranteed on a senior basis by Pulte and |
||||||||||||
certain wholly-owned subsidiaries of Pulte. See Note 13 |
111,880 | 114,842 | ||||||||||
7.3% unsecured Senior Notes, issued by Pulte Corporation, due 2005, not |
||||||||||||
redeemable prior to maturity, guaranteed on a senior basis by Pulte and |
||||||||||||
certain wholly-owned subsidiaries of Pulte. See Note 13 |
124,949 | 124,938 | ||||||||||
7.625% unsecured Senior Notes, issued by Pulte Corporation, due 2017, not |
||||||||||||
redeemable prior to maturity, guaranteed on a senior basis by Pulte and |
||||||||||||
certain wholly-owned subsidiaries of Pulte. See Note 13 |
148,178 | 148,070 | ||||||||||
8% unsecured promissory note, issued by Pulte Diversified Companies, Inc., |
||||||||||||
due 2001, unconditionally guaranteed by Pulte |
7,000 | 21,000 | ||||||||||
Homebuilding |
||||||||||||
Other non-recourse debt, minimum annual principal payments required, |
||||||||||||
maturing at various times through 2001, interest rates ranging |
||||||||||||
from 3% to 10.5% |
11,306 | 17,275 | ||||||||||
$ | 677,602 | $ | 525,965 | |||||||||
Estimated fair value |
$ | 654,161 | $ | 490,483 | ||||||||
Total Corporate and Homebuilding long-term debt maturities and mandatory annual sinking fund payments during the five years after 2000 are as follows: 2001 — $18,306; 2002 — $0; 2003 — $274,289; 2004 — $111,880; 2005- $124,949; and thereafter $148,178. |
42
7. Stock compensation plans and management incentive compensation
The Company has four fixed stock option plans for employees (the “Employee Plans”) and two stock option plans for nonemployee directors (the “Director Plans”); information related to the Plans is as follows: |
Shares | ||||
Plan Name | Authorized | |||
Employee plans |
||||
Pulte Corporation 2000 Stock Incentive Plan for Key Employees |
2,500,000 | |||
Pulte Corporation 1995 Stock Incentive Plan for Key Employees |
4,000,000 | |||
Pulte Corporation 1994 Stock Incentive Plan for Key Employees |
2,000,000 | |||
Pulte Corporation 1990 Stock Incentive Plan for Key Employees |
1,600,000 | |||
Nonemployee director plans |
||||
2000 Stock Plan for Nonemployee Directors |
250,000 | |||
1997 Stock Plan for Nonemployee Directors |
133,400 |
As of December 31, 2000, 2,250,000 stock options remain available for grant under the Employee Plans and 279,000 stock options remain available for grant under the Director Plans. |
The Employee Plans provide for the grant of options (both non-qualified options and incentive stock options as defined in each respective plan), stock appreciation rights and restricted stock to key employees of the Company or its subsidiaries (as determined by the Compensation Committee of the Board of Directors) for periods not exceeding 10 years. Options granted under the Employee Plans vest incrementally in periods ranging from six months to five years. |
Under the Director Plans, each new nonemployee director will receive 900 shares of common stock and options to purchase an additional 4,000 shares. Nonemployee directors are also entitled to an annual distribution of 900 shares of common stock and options to purchase an additional 4,000 shares. All options granted are non-qualified, vest immediately and are exercisable on the date of grant. Options granted under the Director Plans are exercisable for 10 years from the grant date. |
A summary of the status of the Company’s stock option plans as of December 31, 2000, 1999 and 1998 and changes during the years ending on those dates is presented below (000’s omitted): |
2000 | 1999 | 1998 | ||||||||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||||
Per Share | Per Share | Per Share | ||||||||||||||||||||||||
Shares | Exercise Price | Shares | Exercise Price | Shares | Exercise Price | |||||||||||||||||||||
Outstanding, beginning |
||||||||||||||||||||||||||
of year |
5,589 | $ | 19 | 4,400 | $ | 18 | 5,086 | $ | 17 | |||||||||||||||||
Granted |
1,439 | 33 | 1,427 | 23 | 199 | 22 | ||||||||||||||||||||
Exercised |
(1,631 | ) | 17 | (93 | ) | 15 | (461 | ) | 15 | |||||||||||||||||
Forfeited |
(39 | ) | 24 | (145 | ) | 20 | (424 | ) | 17 | |||||||||||||||||
Outstanding, end of year |
5,358 | $ | 23 | 5,589 | $ | 19 | 4,400 | $ | 18 | |||||||||||||||||
Options exercisable at |
||||||||||||||||||||||||||
year-end |
1,939 | $ | 18 | 2,028 | $ | 17 | 898 | $ | 16 | |||||||||||||||||
Weighted-average per share |
||||||||||||||||||||||||||
fair value of options |
||||||||||||||||||||||||||
granted during the year |
$ | 15.20 | $ | 10.45 | $ | 8.52 | ||||||||||||||||||||
43
7. Stock compensation plans and management incentive compensation (continued)
The following table summarizes information about fixed stock options outstanding at December 31, 2000 (000’s omitted): |
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Range of | Number | Average | Average | Number | Average | |||||||||||||||
Per Share | Outstanding at | Remaining | Per Share | Exercisable at | Per Share | |||||||||||||||
Exercise Prices | December 31 | Contract Life | Exercise Price | December 31 | Exercise Price | |||||||||||||||
$13 to 19 |
2,203 | 5.1 | $ | 17 | 1,240 | $ | 17 | |||||||||||||
$20 to 30 |
2,266 | 6.9 | $ | 23 | 699 | $ | 21 | |||||||||||||
$31 to 42 |
889 | 9.9 | $ | 42 | — | — |
Under SFAS No. 123, compensation cost for the Company’s stock-based compensation plans is determined based on the fair value at the grant dates for awards under those plans. Additional stock option awards are anticipated in future years. For the years ended December 31, 2000, 1999 and 1998, the Company’s income from continuing operations, net income and earnings per share would have been reduced to the pro forma amounts indicated below: |
2000 | 1999 | 1998 | |||||||||||||
Income from continuing operations: |
|||||||||||||||
As reported |
$ | 218,384 | $ | 178,287 | $ | 101,148 | |||||||||
Pro forma |
$ | 212,796 | $ | 174,685 | $ | 99,655 | |||||||||
Net income: |
|||||||||||||||
As reported |
$ | 188,513 | $ | 178,165 | $ | 102,183 | |||||||||
Pro forma |
$ | 182,925 | $ | 174,563 | $ | 100,690 | |||||||||
Per share data: |
|||||||||||||||
Basic: |
|||||||||||||||
Income from continuing operations: |
|||||||||||||||
As reported |
$ | 5.29 | $ | 4.12 | $ | 2.35 | |||||||||
Pro forma |
$ | 5.15 | $ | 4.04 | $ | 2.32 | |||||||||
Net income: |
|||||||||||||||
As reported |
$ | 4.56 | $ | 4.12 | $ | 2.38 | |||||||||
Pro forma |
$ | 4.43 | $ | 4.04 | $ | 2.34 | |||||||||
Assuming dilution: |
|||||||||||||||
Income from continuing operations: |
|||||||||||||||
As reported |
$ | 5.18 | $ | 4.07 | $ | 2.30 | |||||||||
Pro forma |
$ | 5.05 | $ | 3.98 | $ | 2.27 | |||||||||
Net income: |
|||||||||||||||
As reported |
$ | 4.47 | $ | 4.07 | $ | 2.33 | |||||||||
Pro forma |
$ | 4.34 | $ | 3.98 | $ | 2.29 | |||||||||
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in 2000, 1999 and 1998, respectively: weighted-average dividend yields of .57%, .67% and .68%, expected volatility 34.5%, 30.5% and 29.8%, weighted-average risk-free interest rates of 5.54%, 5.48% and 5.57%, and weighted-average expected lives of 7.33 years, 7.27 years and 6.75 years. |
44
7. Stock compensation plans and management incentive compensation (continued)
Homebuilding operating management personnel are paid current cash incentive compensation based on operating performance. Mortgage banking management personnel are paid current cash incentive compensation substantially based on the performance of the applicable subsidiary. The Company’s corporate management personnel are paid current cash incentive compensation based on overall performance of the Company. For the years ended December 31, 2000, 1999 and 1998, the Company’s total current cash incentive compensation expense was $51,300, $45,300 and $25,500, respectively. The Company also utilizes a long-term cash incentive plan as a means of compensating key operating employees for long-term performance and contributions to the growth of the Company. For the years ended December 31, 2000, 1999 and 1998 the Company expensed $2,300, $10,087 and $4,600, respectively, relating to this plan. |
8. Income taxes
The Company’s net deferred tax asset is as follows:
At December 31, | |||||||||
2000 | 1999 | ||||||||
Deferred tax liabilities: |
|||||||||
Capitalized items deducted for tax, net |
$ | (13,219 | ) | $ | (11,314 | ) | |||
Market losses deducted for tax and other |
(10 | ) | (7 | ) | |||||
(13,229 | ) | (11,321 | ) | ||||||
Deferred tax assets: |
|||||||||
Non-deductible reserves and other |
67,544 | 58,045 | |||||||
State net operating loss carryforwards |
2,257 | 2,257 | |||||||
AMT credit carryforwards |
— | 8,243 | |||||||
69,801 | 68,545 | ||||||||
Net deferred tax asset |
$ | 56,572 | $ | 57,224 | |||||
The net operating losses expire in 2006 and are generally available to offset the Company’s taxable income in future years. | |
Realization of the net deferred tax asset is dependent on future reversals of existing taxable temporary differences and adequate future taxable income. Although realization is not assured, management believes that it is more likely than not that the net deferred tax asset will be realized. | |
Components of current and deferred income tax expense (benefit) of continuing operations are as follows: |
Current | Deferred | Total | |||||||||||
Year ended December 31, 2000 |
|||||||||||||
Federal |
$ | 123,381 | $ | 1,594 | $ | 124,975 | |||||||
State and other |
12,679 | (942 | ) | 11,737 | |||||||||
$ | 136,060 | $ | 652 | $ | 136,712 | ||||||||
Year ended December 31, 1999 |
|||||||||||||
Federal |
$ | 78,351 | $ | 22,980 | $ | 101,331 | |||||||
State and other |
6,606 | 181 | 6,787 | ||||||||||
$ | 84,957 | $ | 23,161 | $ | 108,118 | ||||||||
Year ended December 31, 1998 |
|||||||||||||
Federal |
$ | 33,804 | $ | 24,974 | $ | 58,778 | |||||||
State and other |
6,588 | (700 | ) | 5,888 | |||||||||
$ | 40,392 | $ | 24,274 | $ | 64,666 | ||||||||
45
8. Income taxes (continued)
The following table reconciles the statutory federal income tax rate to the effective income tax rate for continuing operations: |
2000 | 1999 | 1998 | ||||||||||
Income taxes at federal statutory rate |
35.00 | % | 35.00 | % | 35.00 | % | ||||||
Effect of state and local income taxes, net of federal tax |
2.91 | 2.23 | 4.20 | |||||||||
Settlement of state tax issues and other |
.59 | .52 | (.20 | ) | ||||||||
Effective rate |
38.50 | % | 37.75 | % | 39.00 | % | ||||||
9. Leases
The Company leases certain property and equipment under non-cancelable leases. The office and equipment leases are generally for terms of three to five years and generally provide renewal options for terms of up to an additional three years. Model home leases are generally for shorter terms approximating one year with renewal options on a month-to-month basis. In most cases, management expects that in the normal course of business, leases that expire will be renewed or replaced by other leases. The future minimum lease payments required under operating leases that have initial or remaining non-cancelable terms in excess of one year are as follows: |
Years Ending December 31, | ||||
$ | 16,459 | |||
2002 |
10,676 | |||
2003 |
6,533 | |||
2004 |
3,722 | |||
2005 |
3,383 | |||
After 2005 |
4,383 | |||
Total minimum lease payments |
$ | 45,156 | ||
Net rental expense for the years ended December 31, 2000, 1999 and 1998 was $25,513, $22,122 and $20,577, respectively. Certain leases contain purchase options and generally provide that the Company shall pay for insurance, taxes and maintenance. |
10. Commitments and contingencies
In the normal course of business, Pulte acquires rights under options or option-type agreements to purchase land to be used in homebuilding operations at future dates. The total purchase price applicable to land under option at December 31, 2000 and 1999 approximated $1,100,900 and $835,400 respectively. |
At December 31, 2000, Pulte, in the normal course of business, had outstanding letters of credit and performance bonds of $154,100 and $471,000, respectively. |
The Company is involved in various litigation incidental to its continuing business operations. Management does not believe that this litigation will have a material adverse impact on the results of operations or financial position of the Company. |
46
10. Commitments and contingencies (continued)
First Heights-related litigation |
The Company is a party to three lawsuits relating to First Heights’ 1988 acquisition from the Federal Savings and Loan Insurance Corporation (FSLIC) and First Heights’ ownership of five failed Texas thrifts. The first lawsuit (the “District Court Case”) was filed on July 7, 1995, in the United States District Court, Eastern District of Michigan, by the Federal Deposit Insurance Corporation (FDIC) against the Company, PDCI and First Heights (collectively, the “Pulte Parties”). The second lawsuit (the “Court of Federal Claims Case”) was filed on December 26, 1996, in the United States Court of Federal Claims (Washington, D.C.) by the Pulte Parties against the United States. The third lawsuit was filed by First Heights on January 10, 2000, in the United States District Court, Eastern District of Michigan against the FDIC regarding the amounts, including interest, the FDIC is obligated to pay First Heights on two promissory notes which had been executed by the FDIC’s predecessor, the FSLIC. The FDIC filed a motion to dismiss the case and on April 12, 2000, the District Court dismissed First Heights’ complaint. First Heights has appealed the Court’s ruling to the Sixth Circuit Court of Appeals and that appeal remains pending. |
In the District Court Case, the FDIC seeks a declaration of rights and other relief related to the Assistance Agreement entered into between First Heights and the FSLIC. The FDIC is the successor to the FSLIC. The FDIC and the Pulte Parties disagree about the proper interpretation of provisions in the Assistance Agreement which provide for sharing of certain tax benefits achieved in connection with First Heights’ 1988 acquisition and ownership of the five failed Texas thrifts. The District Court Case also includes certain other claims relating to the foregoing, including claims resulting from the Company’s and First Heights’ amendment of a tax sharing and allocation agreement between the Company and First Heights. The Pulte Parties dispute the FDIC’s claims and believe that a proper interpretation of the Assistance Agreement limits the FDIC’s participation in the tax benefits. The Pulte Parties filed an answer and a counterclaim, seeking, among other things, a declaration that the FDIC has breached the Assistance Agreement in numerous respects. On December 24, 1996, the Pulte Parties voluntarily dismissed without prejudice certain of their claims in the District Court Case and on December 26, 1996, initiated the Court of Federal Claims Case. |
On March 5, 1999, the United States District Court (the Court), entered a “Final Judgment” against First Heights and PDCI (the Court had previously ruled that Pulte Corporation was not liable for monetary damages to the FDIC) resolving by summary judgment in favor of the FDIC most of the FDIC’s claims against the Pulte Parties. The Final Judgment requires PDCI and First Heights to pay the FDIC monetary damages totaling approximately $221,300, including interest but excluding costs (such as attorneys fees) to be determined in the future by the District Court and post-judgment interest. However, the FDIC acknowledged that it has already paid itself or withheld from assistance its obligation to pay to First Heights approximately $105,000, excluding interest thereon. The Company believes that it is entitled to a credit or actual payment of such amount plus interest. The Final Judgment does not address this issue. The Company disagreed with the District Court’s rulings and appealed the decision to the Sixth Circuit Court of Appeals. The Company had previously disclosed that if the District Court’s final judgment were upheld in its entirety on appeal, the potential after-tax charge against Discontinued Operations, after giving effect to interest owed by the FDIC to First Heights, would approximate $88,000 plus post judgment interest. |
47
10. Commitments and contingencies (continued)
First Heights-related litigation (continued) |
On October 12, 2000, the Sixth Circuit Court of Appeals rendered its opinion in which it affirmed in part, reversed in part and remanded the case to the District Court for further proceedings. The Sixth Circuit affirmed most of the District Court’s adverse liability rulings, including as to the sharing of certain tax benefits achieved in connection with First Heights’ 1988 acquisition and ownership of the five failed Texas thrifts and regarding the Company’s and First Heights’ amendment of a tax sharing and allocation agreement and rescission of a warrant assumption agreement between PDCI and First Heights. The Sixth Circuit, however, vacated the District Court’s damage calculations as to a number of issues, vacated the District Court’s pre-judgment interest award, and remanded to the District Court for a proper recalculation of all such amounts. The Sixth Circuit denied both the Company’s and the FDIC’s petition for rehearing. Since the Sixth Circuit opinion leaves certain significant issues to be resolved through further Court proceedings the Company is currently unable to precisely calculate the final amount it may owe. Based upon its reading of the Sixth Circuit opinion, however, the Company determined that an after-tax charge of $30,000 to Discontinued Operations was appropriate in the third quarter. The final settlement with the FDIC may be more or less than amounts provided because the outcome of the remaining litigation issues is uncertain. |
The Company does not believe that the claims in the Court of Federal Claims Case are in any way prejudiced by the rulings in the District Court Case. The Company is considering seeking relief in the Court of Federal Claims Case that would, if granted, recoup portions of the damages awarded in the District Court Case should they be upheld. |
The Court of Federal Claims Case contains similar claims as those that were voluntarily dismissed from the District Court Case. In their complaint, the Pulte Parties assert breaches of contract on the part of the United States in connection with the enactment of section 13224 of the Omnibus Budget Reconciliation Act of 1993. That provision repealed portions of the tax benefits that the Pulte Parties claim they were entitled to under the contract to acquire the failed Texas thrifts. The Pulte Parties also assert certain other claims concerning the contract, including claims that the United States (through the FDIC as receiver) has improperly attempted to amend the failed thrifts’ pre-acquisition tax returns and that this attempt was made in an effort to deprive the Pulte Parties of tax benefits they had contracted for, and that the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 breached the Government’s obligation not to require contributions of capital greater than those required by the contract. |
11. Financial instruments, including those with off-balance sheet risk
Market risks arise from movements in interest rates and canceled or modified commitments to lend. To reduce these risks, the Company uses derivative financial instruments with off-balance sheet risk. These financial instruments include cash forward placement contracts on mortgage-backed securities, whole loan investor commitments, options on treasury futures contracts and options on cash forward placement contracts on mortgage-backed securities. The Company does not use any derivative financial instruments for trading purposes. |
Cash forward placement contracts on mortgage-backed securities are commitments to either purchase or sell a specified financial instrument at a specified future date for a specified price and may be settled in cash by offsetting the position, or through the delivery of the financial instrument. Whole loan investor commitments are obligations of the investor to buy loans at a specified price within a specified time period. Options on treasury future contracts and options on mortgage-backed securities grant the purchaser, for a premium payment, the right to either purchase or sell a specified treasury futures contract or a specified mortgage-backed security, respectively, for a specified price within a specified period of time or on a specified date from or to the writer of the option. |
48
11. Financial instruments, including those with off-balance sheet risk (continued)
Mandatory cash forward contracts on mortgage-backed securities are the predominant derivative financial instruments used to minimize the market risk during the period from when the Company extends an interest rate lock to a loan applicant until the time the loan is sold to an investor. Options on cash forward contracts on mortgage-backed securities are used in the same manner as mandatory cash forward contracts, but provide protection from interest rates rising, while still allowing an opportunity for profit if interest rates fall. Options on the treasury futures contracts are used as cross hedges on various loan product types and to protect the Company in a volatile interest rate environment from unexpected increases, cancellations or modifications in lending commitments. |
Since PMC can terminate a loan commitment if the borrower does not comply with the terms of the contract, and some loan commitments may expire without being drawn upon, these commitments do not necessarily represent future cash requirements of PMC. PMC evaluates the creditworthiness of these transactions through its normal credit policies. |
The following are PMC’s loan commitments: |
Fair | ||||||||||||||||
Commitment | Market | Interest | Expiration | |||||||||||||
Amount | Value | Rates | Dates | |||||||||||||
Loan commitments to borrowers |
$ | 28,823 | $ | 28,421 | 6.49 to | January 2001- | ||||||||||
13.80% | June 2001 | |||||||||||||||
Loan commitments to borrowers |
$ | 51,341 | $ | 51,189 | 5.50 to | January 2000- | ||||||||||
10.50% | November 2000 |
PMC has credit risk to the extent that the counterparties to the derivative financial instruments do not perform their obligation under the agreements. If one of the counterparties does not perform, PMC would not receive the cash to which it is entitled under the conditions of the agreement. PMC manages credit risk by entering into agreements with large national investment bankers or financial institutions, all of whom meet PMC’s established credit underwriting standards. Options on futures are traded on organized exchanges with the exchange clearinghouse serving as the counterparty in the trade, reducing the risk of non-performance. Management does not anticipate any material losses as a result of its agreements and does not consider them to represent an undue level of credit, interest or liquidity risk for PMC. |
The table below summarizes, by class, the contractual amounts of PMC’s derivative financial instruments. |
Fair | |||||||||||||||||
Commitment | Market | Interest | Expiration | ||||||||||||||
Amount | Value | Rates | Dates | ||||||||||||||
Sell Securities |
$ | 267,534 | $ | 265,816 | 5.88 to | January 2001- | |||||||||||
13.80% | February 2001 | ||||||||||||||||
Sell Securities |
$ | 242,854 | $ | 244,537 | 5.50 to | January 2000- | |||||||||||
8.00% | February 2000 |
Realized gains or losses on derivative financial instruments are recognized in net gain from sale of mortgages in the period settlement occurs. |
49
12. Supplemental cash flow information
Years ended December 31 | |||||||||||||
2000 | 1999 | 1998 | |||||||||||
Cash paid during the year for: |
|||||||||||||
Interest, net of amount capitalized |
$ | 29,579 | $ | 26,225 | $ | 31,231 | |||||||
Income taxes |
$ | 115,352 | $ | 63,685 | $ | 33,811 | |||||||
Non-cash investing and financing activities: |
|||||||||||||
Issuance of common stock for business acquisition |
$ | — | $ | — | $ | 4,269 | |||||||
13. Supplemental Guarantor information
The Company has the following outstanding Senior Note obligations: (1) $175,000, 9.5%, due 2003, (2) $100,000, 7%, due 2003, (3) $112,000, 8.375%, due 2004, (4) $125,000, 7.3%, due 2005, and (5) $150,000, 7.625%, due 2017. Such obligations to pay principal, premium, if any, and interest are guaranteed jointly and severally on a senior basis by the Company’s wholly-owned Domestic Homebuilding subsidiaries (collectively, the Guarantors). Such guarantees are full and unconditional. The principal non-Guarantors include PDCI, Pulte International, PMC and First Heights. |
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 assets held and the operations of the combined groups. |
50
13. Supplemental Guarantor information (continued)
Unconsolidated | ||||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | ||||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | ||||||||||||||||||
ASSETS |
||||||||||||||||||||||
Cash and equivalents |
$ | — | $ | 133,860 | $ | 50,125 | $ | — | $ | 183,985 | ||||||||||||
Unfunded settlements |
— | 91,008 | (7,861 | ) | — | 83,147 | ||||||||||||||||
House and land inventories |
— | 1,852,534 | 27,729 | — | 1,880,263 | |||||||||||||||||
Residential mortgage loans available-for-sale |
— | — | 259,239 | — | 259,239 | |||||||||||||||||
Land held for sale and future development |
— | 121,084 | — | — | 121,084 | |||||||||||||||||
Other assets |
41,136 | 196,627 | 64,430 | — | 302,193 | |||||||||||||||||
Deferred income taxes |
56,572 | — | — | — | 56,572 | |||||||||||||||||
Investment in subsidiaries |
1,419,923 | 27,704 | 1,497,150 | (2,944,777 | ) | — | ||||||||||||||||
Advances receivable — subsidiaries |
540,914 | 23,491 | 2,786 | (567,191 | ) | — | ||||||||||||||||
$ | 2,058,545 | $ | 2,446,308 | $ | 1,893,598 | $ | (3,511,968 | ) | $ | 2,886,483 | ||||||||||||
LIABILITIES AND |
||||||||||||||||||||||
SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Accounts payable and accrued liabilities |
$ | 112,131 | $ | 565,611 | $ | 30,436 | $ | — | $ | 708,178 | ||||||||||||
Collateralized short-term debt, recourse solely to applicable subsidiary assets |
— | — | 242,603 | — | 242,603 | |||||||||||||||||
Income taxes |
10,169 | — | — | — | 10,169 | |||||||||||||||||
Subordinated debentures and senior notes |
659,296 | 11,306 | 7,000 | — | 677,602 | |||||||||||||||||
Advances payable — subsidiaries |
29,018 | 373,171 | 165,002 | (567,191 | ) | — | ||||||||||||||||
Total liabilities |
810,614 | 950,088 | 445,041 | (567,191 | ) | 1,638,552 | ||||||||||||||||
Shareholders’ Equity: |
||||||||||||||||||||||
Common stock |
416 | 300 | 11,032 | (11,332 | ) | 416 | ||||||||||||||||
Additional paid-in capital |
109,593 | 599,962 | 651,586 | (1,251,548 | ) | 109,593 | ||||||||||||||||
Accumulated other comprehensive income |
185 | — | 185 | (185 | ) | 185 | ||||||||||||||||
Retained earnings |
1,137,737 | 895,958 | 785,754 | (1,681,712 | ) | 1,137,737 | ||||||||||||||||
Total shareholders’ equity |
1,247,931 | 1,496,220 | 1,448,557 | (2,944,777 | ) | 1,247,931 | ||||||||||||||||
$ | 2,058,545 | $ | 2,446,308 | $ | 1,893,598 | $ | (3,511,968 | ) | $ | 2,886,483 | ||||||||||||
51
13. Supplemental Guarantor information (continued)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1999
Unconsolidated | ||||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | ||||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | ||||||||||||||||||
ASSETS |
||||||||||||||||||||||
Cash and equivalents |
$ | 50 | $ | 44,206 | $ | 7,541 | $ | — | $ | 51,797 | ||||||||||||
Unfunded settlements |
— | 60,143 | (6,599 | ) | — | 53,544 | ||||||||||||||||
House and land inventories |
— | 1,760,581 | 32,152 | — | 1,792,733 | |||||||||||||||||
Residential mortgage loans available-for-sale |
— | — | 218,062 | — | 218,062 | |||||||||||||||||
Land held for sale and future development |
— | 52,453 | — | — | 52,453 | |||||||||||||||||
Other assets |
21,109 | 188,298 | 52,131 | — | 261,538 | |||||||||||||||||
Deferred income taxes |
57,224 | — | — | — | 57,224 | |||||||||||||||||
Investment in subsidiaries |
1,298,676 | 19,904 | 1,302,700 | (2,621,280 | ) | — | ||||||||||||||||
Advances receivable — subsidiaries |
354,211 | 21,927 | 40,571 | (416,709 | ) | — | ||||||||||||||||
$ | 1,731,270 | $ | 2,147,512 | $ | 1,646,558 | $ | (3,037,989 | ) | $ | 2,487,351 | ||||||||||||
LIABILITIES AND |
||||||||||||||||||||||
SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||
Accounts payable and accrued liabilities |
$ | 86,526 | $ | 554,745 | $ | 1,068 | $ | — | $ | 642,339 | ||||||||||||
Unsecured short-term borrowings |
7,000 | — | — | — | 7,000 | |||||||||||||||||
Collateralized short-term debt, recourse solely to applicable subsidiary assets |
— | — | 206,959 | — | 206,959 | |||||||||||||||||
Income taxes |
11,769 | — | — | — | 11,769 | |||||||||||||||||
Subordinated debentures and senior notes |
487,690 | 17,275 | 21,000 | — | 525,965 | |||||||||||||||||
Advances payable — subsidiaries |
44,966 | 274,390 | 97,353 | (416,709 | ) | — | ||||||||||||||||
Total liabilities |
637,951 | 846,410 | 326,380 | (416,709 | ) | 1,394,032 | ||||||||||||||||
Shareholders’ Equity: |
||||||||||||||||||||||
Common stock |
433 | — | 11,137 | (11,137 | ) | 433 | ||||||||||||||||
Additional paid-in capital |
77,070 | 546,754 | 650,816 | (1,197,570 | ) | 77,070 | ||||||||||||||||
Accumulated other comprehensive loss |
(259 | ) | — | (259 | ) | 259 | (259 | ) | ||||||||||||||
Retained earnings |
1,016,075 | 754,348 | 658,484 | (1,412,832 | ) | 1,016,075 | ||||||||||||||||
Total shareholders’ equity |
1,093,319 | 1,301,102 | 1,320,178 | (2,621,280 | ) | 1,093,319 | ||||||||||||||||
$ | 1,731,270 | $ | 2,147,512 | $ | 1,646,558 | $ | (3,037,989 | ) | $ | 2,487,351 | ||||||||||||
52
13. Supplemental Guarantor information (continued)
Unconsolidated | |||||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | |||||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | |||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Homebuilding | $ | — | $ | 4,083,816 | $ | 27,159 | $ | — | $ | 4,110,975 | |||||||||||||
Mortgage banking and financing,
interest and other |
— | — | 47,443 | — | 47,443 | ||||||||||||||||||
Corporate | 317 | 316 | — | — | 633 | ||||||||||||||||||
Total revenues | 317 | 4,084,132 | 74,602 | — | 4,159,051 | ||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Homebuilding: | |||||||||||||||||||||||
Cost of sales | — | 3,315,106 | 24,611 | — | 3,339,717 | ||||||||||||||||||
Selling, general and administrative
and other expense |
(295 | ) | 380,857 | 3,768 | — | 384,330 | |||||||||||||||||
Mortgage banking and financing,
principally interest |
— | — | 28,434 | — | 28,434 | ||||||||||||||||||
Corporate, net | 45,025 | 14,134 | (2,230 | ) | — | 56,929 | |||||||||||||||||
Total expenses | 44,730 | 3,710,097 | 54,583 | — | 3,809,410 | ||||||||||||||||||
Other Income: | |||||||||||||||||||||||
Equity in income of Pulte-affiliates |
— | — | 5,455 | — | 5,455 | ||||||||||||||||||
Income (loss) from continuing operations
before income taxes and equity in net
income of subsidiaries |
(44,413 | ) | 374,035 | 25,474 | — | 355,096 | |||||||||||||||||
Income taxes (benefit) | (18,273 | ) | 144,508 | 10,477 | — | 136,712 | |||||||||||||||||
Income (loss) from continuing operations
before equity in net income of
subsidiaries |
(26,140 | ) | 229,527 | 14,997 | — | 218,384 | |||||||||||||||||
Loss from discontinued operations |
(1,948 | ) | — | (27,923 | ) | — | (29,871 | ) | |||||||||||||||
Income (loss) before equity in net income
of subsidiaries |
(28,088 | ) | 229,527 | (12,926 | ) | — | 188,513 | ||||||||||||||||
Equity in net income (loss) of subsidiaries: |
|||||||||||||||||||||||
Continuing operations | 244,524 | 11,750 | 239,390 | (495,664 | ) | — | |||||||||||||||||
Discontinued operations | (27,923 | ) | — | — | 27,923 | — | |||||||||||||||||
216,601 | 11,750 | 239,390 | (467,741 | ) | — | ||||||||||||||||||
Net income | $ | 188,513 | $ | 241,277 | $ | 226,464 | $ | (467,741 | ) | $ | 188,513 | ||||||||||||
53
13. Supplemental Guarantor information (continued)
Unconsolidated | |||||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | |||||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | |||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Homebuilding | $ | — | $ | 3,655,775 | $ | 21,941 | $ | — | $ | 3,677,716 | |||||||||||||
Mortgage banking and financing,
interest and other |
— | — | 49,873 | — | 49,873 | ||||||||||||||||||
Corporate | 681 | 719 | 1,348 | — | 2,748 | ||||||||||||||||||
Total revenues | 681 | 3,656,494 | 73,162 | — | 3,730,337 | ||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Homebuilding: | |||||||||||||||||||||||
Cost of sales | — | 3,003,504 | 20,337 | — | 3,023,841 | ||||||||||||||||||
Selling, general and administrative
and other expense |
1,097 | 342,064 | 969 | — | 344,130 | ||||||||||||||||||
Mortgage banking and financing,
principally interest |
— | — | 29,045 | — | 29,045 | ||||||||||||||||||
Corporate, net | 40,609 | 10,570 | 2,553 | — | 53,732 | ||||||||||||||||||
Total expenses | 41,706 | 3,356,138 | 52,904 | — | 3,450,748 | ||||||||||||||||||
Other Income: | |||||||||||||||||||||||
Equity in income of Pulte-affiliates |
— | 816 | 6,000 | — | 6,816 | ||||||||||||||||||
Income (loss) from continuing operations
before income taxes and equity in net
income of subsidiaries |
(41,025 | ) | 301,172 | 26,258 | — | 286,405 | |||||||||||||||||
Income taxes (benefit) | (22,704 | ) | 118,796 | 12,026 | — | 108,118 | |||||||||||||||||
Income (loss) from continuing operations
before equity in net income of
subsidiaries |
(18,321 | ) | 182,376 | 14,232 | — | 178,287 | |||||||||||||||||
Income (loss) from discontinued operations |
(2,037 | ) | — | 1,915 | — | (122 | ) | ||||||||||||||||
Income (loss) before equity in net income
of subsidiaries |
(20,358 | ) | 182,376 | 16,147 | — | 178,165 | |||||||||||||||||
Equity in net income of subsidiaries: |
|||||||||||||||||||||||
Continuing operations | 196,608 | 11,727 | 192,644 | (400,979 | ) | — | |||||||||||||||||
Discontinued operations | 1,915 | — | — | (1,915 | ) | — | |||||||||||||||||
198,523 | 11,727 | 192,644 | (402,894 | ) | — | ||||||||||||||||||
Net income | $ | 178,165 | $ | 194,103 | $ | 208,791 | $ | (402,894 | ) | $ | 178,165 | ||||||||||||
54
13. Supplemental Guarantor information (continued)
Unconsolidated | |||||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | |||||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | |||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Homebuilding | $ | — | $ | 2,797,999 | $ | 12,152 | $ | — | $ | 2,810,151 | |||||||||||||
Mortgage banking and financing,
interest and other |
— | — | 43,678 | — | 43,678 | ||||||||||||||||||
Corporate | 7,641 | 1,031 | 4,020 | — | 12,692 | ||||||||||||||||||
Total revenues | 7,641 | 2,799,030 | 59,850 | — | 2,866,521 | ||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Homebuilding: | |||||||||||||||||||||||
Cost of sales | — | 2,347,253 | 12,000 | — | 2,359,253 | ||||||||||||||||||
Selling, general and administrative
and other expense |
953 | 272,520 | 3,927 | — | 277,400 | ||||||||||||||||||
Mortgage banking and financing,
principally interest |
— | — | 28,484 | — | 28,484 | ||||||||||||||||||
Corporate, net | 32,107 | (1,785 | ) | 5,096 | — | 35,418 | |||||||||||||||||
Total expenses | 33,060 | 2,617,988 | 49,507 | — | 2,700,555 | ||||||||||||||||||
Other Income: | |||||||||||||||||||||||
Equity in income (loss) of Pulte-affiliates |
— | 310 | (462 | ) | — | (152 | ) | ||||||||||||||||
Income (loss) from continuing operations
before income taxes and equity in net
income of subsidiaries |
(25,419 | ) | 181,352 | 9,881 | — | 165,814 | |||||||||||||||||
Income taxes (benefit) | (14,006 | ) | 72,663 | 6,009 | — | 64,666 | |||||||||||||||||
Income (loss) from continuing operations
before equity in net income of
subsidiaries |
(11,413 | ) | 108,689 | 3,872 | — | 101,148 | |||||||||||||||||
Income (loss) from discontinued operations |
(301 | ) | — | 1,336 | — | 1,035 | |||||||||||||||||
Income (loss) before equity in net income
of subsidiaries |
(11,714 | ) | 108,689 | 5,208 | — | 102,183 | |||||||||||||||||
Equity in net income of subsidiaries: |
|||||||||||||||||||||||
Continuing operations | 112,561 | 9,094 | 112,232 | (233,887 | ) | — | |||||||||||||||||
Discontinued operations | 1,336 | — | — | (1,336 | ) | — | |||||||||||||||||
113,897 | 9,094 | 112,232 | (235,223 | ) | — | ||||||||||||||||||
Net income | $ | 102,183 | $ | 117,783 | $ | 117,440 | $ | (235,223 | ) | $ | 102,183 | ||||||||||||
55
13. Supplemental Guarantor information (continued)
Unconsolidated | ||||||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | ||||||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | ||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net income | $ | 188,513 | $ | 241,277 | $ | 226,464 | $ | (467,741 | ) | $ | 188,513 | |||||||||||||
Adjustments to reconcile net income
to net cash flows provided by
(used in) operating activities: |
||||||||||||||||||||||||
Equity in income of subsidiaries | (216,601 | ) | (11,750 | ) | (239,390 | ) | 467,741 | — | ||||||||||||||||
Amortization, depreciation and
other |
320 | 15,636 | (1,726 | ) | — | 14,230 | ||||||||||||||||||
Deferred income taxes | 652 | — | — | — | 652 | |||||||||||||||||||
Increase (decrease) in cash due to: |
||||||||||||||||||||||||
Inventories | — | (214,448 | ) | 4,423 | — | (210,025 | ) | |||||||||||||||||
Residential mortgage loans
available-for-sale |
— | — | (41,177 | ) | — | (41,177 | ) | |||||||||||||||||
Other assets | (1,431 | ) | (966 | ) | (11,744 | ) | — | (14,141 | ) | |||||||||||||||
Accounts
payable and accrued
liabilities |
6,908 | 33,683 | 36,443 | — | 77,034 | |||||||||||||||||||
Income taxes | (88,518 | ) | 94,476 | 2,278 | — | 8,236 | ||||||||||||||||||
Net cash provided by (used in) operating
activities |
(110,157 | ) | 157,908 | (24,429 | ) | — | 23,322 | |||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||
Increase
in covered assets and FRF Receivables |
— | — | (3,862 | ) | — | (3,862 | ) | |||||||||||||||||
Dividends received from subsidiaries |
100,000 | 4,500 | 104,900 | (209,400 | ) | — | ||||||||||||||||||
Investment in subsidiaries | (4,100 | ) | (670 | ) | (54,300 | ) | 59,070 | — | ||||||||||||||||
Advances (to) from affiliates |
(89,949 | ) | (1,564 | ) | 40,129 | 51,384 | — | |||||||||||||||||
Other, net | — | (95 | ) | (1,228 | ) | — | (1,323 | ) | ||||||||||||||||
Net cash provided by (used in) investing
activities |
$ | 5,951 | $ | 2,171 | 85,639 | (98,946 | ) | (5,185 | ) | |||||||||||||||
56
13. Supplemental Guarantor information (continued)
Unconsolidated | |||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | |||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | |||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||
Payment of long-term debt and bonds | $ | — | $ | (5,969 | ) | $ | (14,000 | ) | $ | — | $ | (19,969 | ) | ||||||||
Proceeds from borrowings | 174,286 | — | 35,644 | — | 209,930 | ||||||||||||||||
Repayment of borrowings | (10,000 | ) | (22,161 | ) | — | — | (32,161 | ) | |||||||||||||
Capital contributions from parent | — | 58,300 | 770 | (59,070 | ) | — | |||||||||||||||
Advances (to) from affiliates | (15,948 | ) | 4,305 | 63,027 | (51,384 | ) | — | ||||||||||||||
Issuance of common stock | 28,784 | — | — | — | 28,784 | ||||||||||||||||
Stock repurchases | (66,383 | ) | — | — | — | (66,383 | ) | ||||||||||||||
Dividends paid | (6,583 | ) | (104,900 | ) | (104,500 | ) | 209,400 | (6,583 | ) | ||||||||||||
Other, net | — | — | 433 | — | 433 | ||||||||||||||||
Net cash provided by (used in) financing | |||||||||||||||||||||
activities | 104,156 | (70,425 | ) | (18,626 | ) | 98,946 | 114,051 | ||||||||||||||
Net increase (decrease) in cash and | |||||||||||||||||||||
equivalents | (50 | ) | 89,654 | 42,584 | — | 132,188 | |||||||||||||||
Cash and equivalents at beginning of year | 50 | 44,206 | 7,541 | — | 51,797 | ||||||||||||||||
Cash and equivalents at end of year | $ | — | $ | 133,860 | $ | 50,125 | $ | — | $ | 183,985 | |||||||||||
57
13. Supplemental Guarantor information (continued)
Unconsolidated | ||||||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | ||||||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | ||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net income | $ | 178,165 | $ | 194,103 | $ | 208,791 | $ | (402,894 | ) | $ | 178,165 | |||||||||||||
Adjustments to reconcile net income
to net cash flows provided by
(used in) operating activities: |
||||||||||||||||||||||||
Equity in income of subsidiaries | (198,523 | ) | (11,727 | ) | (192,644 | ) | 402,894 | — | ||||||||||||||||
Amortization, depreciation and other | 194 | 13,964 | (661 | ) | — | 13,497 | ||||||||||||||||||
Deferred income taxes | 23,161 | — | — | — | 23,161 | |||||||||||||||||||
Gain on sale of securities | — | — | (1,664 | ) | — | (1,664 | ) | |||||||||||||||||
Increase (decrease) in cash due to: | ||||||||||||||||||||||||
Inventories | — | (250,007 | ) | (8,189 | ) | — | (258,196 | ) | ||||||||||||||||
Residential mortgage loans
available-for-sale |
— | — | 16,912 | — | 16,912 | |||||||||||||||||||
Other assets | (3,160 | ) | (66,365 | ) | 8,966 | — | (60,559 | ) | ||||||||||||||||
Accounts payable and accrued
liabilities |
24,411 | 70,358 | 6,476 | — | 101,245 | |||||||||||||||||||
Income taxes | (124,870 | ) | 126,120 | 1,302 | — | 2,552 | ||||||||||||||||||
Net cash provided by (used in) operating
activities |
(100,622 | ) | 76,446 | 39,289 | — | 15,113 | ||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Proceeds from sale of securities
available-for-sale |
— | — | 27,886 | — | 27,886 | |||||||||||||||||||
Principal payments of mortgage-backed
securities |
— | — | 1,490 | — | 1,490 | |||||||||||||||||||
Cash paid for acquisitions, net of cash
acquired |
— | (24,714 | ) | — | — | (24,714 | ) | |||||||||||||||||
Dividends received from subsidiaries | 3,550 | 15,294 | — | (18,844 | ) | — | ||||||||||||||||||
Investment in subsidiaries | (38,678 | ) | (7,752 | ) | — | 46,430 | — | |||||||||||||||||
Advances (to) from affiliates | 48,465 | (4,229 | ) | (14,818 | ) | (29,418 | ) | — | ||||||||||||||||
Other, net | — | — | (5,665 | ) | — | (5,665 | ) | |||||||||||||||||
Net cash provided by (used in) investing
activities |
$ | 13,337 | $ | (21,401 | ) | $ | 8,893 | $ | (1,832 | ) | $ | (1,003 | ) | |||||||||||
58
13. Supplemental Guarantor information (continued)
Unconsolidated | |||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | |||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | |||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||
Payment of long-term debt and bonds | $ | — | $ | (22,405 | ) | $ | (28,075 | ) | $ | — | $ | (50,480 | ) | ||||||||
Proceeds from borrowings | 7,000 | 11,717 | — | — | 18,717 | ||||||||||||||||
Repayment of borrowings | — | (31,281 | ) | (18,708 | ) | — | (49,989 | ) | |||||||||||||
Capital contributions from parent | — | 36,779 | 9,651 | (46,430 | ) | — | |||||||||||||||
Advances (to) from affiliates | 9,053 | (51,758 | ) | 13,287 | 29,418 | — | |||||||||||||||
Issuance of common stock | 1,646 | — | — | — | 1,646 | ||||||||||||||||
Dividends paid | (6,919 | ) | — | (18,844 | ) | 18,844 | (6,919 | ) | |||||||||||||
Other, net | — | — | (617 | ) | — | (617 | ) | ||||||||||||||
Net cash provided by (used in) financing activities | 10,780 | (56,948 | ) | (43,306 | ) | 1,832 | (87,642 | ) | |||||||||||||
Net increase (decrease) in cash and equivalents | (76,505 | ) | (1,903 | ) | 4,876 | — | (73,532 | ) | |||||||||||||
Cash and equivalents at beginning of year | 76,555 | 46,109 | 2,665 | — | 125,329 | ||||||||||||||||
Cash and equivalents at end of year | $ | 50 | $ | 44,206 | $ | 7,541 | $ | — | $ | 51,797 | |||||||||||
59
13. Supplemental Guarantor information (continued)
Unconsolidated | ||||||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | ||||||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | ||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net income | $ | 102,183 | $ | 117,783 | $ | 117,440 | $ | (235,223 | ) | $ | 102,183 | |||||||||||||
Adjustments to reconcile net income
to net cash flows provided by
(used in) operating activities: |
||||||||||||||||||||||||
Equity in income of subsidiaries | (113,897 | ) | (9,094 | ) | (112,232 | ) | 235,223 | — | ||||||||||||||||
Amortization, depreciation and other | 193 | 5,096 | (245 | ) | — | 5,044 | ||||||||||||||||||
Deferred income taxes | 24,274 | — | — | — | 24,274 | |||||||||||||||||||
Increase (decrease) in cash due to: | ||||||||||||||||||||||||
Inventories | — | (213,562 | ) | (11,250 | ) | — | (224,812 | ) | ||||||||||||||||
Residential mortgage loans
available-for-sale |
— | — | (49,956 | ) | — | (49,956 | ) | |||||||||||||||||
Other assets | 356 | 137 | (14,194 | ) | — | (13,701 | ) | |||||||||||||||||
Accounts payable and accrued
liabilities |
2,825 | 32,666 | 11,443 | — | 46,934 | |||||||||||||||||||
Income taxes | (73,475 | ) | 72,663 | 5,353 | — | 4,541 | ||||||||||||||||||
Net cash provided by (used in) operating
activities |
(57,541 | ) | 5,689 | (53,641 | ) | — | (105,493 | ) | ||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Proceeds from sale of securities
available-for-sale |
— | — | 11,276 | — | 11,276 | |||||||||||||||||||
Principal payments of mortgage-backed
securities |
— | — | 32,467 | — | 32,467 | |||||||||||||||||||
Purchase
of securities available-for-sale |
— | — | (21,809 | ) | — | (21,809 | ) | |||||||||||||||||
Decrease in covered assets and
FRF Receivables |
— | — | 33,603 | — | 33,603 | |||||||||||||||||||
Cash paid for acquisitions, net of cash
acquired |
— | (158,832 | ) | — | — | (158,832 | ) | |||||||||||||||||
Proceeds from sale of businesses
operations |
— | 90,602 | — | — | 90,602 | |||||||||||||||||||
Dividends received from subsidiaries | 132,040 | 12,900 | 132,040 | (276,980 | ) | — | ||||||||||||||||||
Investment in subsidiaries | (48,981 | ) | — | — | 48,981 | — | ||||||||||||||||||
Advances to affiliates | (172,652 | ) | (17,698 | ) | (26,518 | ) | 216,868 | — | ||||||||||||||||
Other, net | 15,000 | — | (731 | ) | — | 14,269 | ||||||||||||||||||
Net cash provided by (used in) investing
activities |
$ | (74,593 | ) | $ | (73,028 | ) | $ | 160,328 | $ | (11,131 | ) | $ | 1,576 | |||||||||||
60
13. Supplemental Guarantor information (continued)
Unconsolidated | |||||||||||||||||||||
Pulte | Guarantor | Non-Guarantor | Eliminating | Consolidated | |||||||||||||||||
Corporation | Subsidiaries | Subsidiaries | Entries | Pulte Corporation | |||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||
Payment of long-term debt and bonds | $ | — | $ | — | $ | (10,672 | ) | $ | — | $ | (10,672 | ) | |||||||||
Proceeds from borrowings | — | 29,039 | 62,959 | — | 91,998 | ||||||||||||||||
Repayment of borrowings | — | (26,054 | ) | (31,560 | ) | — | (57,614 | ) | |||||||||||||
Decrease in deposit liabilities | — | — | (37,462 | ) | — | (37,462 | ) | ||||||||||||||
Capital contributions from parent | — | 48,731 | 250 | (48,981 | ) | — | |||||||||||||||
Advances from affiliates | 12,247 | 147,306 | 57,315 | (216,868 | ) | — | |||||||||||||||
Issuance of common stock | 6,952 | — | — | — | 6,952 | ||||||||||||||||
Dividends paid | (6,456 | ) | (132,040 | ) | (144,940 | ) | 276,980 | (6,456 | ) | ||||||||||||
Other, net | — | — | (4,808 | ) | — | (4,808 | ) | ||||||||||||||
Net cash provided by (used in) financing
activities |
12,743 | 66,982 | (108,918 | ) | 11,131 | (18,062 | ) | ||||||||||||||
Net decrease in cash and equivalents | (119,391 | ) | (357 | ) | (2,231 | ) | — | (121,979 | ) | ||||||||||||
Cash and equivalents at beginning of year | 195,946 | 46,466 | 4,896 | — | 247,308 | ||||||||||||||||
Cash and equivalents at end of year | $ | 76,555 | $ | 46,109 | $ | 2,665 | $ | — | $ | 125,329 | |||||||||||
61
The management of Pulte Corporation is responsible for the integrity and objectivity of the accompanying financial statements and related information. The statements were prepared in accordance with accounting principles generally accepted in the United States, and include amounts that are based on our best judgments and estimates.
Management maintains a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded and that transactions and events are recorded properly. While the Company is organized on the principle of decentralized management, appropriate control measures are also evidenced by well-defined organizational responsibilities, management selection, development and evaluation processes, communication techniques, financial planning and reporting systems and formalized procedures. In addition, internal auditors monitor the operation of the internal control system and report findings and recommendations to management and the board of directors, and corrective actions are taken to correct deficiencies if and when they are identified.
Ernst & Young LLP, independent auditors, is engaged to audit our financial statements. Ernst & Young LLP maintains an understanding of our internal controls and conducts such tests and other auditing procedures considered necessary in the circumstances to express their opinion in the report that follows.
The Audit Committee, composed entirely of nonemployee directors, meets periodically with the independent auditors, management and internal auditors to review their work and confirm they are properly performing their duties. Both the internal and independent auditors have unrestricted access to the Committee, without the presence of management, to discuss any appropriate matters.
Roger A. Cregg Senior Vice President and Chief Financial Officer |
Vincent J. Frees Vice President and Controller |
The Board of Directors and Shareholders
Pulte Corporation
We have audited the accompanying consolidated balance sheets of Pulte Corporation as of December 31, 2000 and 1999 and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2000. Our audits also included the financial statement schedule listed in the Index at Item 14. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pulte Corporation at December 31, 2000 and 1999 and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Detroit, Michigan
January 22, 2001
62
1st | 2nd | 3rd | 4th | |||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Total | ||||||||||||||||||
2000 | ||||||||||||||||||||||
Homebuilding operations: | ||||||||||||||||||||||
Sales (settlements) | $ | 765,588 | $ | 971,993 | $ | 1,041,462 | $ | 1,331,932 | $ | 4,110,975 | ||||||||||||
Cost of sales | 630,681 | 790,292 | 847,156 | 1,071,588 | 3,339,717 | |||||||||||||||||
Income before income taxes | 45,910 | 87,272 | 106,585 | 152,616 | 392,383 | |||||||||||||||||
Financial services operations: | ||||||||||||||||||||||
Revenues | $ | 10,165 | $ | 10,535 | $ | 12,135 | $ | 14,608 | $ | 47,443 | ||||||||||||
Income before income taxes | 3,467 | 3,437 | 5,215 | 6,890 | 19,009 | |||||||||||||||||
Corporate: | ||||||||||||||||||||||
Revenues | $ | 66 | $ | 56 | $ | 286 | $ | 225 | $ | 633 | ||||||||||||
Loss before income taxes | (9,915 | ) | (13,219 | ) | (12,850 | ) | (20,312 | ) | (56,296 | ) | ||||||||||||
Consolidated results: | ||||||||||||||||||||||
Revenues | $ | 775,819 | $ | 982,584 | $ | 1,053,883 | $ | 1,346,765 | $ | 4,159,051 | ||||||||||||
Income from continuing operations before income taxes | 39,462 | 77,490 | 98,950 | 139,194 | 355,096 | |||||||||||||||||
Income taxes | 15,193 | 29,830 | 38,091 | 53,598 | 136,712 | |||||||||||||||||
Income from continuing operations | 24,269 | 47,660 | 60,859 | 85,596 | 218,384 | |||||||||||||||||
Income (loss) from discontinued operations | 67 | 32 | (29,967 | ) | (3 | ) | (29,871 | ) | ||||||||||||||
Net income | $ | 24,336 | $ | 47,692 | $ | 30,892 | $ | 85,593 | $ | 188,513 | ||||||||||||
Per share data: | ||||||||||||||||||||||
Basic: | ||||||||||||||||||||||
Income from continuing operations | $ | .57 | $ | 1.16 | $ | 1.50 | $ | 2.09 | $ | 5.29 | ||||||||||||
Loss from discontinued operations | — | — | (.74 | ) | — | (.73 | ) | |||||||||||||||
Net income | $ | .57 | $ | 1.16 | $ | .76 | $ | 2.09 | $ | 4.56 | ||||||||||||
Weighted-average common shares outstanding | 42,696 | 41,053 | 40,476 | 41,027 | 41,310 | |||||||||||||||||
Assuming dilution: | ||||||||||||||||||||||
Income from continuing operations | $ | .57 | $ | 1.15 | $ | 1.47 | $ | 2.01 | $ | 5.18 | ||||||||||||
Loss from discontinued operations | — | — | (.73 | ) | — | (.71 | ) | |||||||||||||||
Net income | $ | .57 | $ | 1.15 | $ | .74 | $ | 2.01 | $ | 4.47 | ||||||||||||
Adjusted weighted-average common shares and effect of dilutive securities | 42,871 | 41,569 | 41,527 | 42,527 | 42,146 |
63
1st | 2nd | 3rd | 4th | |||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Total | ||||||||||||||||||
1999 | ||||||||||||||||||||||
Homebuilding operations: | ||||||||||||||||||||||
Sales (settlements) | $ | 666,823 | $ | 821,317 | $ | 961,740 | $ | 1,227,836 | $ | 3,677,716 | ||||||||||||
Cost of sales | 555,688 | 680,220 | 791,862 | 996,071 | 3,023,841 | |||||||||||||||||
Income before income taxes | 40,127 | 61,868 | 82,114 | 132,452 | 316,561 | |||||||||||||||||
Financial services operations: | ||||||||||||||||||||||
Revenues | $ | 14,746 | $ | 12,423 | $ | 10,703 | $ | 12,001 | $ | 49,873 | ||||||||||||
Income before income taxes | 7,201 | 5,077 | 3,539 | 5,011 | 20,828 | |||||||||||||||||
Corporate: | ||||||||||||||||||||||
Revenues | $ | 898 | $ | 412 | $ | 674 | $ | 764 | $ | 2,748 | ||||||||||||
Loss before income taxes | (7,736 | ) | (8,911 | ) | (9,691 | ) | (24,646 | ) | (50,984 | ) | ||||||||||||
Consolidated results: | ||||||||||||||||||||||
Revenues | $ | 682,467 | $ | 834,152 | $ | 973,117 | $ | 1,240,601 | $ | 3,730,337 | ||||||||||||
Income from continuing operations before income taxes | 39,592 | 58,034 | 75,962 | 112,817 | 286,405 | |||||||||||||||||
Income taxes | 15,638 | 20,971 | 28,485 | 43,024 | 108,118 | |||||||||||||||||
Income from continuing operations | 23,954 | 37,063 | 47,477 | 69,793 | 178,287 | |||||||||||||||||
Income (loss) from discontinued operations | 376 | 53 | (383 | ) | (168 | ) | (122 | ) | ||||||||||||||
Net income | $ | 24,330 | $ | 37,116 | $ | 47,094 | $ | 69,625 | $ | 178,165 | ||||||||||||
Per share data: | ||||||||||||||||||||||
Basic: | ||||||||||||||||||||||
Income from continuing operations | $ | .55 | $ | .86 | $ | 1.10 | $ | 1.60 | $ | 4.12 | ||||||||||||
Income (loss) from discontinued operations | .01 | — | (.01 | ) | — | — | ||||||||||||||||
Net income | $ | .56 | $ | .86 | $ | 1.09 | $ | 1.60 | $ | 4.12 | ||||||||||||
Weighted-average common shares outstanding | 43,233 | 43,245 | 43,248 | 43,257 | 43,246 | |||||||||||||||||
Assuming dilution: | ||||||||||||||||||||||
Income from continuing operations | $ | .54 | $ | .85 | $ | 1.08 | $ | 1.60 | $ | 4.07 | ||||||||||||
Income (loss) from discontinued operations | .01 | — | (.01 | ) | — | — | ||||||||||||||||
Net income | $ | .55 | $ | .85 | $ | 1.07 | $ | 1.60 | $ | 4.07 | ||||||||||||
Adjusted weighted-average common shares and effect of dilutive securities | 44,047 | 43,838 | 43,833 | 43,630 | 43,823 |
64
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
This Item is not applicable.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this Item with respect to executive officers of the Company is set forth in Item 4A. Information required by this Item with respect to members of the Board of Directors of the Company is contained in the Proxy Statement for the 2001 Annual Meeting of Shareholders (2001 Proxy Statement) under the caption “Election of Directors,” incorporated herein by this reference. Additionally, information required by this Item with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 is contained in the 2001 Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.”
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is contained in the 2001 Proxy Statement under the caption “Compensation of Executive Officers and Directors,” incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is contained in the 2001 Proxy Statement under the caption “Voting Securities and Principal Holders” and under the caption “Election of Directors,” incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is contained in the 2001 Proxy Statement under the caption “Compensation of Executive Officers and Directors,” incorporated herein by this reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as part of this Annual Report on Form 10-K.
(a) Financial Statements and Schedules
(1) Financial Statements
Page Herein | ||||
Consolidated Balance Sheets at December 31, 2000 and 1999 | 28 | |||
Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998 | 29 | |||
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2000, 1999 and 1998 | 30 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998 | 31 | |||
Notes to Consolidated Financial Statements | 32 |
(2) Financial Statement Schedules
I — Condensed Financial Information of Registrant | 70 | |||
All other schedules are omitted since the required information is not present, is not present in amounts sufficient to require submission of the schedule or because the required information is included in the financial statements or notes thereto.
65
(3) EXHIBITS
Page Herein or Incorporated | |||||||||
Exhibit Number and Description | by Reference From | ||||||||
(2) and |
|||||||||
(10) |
(a) Assistance Agreement, dated
September 9, 1988, by and
among The Federal Savings
and Loan Insurance Corporation
(FSLIC), First Heights, FSA,
Heights of Texas, FSB (Heights
of Texas) and Pulte Diversified
Companies, Inc. (PDCI). |
Filed as Exhibit 2 and 10(a) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | |||||||
(b) Amendment to Assistance Agreement,
dated September 23, 1988, among
the FSLIC, First Heights, FSA,
Heights of Texas and PDCI. |
Filed as Exhibit 2 and 10(b) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | ||||||||
(c) Promissory Notes |
|||||||||
(1) |
Promissory Note No. 1, dated September 9, 1988, in the amount of $139,400,000 from the FSLIC to First Heights. | Filed as Exhibit 2 and 10(c) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | |||||||
(2) |
Promissory Note No. 2, dated September 9, 1988, in the amount of $172,365,000 from the FSLIC to First Heights. | Filed as Exhibit 2 and 10(c) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | |||||||
(3) |
Receiver’s Note No. 3, dated September 23, 1988, in the amount of $152,169,750 from the FSLIC to the FSLIC as receiver for Champion Savings Association (Champion). | Filed as Exhibit 2 and 10(c) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | |||||||
(4) |
Receiver’s Note No. 4, dated September 23, 1988, in the amount of $48,527,250 from the FSLIC to the FSLIC as receiver for Champion. | Filed as Exhibit 2 and 10(c) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | |||||||
(d) Regulatory Capital Maintenance
Agreement, dated September 9, 1988,
by and among, Pulte Corporation,
PDCI, First Heights, Heights of Texas
and the FSLIC.
|
Filed as Exhibit 2 and 10(d) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. |
66
(3) EXHIBITS
Page Herein or Incorporated | ||||
Exhibit Number and Description | by Reference From | |||
(e)Amendment to Regulatory Capital
Maintenance Agreement, dated
September 23, 1988, among Pulte
Corporation, PDCI, First Heights,
Heights of Texas and the FSLIC.
|
Filed as Exhibit 2 and 10(e) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | |||
(f) Warranty Agreement, dated as of
September 9, 1988, between
First Heights and the FSLIC.
|
Filed as Exhibit 2 and 10(f) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | |||
(g) Receiver’s Note Agreement, dated
September 23, 1988, between the
FSLIC, as receiver for Champion and
the FSLIC.
|
Filed as Exhibit 2 and 10(g) to Pulte Corporation’s Annual Report on Form 10-K for the year ended December 31, 1988. | |||
(3) |
(a) Articles of Incorporation, as amended.
|
Filed as Exhibit 19(a) to Pulte |
||
Corporation’s Form 10-Q for the quarter ended June 30, 1988. | ||||
(b) By-laws
|
Filed as Exhibit 3(b) to the Registrant’s Registration Statement on Form S-4 (Registration Statement No. 33-17223). | |||
(4) |
(a) Senior Note Indenture among Pulte
Corporation, certain of its subsidiaries,
as Guarantors, and NationsBank of
Georgia, National Association, as Trustee,
including Form of Senior Guarantee, covering
Pulte Corporation’s 8.375% unsecured Senior
Notes due 2004 ($115,000,000 aggregate
principal amount outstanding) and 7%
unsecured Senior Notes due 2003
($100,000,000 aggregate principal amount
outstanding)
|
Filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form S-3 (Registration Statement No. 33-71742). | ||
(b) Senior Note Indenture among Pulte Corporation,
certain of its subsidiaries, as Guarantors,
and The First National Bank of Chicago,
as Trustee, covering Pulte Corporation’s 7.3%
unsecured Senior Notes due 2005 ($125,000,000
aggregate principal amount outstanding) and
7.625% unsecured Senior Notes due 2017
($150,000,000 aggregate principal amount
outstanding).
|
Filed as Exhibit (c) 1 to the Registrant’s Current Report on Form 8-K dated October 20, 1995. |
67
(3) EXHIBITS
Page Herein or Incorporated | ||||
Exhibit Number and Description | by Reference From | |||
(c) Indenture supplement dated April 3, 2000 among
Pulte Corporation, Bank One Trust Company,
National Association (as successor Trustee
to the First National Bank of Chicago), and
certain subsidiaries of Pulte Corporation
|
Filed as Exhibit 4.5 to the Registrant’s Registration Statement on Form S-4 (Registration Statement No. 333-36814) | |||
(d) Registration Rights Agreement dated April 3,
2000 among Pulte Corporation, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as the
Initial Purchaser Representative
|
Filed as Exhibit 4.17 to the Registrant’s Registration Statement on Form S-4 (Registration Statement No. 333-36814). | |||
(e) Indenture supplement dated February 21, 2001
among Pulte Corporation, Bank One Trust Company,
National Association (as successor Trustee to
the First National Bank of Chicago), and certain
subsidiaries of Pulte Corporation
|
Filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated February 23, 2001. | |||
(f) Underwriting Agreement dated February 21,
2001 among Pulte Corporation, Banc One Capital
Markets, Inc., Banc of America Securities LLC,
Merrill Lynch & Co., Comerica Securities, Inc.,
and SunTrust Equitable Securities Corporation,
and the Guarantors named therein.
|
Filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K dated February 23, 2001. | |||
(g) Pricing Agreement dated February 21, 2001
among Pulte Corporation, Banc One Capital
Markets, Inc., Banc of America Securities LLC,
Merrill Lynch & Co., Comerica Securities, Inc.,
and SunTrust Equitable Securities Corporation,
and the Guarantors named therein.
|
Filed as Exhibit 1.2 to the Registrant’s Current Report on Form 8-K dated February 23, 2001. | |||
(10) |
||||
(a) 1990 Stock Incentive Plan for Key Employees |
Filed with the Proxy Statement dated April 3, 1990 and as an exhibit to the Registrant’s Registration Statement on Form S-8 (Registration Statement No. 33-40102). | |||
(b) 1994 Stock Incentive Plan for Key Employees |
Filed with the Proxy Statement dated March 31, 1994 and as an exhibit to the Registrant’s Registration Statement on Form S-8 (Registration Statement No. 33-98944). | |||
(c) 1995 Stock Incentive Plan for Key Employees |
Filed with the Proxy Statement dated March 31, 1995 and as an exhibit to the Registrant’s Registration Statement on Form S-8 (Registration Statement No 33-99218). |
68
(3) EXHIBITS
Exhibit Number and Description | Page Herein or Incorporated | |||
by Reference From | ||||
(d) 1997 Stock Plan for Nonemployee Directors
|
Filed with Proxy Statement on March 27, 1998 and as Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (Registration Statement No. 33-51019 filed on May 7, 1998). | |||
(e) 364-Day Credit Agreement among Pulte
Corporation as Borrower, the Material
Subsidiaries of Pulte Corporation as
Guarantors, the Lenders Identified Herein,
and Bank of America, N.A., as Administrative
Agent, dated as of September 15, 1999
|
Filed as Exhibit 10 to the Pulte Corporation Report on Form 10-Q for the quarter ended September 30, 1999. | |||
(f) Credit agreement among Pulte Corporation as
Borrower, the Material Subsidiaries of Pulte
Corporation as Guarantors, the Lenders Identified
Herein, and Bank of America, N.A., as
Administrative Agent, dated as of August 31, 2000
|
Filed as Exhibit 10 to the Pulte Corporation Report on Form 10-Q for the quarter ended September 30, 2000 | |||
(g) 2000 Stock Plan for Non Employee Directors
|
Filed with the Proxy Statement dated March 31, 2000 | |||
(h) 2000 Stock Incentive Plan for Key Employees
|
Filed with the Proxy Statement dated March 31, 2000 | |||
(i) Long Term Incentive Plan
|
Filed with the Proxy Statement dated March 31, 2000 | |||
(j) First Amendment to 1990 Stock Incentive Plan for
Key Employees
|
Filed with the Proxy Statement dated March 31, 2000 | |||
(21) |
74 |
|||
(23) |
Consent of Independent Auditors
|
78 |
69
Pulte Corporation (the Registrant) is a holding company. The accompanying financial statements are not the primary consolidated financial statements since these financial statements present only the accounts of Pulte Corporation which include its investment in subsidiaries on the equity method. The primary financial statements of the Company are its consolidated financial statements.
The net assets of Pulte Home Corporation, Pulte Mortgage Corporation and First Heights Bank, a federal savings bank, all of which are indirectly wholly-owned subsidiaries of the registrant are subject to certain restrictions (see Notes to Consolidated Financial Statements).
2000 | 1999 | ||||||||
Assets: | |||||||||
Cash and equivalents | $ | — | $ | 50 | |||||
Investment in subsidiaries, on the equity method | 1,419,923 | 1,298,676 | |||||||
Advances receivable — subsidiaries | 540,914 | 354,211 | |||||||
Deferred income taxes | 56,572 | 57,224 | |||||||
Other assets | 41,136 | 21,109 | |||||||
$ | 2,058,545 | $ | 1,731,270 | ||||||
Liabilities and shareholders’ equity: | |||||||||
Advances payable — subsidiaries | $ | 29,018 | $ | 44,966 | |||||
Income taxes | 10,169 | 11,769 | |||||||
Accrued liabilities | 112,131 | 86,526 | |||||||
Unsecured short-term borrowings | — | 7,000 | |||||||
Senior notes | 659,296 | 487,690 | |||||||
Total liabilities | 810,614 | 637,951 | |||||||
Shareholders’ equity | 1,247,931 | 1,093,319 | |||||||
$ | 2,058,545 | $ | 1,731,270 | ||||||
70
2000 | 1999 | 1998 | |||||||||||
Revenues — Interest income | $ | 317 | $ | 681 | $ | 7,641 | |||||||
Expenses — General and administrative | 10,767 | 12,416 | 9,095 | ||||||||||
Interest | 32,313 | 26,047 | 22,750 | ||||||||||
43,080 | 38,463 | 31,845 | |||||||||||
Expenses in excess of revenues | (42,763 | ) | (37,782 | ) | (24,204 | ) | |||||||
Other expense | (1,650 | ) | (3,243 | ) | (1,215 | ) | |||||||
Loss from continuing operations before income taxes | |||||||||||||
and equity in net income of subsidiaries | (44,413 | ) | (41,025 | ) | (25,419 | ) | |||||||
Income tax benefit | (18,273 | ) | (22,704 | ) | (14,006 | ) | |||||||
Loss from continuing operations before equity in net | |||||||||||||
income of subsidiaries | (26,140 | ) | (18,321 | ) | (11,413 | ) | |||||||
Loss from discontinued operations | (1,948 | ) | (2,037 | ) | (301 | ) | |||||||
Loss before equity in net income of subsidiaries | (28,088 | ) | (20,358 | ) | (11,714 | ) | |||||||
Equity in net income (loss) of subsidiaries: | |||||||||||||
Continuing operations | 244,524 | 196,608 | 112,561 | ||||||||||
Discontinued operations | (27,923 | ) | 1,915 | 1,336 | |||||||||
216,601 | 198,523 | 113,897 | |||||||||||
Net income | $ | 188,513 | $ | 178,165 | $ | 102,183 | |||||||
71
2000 | 1999 | 1998 | ||||||||||||||
Continuing operations | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 188,513 | $ | 178,165 | $ | 102,183 | ||||||||||
Adjustments to reconcile income from continuing operations | ||||||||||||||||
to net cash used in operating activities: | ||||||||||||||||
Equity in income of subsidiaries | (216,601 | ) | (198,523 | ) | (113,897 | ) | ||||||||||
Amortization | 320 | 194 | 193 | |||||||||||||
Deferred income taxes | 652 | 23,161 | 24,274 | |||||||||||||
Changes in cash due to: | ||||||||||||||||
Accounts receivable and other assets | (1,431 | ) | (3,160 | ) | 356 | |||||||||||
Income taxes | (88,518 | ) | (124,870 | ) | (73,475 | ) | ||||||||||
Accrued liabilities | 6,908 | 24,411 | 2,825 | |||||||||||||
Net cash used in operating activities | (110,157 | ) | (100,622 | ) | (57,541 | ) | ||||||||||
Cash flows provided by investing activities: | ||||||||||||||||
Investment in subsidiaries | (4,100 | ) | (38,678 | ) | (48,981 | ) | ||||||||||
Dividends received from subsidiaries | 100,000 | 3,550 | 132,040 | |||||||||||||
Advances (to) from affiliates | (89,949 | ) | 48,465 | (172,652 | ) | |||||||||||
Other, net | — | — | 15,000 | |||||||||||||
Net cash provided by (used in) investing activities | 5,951 | 13,337 | (74,593 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from borrowings | 174,286 | 7,000 | — | |||||||||||||
Repayment of borrowings | (10,000 | ) | — | — | ||||||||||||
Issuance of common stock | 28,784 | — | — | |||||||||||||
Stock repurchases | (66,383 | ) | — | — | ||||||||||||
Dividends paid | (6,583 | ) | (6,919 | ) | (6,456 | ) | ||||||||||
Advances from affiliates | (15,948 | ) | 9,053 | 12,247 | ||||||||||||
Other, net | — | 1,646 | 6,952 | |||||||||||||
Net cash provided by financing activities | 104,156 | 10,780 | 12,743 | |||||||||||||
Net decrease in cash and equivalents | (50 | ) | (76,505 | ) | (119,391 | ) | ||||||||||
Cash and equivalents at beginning of year | 50 | 76,555 | 195,946 | |||||||||||||
Cash and equivalents at end of year | $ | — | $ | 50 | $ | 76,555 | ||||||||||
72
Pursuant to the requirements of Section 13 or 15(d) 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.
March 8, 2001 | /s/ Roger A. Cregg | /s/ Vincent J. Frees | |||
Roger A. Cregg Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
Vincent J. Frees Vice President and Controller (Principal Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capabilities and on the dates indicated:
Signature | Title | Date | ||
/s/ William J. Pulte William J. Pulte |
Member of Board of Directors | March 8, 2001 | ||
/s/ Robert K. Burgess Robert K. Burgess |
Chairman of the Board, Chief Executive Officer and Member of Board of Directors |
March 8, 2001 | ||
/s/ Debra Kelly-Ennis Debra Kelly-Ennis |
Member of Board of Directors | March 8, 2001 | ||
/s/ David N. McCammon David N. McCammon |
Member of Board of Directors | March 8, 2001 | ||
/s/ Patrick J. O’Meara Patrick J. O’Meara |
Member of Board of Directors | March 8, 2001 | ||
/s/ Alan E. Schwartz Alan E. Schwartz |
Member of Board of Directors | March 8, 2001 | ||
/s/ Francis J. Sehn Francis J. Sehn |
Member of Board of Directors | March 8, 2001 | ||
/s/ John J. Shea John J. Shea |
Member of Board of Directors | March 8, 2001 | ||
/s/ William B. Smith William B. Smith |
Member of Board of Directors | March 8, 2001 |
73
This ‘10-K405’ Filing | Date | Other Filings | ||
---|---|---|---|---|
8/31/05 | ||||
12/22/03 | 4 | |||
3/31/03 | 10-Q | |||
12/31/01 | 10-K, 11-K | |||
Filed on: | 3/9/01 | |||
3/8/01 | ||||
2/28/01 | ||||
2/23/01 | 424B5, 8-K | |||
2/21/01 | 424B5 | |||
1/22/01 | ||||
1/1/01 | ||||
For Period End: | 12/31/00 | 11-K | ||
10/12/00 | ||||
9/30/00 | 10-Q | |||
8/31/00 | ||||
6/15/00 | ||||
4/12/00 | ||||
4/3/00 | ||||
3/31/00 | 10-Q, DEF 14A | |||
1/10/00 | ||||
12/31/99 | 10-K | |||
9/30/99 | 10-Q | |||
9/15/99 | ||||
7/1/99 | ||||
3/5/99 | ||||
1/20/99 | ||||
1/1/99 | ||||
12/31/98 | 10-K, 11-K | |||
7/1/98 | ||||
6/1/98 | ||||
5/27/98 | ||||
5/7/98 | DEF 14A, S-8 | |||
3/27/98 | DEF 14A | |||
3/25/98 | ||||
1/31/98 | ||||
12/31/97 | 10-K | |||
12/26/96 | ||||
12/24/96 | ||||
10/20/95 | ||||
7/7/95 | ||||
3/31/95 | ||||
3/31/94 | ||||
List all Filings |