=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
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 Pkwy., Suite 200,
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 647-2750
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to the filing requirements for the past 90 days.
YES __X__ NO _____
Number of shares of common stock outstanding
as of October 31, 1997: 21,227,730
Total pages: 31
Listing of exhibits: 29
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1
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<TABLE>
<CAPTION>
PULTE CORPORATION
INDEX
Page No.
--------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
Condensed Consolidated Balance Sheets, September 30, 1997 and December 31, 1996.... 3
Condensed Consolidated Statements of Income, Three and Nine Months Ended
September 30, 1997 and 1996........................................................ 4
Condensed Consolidated Statement of Shareholders' Equity, Nine Months Ended
September 30, 1997................................................................. 5
Condensed Consolidated Statements of Cash Flows, Nine Months Ended
September 30, 1997 and 1996........................................................ 6
Notes to Condensed Consolidated Financial Statements................................ 8
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................... 21
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K........................................... 29
SIGNATURES.......................................................................... 31
</TABLE>
2
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<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PULTE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($000's omitted)
September 30, December 31,
1997 1996
------------- ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Cash and equivalents................................................... $ 56,388 $ 189,625
Unfunded settlements................................................... 41,138 73,896
House and land inventories............................................. 1,222,233 1,017,262
Mortgage-backed and related securities................................. 41,198 47,113
Residential mortgage loans and other securities available-for-sale..... 128,863 170,443
Other assets........................................................... 394,448 342,726
Discontinued operations................................................ 131,550 144,076
------------- -------------
$ 2,015,818 $ 1,985,141
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities, including bank overdrafts
of $87,928 and $85,827 in 1997 and 1996, respectively........... $ 474,862 $ 439,578
Unsecured short-term borrowings..................................... 72,700 --
Collateralized short-term debt, recourse solely to applicable
subsidiary assets................................................ 121,725 154,136
Mortgage-backed bonds, recourse solely to applicable
subsidiary assets................................................ 39,289 45,304
Income taxes........................................................ 12,018 12,930
Subordinated debentures and senior notes............................ 401,833 391,175
Discontinued operations............................................. 98,521 112,745
------------- -------------
Total liabilities............................................... 1,220,948 1,155,868
Shareholders' equity................................................... 794,870 829,273
------------- -------------
$ 2,015,818 $ 1,985,141
============= =============
<FN>
The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
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<TABLE>
<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(000's omitted, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Homebuilding...................................... $ 657,265 $ 613,722 $ 1,647,615 $ 1,593,725
Mortgage banking and financing, interest and other 9,808 9,247 23,460 40,476
Corporate ........................................ 2,818 2,203 6,831 11,846
----------- ----------- ----------- -----------
Total revenues.......................... 669,891 625,172 1,677,906 1,646,047
----------- ----------- ----------- -----------
Expenses:
Homebuilding, principally cost of sales........... 620,703 580,287 1,573,804 1,523,499
Mortgage banking and financing, interest and other 6,763 7,915 19,812 28,397
Corporate, net.................................... 12,237 9,553 31,491 30,569
----------- ----------- ----------- -----------
Total expenses.......................... 639,703 597,755 1,625,107 1,582,465
----------- ----------- ----------- -----------
Income from continuing operations before
income taxes...................................... 30,188 27,417 52,799 63,582
Income taxes ........................................ 11,623 10,994 20,328 25,650
----------- ----------- ----------- -----------
Income from continuing operations.................... 18,565 16,423 32,471 37,932
Income from discontinued thrift operations, net of
income taxes...................................... 1,145 111,208 3,349 114,973
----------- ----------- ----------- -----------
Net income........................................... $ 19,710 $ 127,631 $ 35,820 $ 152,905
=========== =========== =========== ===========
Per share data:
Primary and fully-diluted:
Income from continuing operations............... $ 0.86 $ 0.68 $ 1.47 $ 1.48
Income from discontinued operations............. 0.06 4.61 0.15 4.47
----------- ----------- ----------- -----------
Net income...................................... $ 0.92 $ 5.29 $ 1.62 $ 5.95
=========== =========== =========== ===========
Cash dividends declared........................... $ 0.06 $ 0.06 $ 0.18 $ 0.18
=========== =========== =========== ===========
Weighted-average common shares outstanding:
Primary......................................... 21,370 24,141 22,101 25,692
=========== =========== =========== ===========
Fully-diluted................................... 21,386 24,141 22,114 25,692
=========== =========== =========== ===========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
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<TABLE>
<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
($000's omitted, except per share data)
(Unaudited)
Additional
Common Paid-in Unrealized Retained
Stock Capital Gains Earnings Total
------ ---------- ---------- -------- -----
<S> <C> <C> <C> <C> <C>
Shareholders' Equity, December 31, 1996 ... $ 233 $ 57,516 $ 1,474 $ 770,050 $ 829,273
Exercise of stock options ................. 3 8,166 -- -- 8,169
Cash dividends declared ................... -- -- -- (3,877) (3,877)
Stock repurchases ......................... (24) (6,015) -- (68,556) (74,595)
Change in unrealized gains on securities
available-for-sale, net of income taxes
of $9 ................................. -- -- 80 -- 80
Net income ................................ -- -- -- 35,820 35,820
--------- --------- --------- --------- ---------
Shareholders' Equity, September 30, 1997 .. $ 212 $ 59,667 $ 1,554 $ 733,437 $ 794,870
========= ========= ========= ========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
5
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<TABLE>
<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($000's omitted)
(Unaudited)
Nine Months Ended
September 30,
------------------
1997 1996
---- ----
<S> <C> <C>
Continuing operations:
Cash flows from operating activities:
Income from continuing operations ........................ $ 32,471 $ 37,932
Adjustments to reconcile income from continuing operations
to net cash flows used in operating activities:
Amortization, depreciation and other ............... 5,231 5,481
Deferred income taxes .............................. 12,356 50,835
Gain on sale of securities ......................... -- (10,285)
Increase (decrease) in cash due to:
Inventories ................................ (204,971) (205,017)
Residential mortgage loans held for sale ... 41,581 44,571
Other assets ............................... (35,537) (43,423)
Accounts payable and accrued liabilities ... 45,743 58,999
Income taxes ............................... 1,484 (30,808)
--------- ---------
Net cash used in operating activities ........................ (101,642) (91,715)
--------- ---------
Cash flows from investing activities:
Proceeds from exchange of securities held-to-maturity .... -- 12,282
Proceeds from sale of securities available-for-sale ...... -- 168,085
Principal payments of mortgage-backed securities ......... 5,966 17,681
Decrease in funds held by trustee ........................ 94 4,261
Other, net ............................................... -- (12,517)
--------- ---------
Net cash provided by investing activities .................... 6,060 189,792
--------- ---------
Cash flows from financing activities:
Payment of long-term debt and bonds ...................... (6,916) (171,695)
Proceeds from borrowings ................................. 83,294 23,595
Repayment of borrowings .................................. (40,706) (25,052)
Stock repurchases ........................................ (74,595) (92,563)
Dividends paid ........................................... (3,877) (5,963)
Other, net ............................................... 5,145 273
--------- ---------
Net cash used in financing activities ........................ (37,655) (271,405)
--------- ---------
Net decrease in cash and equivalents-continuing operations ... $(133,237) $(173,328)
--------- ---------
</TABLE>
6
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<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
($000's omitted)
(Unaudited)
Nine Months Ended
September 30,
-----------------
1997 1996
---- ----
<S> <C> <C>
Discontinued Operations:
Cash flows from operating activities:
Income from discontinued operations ......................... $ 3,349 $ 114,973
Change in deferred income taxes ............................. (720) (109,709)
Change in income taxes ...................................... 999 773
Other changes, net .......................................... (3,166) (7,799)
Cash flows from investing activities:
Purchase of securities available-for-sale ................... (14,433) (42,209)
Principal payments of mortgage-backed securities ............ 24,658 36,696
Net proceeds from sale of investments ....................... 3,219 4,100
Decrease in Covered Assets and FSLIC Resolution Fund (FRF)
receivables ............................................... 28,215 31,215
Cash flows from financing activities:
Increase (decrease) in deposit liabilities .................. (6,802) 5,212
Repayment of borrowings ..................................... (31,560) (31,560)
Decrease in Federal Home Loan Bank (FHLB) advances .......... (4,000) (2,200)
--------- ---------
Net decrease in cash and equivalents-discontinued operations .... (241) (508)
--------- ---------
Net decrease in cash and equivalents ............................ (133,478) (173,836)
Cash and equivalents at beginning of period ..................... 192,202 295,163
--------- ---------
Cash and equivalents at end of period ........................... $ 58,724 $ 121,327
========= =========
Cash - continuing operations .................................... $ 56,388 $ 118,899
Cash - discontinued operations .................................. 2,336 2,428
--------- ---------
$ 58,724 $ 121,327
========= =========
Supplemental disclosure of cash flow information-cash paid during
the period for:
Interest, net of amount capitalized
Continuing operations ..................................... $ 13,170 $ 20,531
Discontinued operations ................................... 2,048 1,744
--------- ---------
$ 15,218 $ 22,275
========= =========
Income taxes ................................................ $ 6,208 $ 5,757
========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
7
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PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($000's omitted)
(Unaudited)
1. Basis of presentation and significant accounting policies
Basis of presentation
The condensed consolidated financial statements include the accounts of
Pulte Corporation (the Company), and all of its significant
subsidiaries. The Company's direct subsidiaries consist of Pulte
Financial Companies, Inc. (PFCI) and Pulte Diversified Companies, Inc.
(PDCI). PDCI's direct subsidiaries are Pulte Home Corporation (Pulte)
and First Heights Bank, fsb (First Heights). Pulte Mortgage Corporation
(Pulte Mortgage) is a direct subsidiary of Pulte. The Company's
continuing operations include its homebuilding (Pulte) and financial
services subsidiaries, which include Pulte Mortgage (mortgage banking)
and PFCI (financing). The Company's thrift subsidiary, First Heights,
has been classified as discontinued operations (See Note 2).
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the nine month period ended September
30, 1997, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. These financial
statements should be read in conjunction with the Company's consolidated
financial statements and footnotes thereto included in the Registrant
Company and Subsidiaries' annual report on Form 10-K for the year ended
December 31, 1996.
Certain 1996 classifications have been changed to conform with the 1997
presentation.
Significant accounting policies
In February 1997, the Financial Accounting Standards Board (FASB)
adopted Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share, which is effective for fiscal years ending after
December 15, 1997. This statement replaces Accounting Principles Board
(APB) Opinion No 15, Earnings Per Share, and the presentation of primary
earnings per share (EPS) with a presentation of basic EPS. This
statement also requires dual presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS calculation. Basic EPS excludes dilution
and is computed by dividing income available to common shareholders by
the weighted-average number of common shares outstanding for the period.
Diluted EPS is computed similarly to fully-diluted EPS pursuant to APB
15. Under SFAS No. 128, the Company's basic and diluted EPS amounts
would have been substantially the same as the primary and fully-diluted
EPS amounts presented in its consolidated statements of income for the
three and nine months ended September 30, 1997 and 1996.
2. Discontinued operations
Revenues of the Company's discontinued thrift operations for the three
and nine months ended September 30, 1997, were $2,213 and $6,939,
respectively. Revenues for the comparable periods of 1996 were $3,172
and $9,470, respectively. For the three and nine months ended September
30, 1997, discontinued thrift operations provided after-tax income of
$1,145 and $3,349, respectively. After-tax income for the comparable
periods of 1996 were $111,208 and $114,973, respectively. During the
three months ended September 30, 1996, the Company recognized, as part
of discontinued thrift operations, after-tax income of approximately
$110,000. Such income related to tax benefits associated with net
operating losses.
8
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
3. Segment Information
<TABLE>
<CAPTION>
Financial Services
----------------------
Mortgage
Homebuilding Banking Financing Corporate Consolidated
------------ -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Nine Months Ended September 30, 1997:
Continuing Operations:
Revenues:
Unaffiliated customers ............. $1,647,615 $ 20,648 $ 2,812 $ 6,831 $1,677,906
========== ========== ========== ========== ==========
Income (loss) before income taxes ... $ 73,811 $ 3,748 $ (100) $ (24,660) $ 52,799
========== ========== ========== ========== ==========
Three Months Ended September 30, 1997:
Continuing Operations:
Revenues:
Unaffiliated customers ............. $ 657,265 $ 8,915 $ 893 $ 2,818 $ 669,891
========== ========== ========== ========== ==========
Income (loss) before income taxes ... $ 36,562 $ 3,073 $ (28) $ (9,419) $ 30,188
========== ========== ========== ========== ==========
At September 30, 1997:
Identifiable assets ................... $1,533,153 $ 142,633 $ 41,421 $ 167,061 $1,884,268
========== ========== ========== ==========
Assets of discontinued operations ..... 131,550
----------
Total assets .......................... $2,015,818
==========
Nine Months Ended September 30, 1996:
Continuing Operations:
Revenues:
Unaffiliated customers ............. $1,593,725 $ 22,725 $ 17,751 $ 11,846 $1,646,047
========== ========== ========== ========== ==========
Income (loss) before income taxes ... $ 70,226 $ 1,465 $ 10,614 $ (18,723) $ 63,582
========== ========== ========== ========== ==========
Three Months Ended September 30, 1996:
Continuing Operations:
Revenues:
Unaffiliated customers ............. $ 613,722 $ 7,667 $ 1,580 $ 2,203 $ 625,172
========== ========== ========== ========== ==========
Income (loss) before income taxes ... $ 33,435 $ 914 $ 418 $ (7,350) $ 27,417
========== ========== ========== ========== ==========
At September 30, 1996:
Identifiable assets ................... $1,370,488 $ 148,556 $ 56,439 $ 215,021 $1,790,504
========== ========== ========== ==========
Assets of discontinued operations .... 158,060
----------
Total assets .......................... $1,948,564
==========
</TABLE>
4. Restructuring
On August 12, 1997, the Company announced the reorganization of its
homebuilding operations to strengthen management focus on key customer groups
and to generate increased operating efficiencies. This reorganization
replaced the Company's existing homebuilding structure comprised of three
geographically-based operating companies with a structure focused more
closely on specific customer segments. This reorganization also created a new
position of Executive Vice President and Chief Operating Officer with
responsibility for all of the Company's homebuilding businesses, and
appointed senior homebuilding executives to head the Company's domestic
homebuilding and Active Adult (mature buyer) operations. In conjunction with
this reorganization, the Company anticipates incurring a one-time
restructuring charge during the fourth quarter of 1997 for certain costs
associated with its reorganization, principally severance and
relocation-related expenses. While certain steps have already been taken, the
Company's restructuring plan has not yet been finalized. It is anticipated
that pre-tax restructuring charges could approximate $7,500 to $10,000 and
could result in annualized savings of approximately $5,000 to $8,000 on a
pre-tax basis beginning in 1998.
9
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
5. Commitments and contingencies
First Heights related litigation
The Company is a party to two lawsuits relating to First Heights' 1988
acquisition from the 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 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. 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 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 had 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.
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.
Management believes that the First Heights related litigation will not
have a material adverse impact on the results of operations or financial
position of the Company.
6. Supplemental Guarantor Information
In September 1995, the Company filed a universal shelf registration of
up to $250,000 of debt or equity securities of which $125,000 of 7.3%
unsecured Senior Notes were issued in October, 1995. In addition, the
Company previously issued $100,000 of 7%, and $115,000 of 8.375%
unsecured Senior Notes. On October 9, 1997, the Company registered an
additional $25,000 of debt securities for an offering pursuant to Rule
462(b) of the Securities Act of 1933, as amended. On October 15, 1997,
the Company issued $150,000 of 7.625% unsecured Senior Notes, due 2017,
pursuant to the September 1995 and October 9, 1997, universal shelf
registrations. Such obligations to pay principal, premium, if any, and
interest are guaranteed jointly and severally on a senior basis by
Pulte, all of Pulte's wholly-owned homebuilding subsidiaries and
Builders' Supply & Lumber Co., Inc. which is a Pulte wholly-owned
subsidiary (collectively, the Guarantors). Such guarantees are full and
unconditional. The principal non-Guarantors include PDCI, the parent
company of Pulte, Pulte Mortgage, a wholly-owned subsidiary of Pulte,
First Heights, and PFCI. See Note 1 for additional information on the
Company's Guarantor and non-Guarantor subsidiaries.
10
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
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 because management has concluded that the segment information
provides sufficient detail to allow investors to determine the nature of
the assets held by and the operations of the combined groups.
<TABLE>
<CAPTION>
CONSOLIDATING BALANCE SHEET
September 30, 1997
Unconsolidated
----------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and equivalents .................... $ 9 $ 54,784 $ 1,595 $ -- $ 56,388
Unfunded settlements .................... -- 41,138 -- -- 41,138
House and land inventories .............. -- 1,222,233 -- -- 1,222,233
Mortgage-backed and related securities .. -- -- 41,198 -- 41,198
Residential mortgage loans and other
securities available-for-sale ......... -- -- 128,863 -- 128,863
Other assets ............................ 134,641 214,998 44,809 -- 394,448
Discontinued operations ................. -- -- 131,550 -- 131,550
Investment in subsidiaries .............. 902,413 13,175 922,679 (1,838,267) --
Advances receivable - subsidiaries ...... 253,094 772 20,952 (274,818) --
----------- ----------- ----------- ----------- -----------
$ 1,290,157 $ 1,547,100 $ 1,291,646 $(2,113,085) $ 2,015,818
=========== =========== =========== =========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities $ 50,411 $ 392,933 $ 31,518 $ -- $ 474,862
Unsecured short-term borrowings ......... 72,700 -- -- -- 72,700
Collateralized short-term debt, recourse
solely to applicable subsidiary assets -- -- 121,725 -- 121,725
Mortgage-backed bonds, recourse solely to
applicable subsidiary assets ......... -- -- 39,289 -- 39,289
Income taxes ............................ 12,018 -- -- -- 12,018
Subordinated debentures and senior notes 339,429 62,404 -- -- 401,833
Discontinued operations ................. 348 -- 98,173 -- 98,521
Advances payable - subsidiaries ......... 20,381 214,985 39,452 (274,818) --
----------- ----------- ----------- ----------- -----------
Total liabilities ................. 495,287 670,322 330,157 (274,818) 1,220,948
Shareholders' equity .................... 794,870 876,778 961,489 (1,838,267) 794,870
----------- ----------- ----------- ----------- -----------
$ 1,290,157 $ 1,547,100 $ 1,291,646 $(2,113,085) $ 2,015,818
=========== =========== =========== =========== ===========
</TABLE>
11
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING BALANCE SHEET
December 31, 1996
Unconsolidated
----------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and equivalents .................... $ 114,585 $ 71,599 $ 3,441 $ -- $ 189,625
Unfunded settlements .................... -- 73,896 -- -- 73,896
House and land inventories .............. -- 1,017,262 -- -- 1,017,262
Mortgage-backed and related securities .. -- -- 47,113 -- 47,113
Residential mortgage loans and other
securities available-for-sale ......... -- -- 170,443 -- 170,443
Other assets ............................ 141,528 178,144 23,054 -- 342,726
Discontinued operations ................. -- -- 144,076 -- 144,076
Investment in subsidiaries .............. 859,866 23,425 878,540 (1,761,831) --
Advances receivable - subsidiaries ...... 139,351 827 17,246 (157,424) --
----------- ----------- ---------- ----------- -----------
$ 1,255,330 $ 1,365,153 $1,283,913 $(1,919,255) $ 1,985,141
=========== =========== ========== =========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities $ 51,731 $ 357,480 $ 30,367 $ -- $ 439,578
Collateralized short-term debt, recourse
solely to applicable subsidiary assets -- -- 154,136 -- 154,136
Mortgage-backed bonds, recourse solely to
applicable subsidiary assets .......... -- -- 45,304 -- 45,304
Income taxes ............................ 12,930 -- -- -- 12,930
Subordinated debentures and senior notes 339,365 51,810 -- -- 391,175
Discontinued operations ................. 4,002 -- 108,743 -- 112,745
Advances payable - subsidiaries ......... 18,029 123,451 15,944 (157,424) --
----------- ----------- ----------- ----------- -----------
Total liabilities ................. 426,057 532,741 354,494 (157,424) 1,155,868
Shareholders' equity .................... 829,273 832,412 929,419 (1,761,831) 829,273
----------- ----------- ----------- ----------- -----------
$ 1,255,330 $ 1,365,153 $ 1,283,913 $(1,919,255) $ 1,985,141
=========== =========== =========== =========== ===========
</TABLE>
12
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF OPERATIONS
For the nine months ended September 30, 1997
Unconsolidated
----------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Homebuilding .............................. $ -- $ 1,647,615 $ -- $ -- $ 1,647,615
Mortgage banking and financing, interest
and other ............................. -- -- 23,460 -- 23,460
Corporate ................................. 1,254 5,577 -- -- 6,831
----------- ----------- ----------- ----------- -----------
Total revenues .............................. 1,254 1,653,192 23,460 -- 1,677,906
----------- ----------- ----------- ----------- -----------
Expenses:
Homebuilding:
Cost of sales ......................... -- 1,403,575 -- -- 1,403,575
Selling, general and administrative and
other expense ......................... -- 170,229 -- -- 170,229
Mortgage banking and financing, interest
and other ............................. -- -- 19,812 -- 19,812
Corporate, net ............................ 22,567 9,145 (221) -- 31,491
----------- ----------- ----------- ----------- -----------
Total expenses .............................. 22,567 1,582,949 19,591 -- 1,625,107
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries ....................... (21,313) 70,243 3,869 -- 52,799
Income taxes (benefit) ...................... (9,748) 28,128 1,948 -- 20,328
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations
before equity in income (loss) of
subsidiaries .......................... (11,565) 42,115 1,921 -- 32,471
Income (loss) from discontinued operations .. 4,915 -- (1,566) -- 3,349
----------- ----------- ----------- ----------- -----------
Income before equity in income (loss) of
subsidiaries .......................... (6,650) 42,115 355 -- 35,820
----------- ----------- ----------- ----------- -----------
Equity in income (loss) of subsidiaries:
Continuing operations ..................... 44,036 2,251 42,115 (88,402) --
Discontinued operations ................... (1,566) -- -- 1,566 --
----------- ----------- ----------- ----------- -----------
42,470 2,251 42,115 (86,836) --
----------- ----------- ----------- ----------- -----------
Net income .................................. $ 35,820 $ 44,366 $ 42,470 $ (86,836) $ 35,820
=========== =========== =========== =========== ===========
</TABLE>
13
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended September 30, 1997
Unconsolidated
---------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Revenues:
Homebuilding .............................. $ -- $ 657,265 $ -- $ -- $ 657,265
Mortgage banking and financing, interest
and other ............................. -- -- 9,808 -- 9,808
Corporate ................................. 82 2,736 -- -- 2,818
--------- --------- --------- --------- ---------
Total revenues .............................. 82 660,001 9,808 -- 669,891
--------- --------- --------- --------- ---------
Expenses:
Homebuilding:
Cost of sales ......................... -- 559,061 -- -- 559,061
Selling, general and administrative and
other expense ........................ -- 61,642 -- -- 61,642
Mortgage banking and financing, interest
and other ............................. -- -- 6,763 -- 6,763
Corporate, net ............................ 8,473 3,675 89 -- 12,237
--------- --------- --------- --------- ---------
Total expenses .............................. 8,473 624,378 6,852 -- 639,703
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries ....................... (8,391) 35,623 2,956 -- 30,188
Income taxes (benefit) ...................... (4,030) 14,262 1,391 -- 11,623
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before equity in income (loss) of
subsidiaries .......................... (4,361) 21,361 1,565 -- 18,565
Income (loss) from discontinued operations .. 1,488 -- (343) -- 1,145
--------- --------- --------- --------- ---------
Income before equity in income (loss) of
subsidiaries .......................... (2,873) 21,361 1,222 -- 19,710
--------- --------- --------- --------- ---------
Equity in income (loss) of subsidiaries:
Continuing operations ..................... 22,926 1,846 21,361 (46,133) --
Discontinued operations ................... (343) -- -- 343 --
--------- --------- --------- --------- ---------
22,583 1,846 21,361 (45,790) --
--------- ---------- --------- --------- ---------
Net income .................................. $ 19,710 $ 23,207 $ 22,583 $ (45,790) $ 19,710
========= ========= ========= ========= =========
</TABLE>
14
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF OPERATIONS
For the nine months ended September 30, 1996
Unconsolidated
----------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Homebuilding .............................. $ -- $ 1,593,725 $ -- $ -- $ 1,593,725
Mortgage banking and financing, interest
and other ............................. -- -- 40,476 -- 40,476
Corporate ................................. 5,458 5,488 900 -- 11,846
----------- ----------- ----------- ----------- -----------
Total revenues .............................. 5,458 1,599,213 41,376 -- 1,646,047
----------- ----------- ----------- ----------- -----------
Expenses:
Homebuilding:
Cost of sales ......................... -- 1,357,970 -- -- 1,357,970
Selling, general and administrative and
other expense ........................ -- 165,529 -- -- 165,529
Mortgage banking and financing, interest
and other ............................. -- -- 28,397 -- 28,397
Corporate, net ............................ 18,580 9,621 2,368 -- 30,569
----------- ----------- ----------- ----------- -----------
Total expenses .............................. 18,580 1,533,120 30,765 -- 1,582,465
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries ....................... (13,122) 66,093 10,611 -- 63,582
Income taxes (benefit) ...................... (5,498) 26,468 4,680 -- 25,650
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations
before equity in income of subsidiaries ... (7,624) 39,625 5,931 - 37,932
Income from discontinued operations ......... 114,427 -- 546 -- 114,973
----------- ----------- ----------- ----------- -----------
Income before equity in income of
subsidiaries .......................... 106,803 39,625 6,477 -- 152,905
----------- ----------- ----------- ----------- -----------
Equity in income of subsidiaries:
Continuing operations ..................... 45,556 879 39,625 (86,060) --
Discontinued operations ................... 546 -- -- (546) --
----------- ----------- ----------- ----------- -----------
46,102 879 39,625 (86,606) --
----------- ----------- ----------- ----------- -----------
Net income .................................. $ 152,905 $ 40,504 $ 46,102 $ (86,606) $ 152,905
=========== =========== =========== =========== ===========
</TABLE>
15
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended September 30, 1996
Unconsolidated
---------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Homebuilding .............................. $ -- $ 613,722 $ -- $ -- $ 613,722
Mortgage banking and financing interest
and other ............................. -- -- 9,247 -- 9,247
Corporate ................................. 1,007 988 208 -- 2,203
--------- --------- --------- --------- ---------
Total revenues .............................. 1,007 614,710 9,455 -- 625,172
--------- --------- --------- --------- ---------
Expenses:
Homebuilding:
Cost of sales ......................... -- 520,841 -- -- 520,841
Selling, general and administrative and
other expense ........................ -- 59,446 -- -- 59,446
Mortgage banking and financing, interest
and other ............................. -- -- 7,915 -- 7,915
Corporate, net ............................ 6,340 2,396 817 -- 9,553
--------- --------- --------- --------- ---------
Total expenses .............................. 6,340 582,683 8,732 -- 597,755
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries ....................... (5,333) 32,027 723 -- 27,417
Income taxes (benefit) ...................... (2,276) 12,841 429 -- 10,994
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before equity in income (loss) of
subsidiaries .......................... (3,057) 19,186 294 -- 16,423
Income (loss) from discontinued
operations ................................ 111,780 -- (572) -- 111,208
--------- --------- --------- --------- ---------
Income (loss) before equity in income
(loss) of subsidiaries .................. 108,723 19,186 (278) -- 127,631
--------- --------- --------- --------- ---------
Equity in income (loss) of subsidiaries:
Continuing operations ..................... 19,480 549 19,186 (39,215) --
Discontinued operations ................... (572) -- -- 572 --
--------- --------- --------- --------- ---------
18,908 549 19,186 (38,643) --
--------- --------- --------- --------- ---------
Net income .................................. $ 127,631 $ 19,735 $ 18,908 $ (38,643) $ 127,631
========= ========= ========= ========= =========
</TABLE>
16
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1997
Unconsolidated
---------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Continuing operations:
Cash flows from operating activities:
Income from continuing operations ........... $ 32,471 $ 44,366 $ 44,036 $ (88,402) $ 32,471
Adjustments to reconcile income from
continuing operations to net cash flows
provided by (used in) operating activities:
Equity in income of subsidiaries ........ (44,036) (2,251) (42,115) 88,402 --
Amortization, depreciation and other .... 64 4,932 235 -- 5,231
Deferred income taxes ................... 12,356 -- -- -- 12,356
Increase (decrease) in cash due to:
Inventories ............................... -- (204,971) -- -- (204,971)
Residential mortgage loans
available-for-sale ...................... -- -- 41,581 -- 41,581
Other assets .............................. (4,208) (9,030) (22,299) -- (35,537)
Accounts payable and accrued ..............
liabilities ............................. (1,320) 35,453 11,610 -- 45,743
Income taxes .............................. (28,593) 28,128 1,949 -- 1,484
--------- --------- --------- --------- ---------
Net cash provided by (used in) operating
activities .................................. (33,266) (103,373) 34,997 -- (101,642)
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Principal payments of
mortgage-backed securities ................ -- -- 5,966 -- 5,966
Decrease in funds held by trustee ........... -- -- 94 -- 94
Dividends received from subsidiaries ........ -- 14,000 -- (14,000) --
Investment in subsidiaries .................. -- (1,497) -- 1,497 --
Advances to affiliates ...................... (83,664) 55 (3,415) 87,024 --
--------- --------- --------- --------- ---------
Net cash provided by (used in) investing
activities .................................. (83,664) 12,558 2,645 74,521 6,060
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Payment of long-term debt and bonds ......... -- -- (6,916) -- (6,916)
Proceeds from borrowings .................... 72,700 10,594 -- -- 83,294
Repayment of borrowings ..................... -- -- (40,706) -- (40,706)
Capital contributions from parent ........... -- -- 1,497 (1,497) --
Advances from affiliates .................... 2,352 63,406 21,266 (87,024) --
Stock repurchases ........................... (74,595) -- -- -- (74,595)
Dividends paid .............................. (3,877) -- (14,000) 14,000 (3,877)
Other, net .................................. 5,774 -- (629) -- 5,145
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities ........................ 2,354 74,000 (39,488) (74,521) (37,655)
--------- --------- --------- --------- ---------
Net decrease in cash and
equivalents - continuing operations ......... $(114,576) $ (16,815) $ (1,846) $ -- $(133,237)
--------- --------- --------- --------- ---------
</TABLE>
17
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF CASH FLOWS (continued)
For the nine months ended September 30, 1997
Unconsolidated
---------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Discontinued operations:
Cash flows from operating activities:
Income from discontinued operations .. $ 3,349 $ -- $ (1,566) $ 1,566 $ 3,349
Change in deferred income taxes ...... (720) -- -- -- (720)
Equity in loss of subsidiaries ....... 1,566 -- -- (1,566) --
Change in income taxes ............... 999 -- -- -- 999
Other changes, net ................... (5,194) -- 2,028 -- (3,166)
Cash flows from investing activities:
Purchase of securities available-
for-sale ......................... -- -- (14,433) -- (14,433)
Principal payments of mortgage-
backed securities ................ -- -- 24,658 -- 24,658
Net proceeds from sale of investment . -- -- 3,219 -- 3,219
Decrease in Covered Assets and FRF
receivables ...................... -- -- 28,215 -- 28,215
Cash flows from financing activities:
Decrease in deposit liabilities ...... -- -- (6,802) -- (6,802)
Repayment of borrowings .............. -- -- (31,560) -- (31,560)
Decrease in FHLB advances ............ -- -- (4,000) -- (4,000)
--------- --------- --------- --------- ---------
Net decrease in cash and equivalents-
discontinued operations .............. -- -- (241) -- (241)
--------- --------- --------- --------- ---------
Net decrease in cash and equivalents ... (114,576) (16,815) (2,087) -- (133,478)
Cash and equivalents at beginning of
period ............................... 114,585 71,599 6,018 -- 192,202
--------- --------- --------- --------- ---------
Cash and equivalents at end of period .. $ 9 $ 54,784 $ 3,931 $ -- $ 58,724
========= ========= ========= ========= =========
</TABLE>
18
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1996
Unconsolidated
---------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Continuing operations:
Cash flows from operating activities:
Income from continuing operations ............. $ 37,932 $ 40,504 $ 45,556 $ (86,060) $ 37,932
Adjustments to reconcile income from
continuing operations to net cash flows
provided by (used in) operating activities:
Equity in income of subsidiaries ........... (45,556) (879) (39,625) 86,060 --
Amortization, depreciation and other ....... 64 4,477 940 -- 5,481
Deferred income taxes ...................... 50,835 -- -- -- 50,835
Gain on sale of securities ................. -- -- (10,285) -- (10,285)
Increase (decrease) in cash due to:
Inventories ................................. -- (205,017) -- -- (205,017)
Residential mortgage loans
available-for-sale ....................... -- -- 44,571 -- 44,571
Other assets ................................ (7,118) (36,967) 662 -- (43,423)
Accounts payable and accrued liabilities .... 8,641 57,185 (6,827) -- 58,999
Income taxes ................................ (61,878) 26,468 4,602 -- (30,808)
--------- --------- --------- --------- ---------
Net cash provided by (used in) operating
activities .................................... (17,080) (114,229) 39,594 -- (91,715)
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Proceeds from exchange of securities
held-to-maturity .......................... -- -- 12,282 -- 12,282
Proceeds from sale of securities
available-for-sale ........................ -- -- 168,085 -- 168,085
Principal payments of
mortgage-backed securities ................ -- -- 17,681 -- 17,681
Decrease in funds held by trustee ............. -- -- 4,261 -- 4,261
Dividends received from subsidiaries .......... -- 18,000 -- (18,000) --
Investment in subsidiaries .................... (2,295) -- -- 2,295 --
Advances to affiliates ........................ (55,909) (749) (675) 57,333 --
Other, net .................................... -- (9,470) (3,047) -- (12,517)
--------- --------- --------- --------- ---------
Net cash provided by (used in) investing
activities .................................... (58,204) 7,781 198,587 41,628 189,792
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Payment of long-term debt and bonds ........... -- -- (171,695) -- (171,695)
Proceeds from borrowings ...................... -- 23,595 -- -- 23,595
Repayment of borrowings ....................... -- -- (25,052) -- (25,052)
Capital contributions from parent ............. -- -- 2,295 (2,295) --
Advances from affiliates ...................... -- 82,276 (24,943) (57,333) --
Stock repurchases ............................. (92,563) -- -- -- (92,563)
Dividends paid ................................ (5,963) -- (18,000) 18,000 (5,963)
Other, net .................................... 160 -- 113 -- 273
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities .......................... (98,366) 105,871 (237,282) (41,628) (271,405)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
equivalents - continuing operations ........... $(173,650) $ (577) $ 899 $ -- $(173,328)
--------- --------- --------- --------- ---------
</TABLE>
19
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF CASH FLOWS (continued)
For the nine months ended September 30, 1996
Unconsolidated
---------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Discontinued operations:
Cash flows from operating activities:
Income from discontinued operations .. $ 114,973 $ -- $ 546 $ (546) $ 114,973
Change in deferred income taxes ...... (109,709) -- -- -- (109,709)
Equity in income of subsidiaries ..... (546) -- -- 546 --
Change in income taxes ............... 773 -- -- -- 773
Other changes, net ................... (5,491) -- (2,308) -- (7,799)
Cash flows from investing activities:
Purchase of securities available-
for-sale ......................... -- -- (42,209) -- (42,209)
Principal payments of mortgage-
backed securities ................ -- -- 36,696 -- 36,696
Net proceeds from sale of investment . -- -- 4,100 -- 4,100
Decrease in Covered Assets and FRF
receivables ...................... -- -- 31,215 -- 31,215
Cash flows from financing activities:
Increase in deposit liabilities ...... -- -- 5,212 -- 5,212
Repayment of borrowings .............. -- -- (31,560) -- (31,560)
Decrease in FHLB advances ............ -- -- (2,200) -- (2,200)
--------- --------- --------- --------- ---------
Net decrease in cash and equivalents-
discontinued operations .............. -- -- (508) -- (508)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
equivalents .......................... (173,650) (577) 391 -- (173,836)
Cash and equivalents at beginning of
period ............................... 220,782 71,012 3,369 -- 295,163
--------- --------- --------- --------- ---------
Cash and equivalents at end of period .. $ 47,132 $ 70,435 $ 3,760 $ -- $ 121,327
========= ========= ========= ========= =========
</TABLE>
20
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
($000's omitted, except per share data)
Overview:
A summary of the Company's operating results by business segment for the
three and nine month periods ended September 30, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Pre-tax income (loss):
Homebuilding operations .............. $ 36,562 $ 33,435 $ 73,811 $ 70,226
--------- --------- --------- ---------
Financial Services operations:
Mortgage banking ................... 3,073 914 3,748 1,465
Financing activities ............... (28) 418 (100) 10,614
--------- --------- --------- ---------
Total Financial Services ............. 3,045 1,332 3,648 12,079
--------- --------- --------- ---------
Corporate ............................ (9,419) (7,350) (24,660) (18,723)
--------- --------- --------- ---------
Pre-tax income from continuing operations 30,188 27,417 52,799 63,582
Income taxes ............................ 11,623 10,994 20,328 25,650
--------- --------- --------- ---------
Income from continuing operations ....... 18,565 16,423 32,471 37,932
Income from discontinued operations ..... 1,145 111,208 3,349 114,973
--------- --------- --------- ---------
Net income .............................. $ 19,710 $ 127,631 $ 35,820 $ 152,905
========= ========= ========= =========
Per share data:
Income from continuing operations .... $ 0.86 $ 0.68 $ 1.47 $ 1.48
Income from discontinued operations .. 0.06 4.61 0.15 4.47
--------- --------- --------- ---------
Net income ........................... $ 0.92 $ 5.29 $ 1.62 $ 5.95
========= ========= ========= =========
</TABLE>
A comparison of pre-tax income (loss) for the three and nine month periods
ended September 30, 1997, is as follows:
o Pre-tax income of the Company's homebuilding operations increased by 9%
and 5%, respectively, over the similar periods of 1996. The reportable
periods were aided by increased sales and gross margins and the
operating results of Builders Supply & Lumber (BSL). In addition, the
nine months ended September 30, 1997, also benefited from proceeds from
the settlement of certain litigation and gains from various land sales.
These factors served to offset an increase in selling, general and
administrative expenses associated with three new market entries during
the third and fourth quarters of 1996 and the year-over-year increase in
the number of active communities.
o Pre-tax income of the Company's mortgage banking operations increased
$2,159 and $2,283, respectively, from the comparable periods of 1996.
This is principally due to a reduction in operating expenses resulting
from the conversion to centralized loan processing during 1996. In
addition, pre-tax income for the third quarter of 1997 was favorably
affected by increased revenues resulting from a larger volume of loan
originations than in the comparable period of the prior year. Pre-tax
income of the reportable periods was also favorably impacted by a share
of the earnings from an investment in a Mexican mortgage banking
company.
o Pre-tax income from the Company's financing activities decreased by
$446 and $10,714, respectively, from the comparable periods of 1996
primarily due to gains from the sales of collateral during the 1996
periods; no such sales took place during the first nine months of 1997.
o Pre-tax loss from corporate operations increased $2,069 and $5,937,
respectively, from the comparable periods of 1996. These losses
increased primarily as a result of higher net interest expense, but were
also affected by expenses associated with the Company's start-up of
manufactured home retail centers.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Restructuring:
On August 12, 1997, the Company announced the reorganization of its
homebuilding operations to strengthen management focus on key customer groups
and to generate increased operating efficiencies. This reorganization
replaced the Company's existing homebuilding structure comprised of three
geographically-based operating companies with a structure focused more
closely on specific customer segments. This reorganization also created a new
position of Executive Vice President and Chief Operating Officer with
responsibility for all of the Company's homebuilding businesses, and
appointed senior homebuilding executives to head the Company's domestic
homebuilding and Active Adult (mature buyer) operations. In conjunction with
this reorganization, the Company anticipates incurring a one-time
restructuring charge during the fourth quarter of 1997 for certain costs
associated with its reorganization, principally severance and
relocation-related expenses. While certain steps have already been taken, the
Company's restructuring plan has not yet been finalized. It is anticipated
that pre-tax restructuring charges could approximate $7,500 to $10,000 and
could result in annualized savings of approximately $5,000 to $8,000 on a
pre-tax basis beginning in 1998.
Homebuilding Operations:
The following table presents selected financial data for Pulte for the three
and nine month periods ended September 30, 1997 and 1996.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Unit settlements:
Pulte Home East ........................ 1,890 1,762 4,956 4,534
Pulte Home Central ..................... 1,196 1,217 2,932 3,390
Pulte Home West ........................ 904 789 2,365 2,107
----------- ----------- ----------- -----------
3,990 3,768 10,253 10,031
=========== =========== =========== ===========
Net new orders - units:
Pulte Home East ........................ 1,914 1,859 5,874 5,605
Pulte Home Central ..................... 1,121 896 3,556 3,420
Pulte Home West ........................ 872 658 2,802 2,224
----------- ----------- ----------- -----------
3,907 3,413 12,232 11,249
=========== =========== =========== ===========
Net new orders - dollars .................. $ 634,000 $ 536,000 $ 1,980,000 $ 1,799,000
=========== =========== =========== ===========
Backlog at September 30 - units:
Pulte Home East ........................ 2,691 2,723
Pulte Home Central ..................... 1,604 1,317
Pulte Home West ........................ 1,132 840
----------- -----------
5,427 4,880
=========== ===========
Backlog at September 30 - dollars ......... $ 929,000 $ 808,000
=========== ===========
Revenues .................................. $ 657,265 $ 613,722 $ 1,647,615 $ 1,593,725
Cost of sales ............................. 559,061 520,841 1,403,575 1,357,970
Selling, general and administrative expense 56,628 55,010 166,290 155,380
Interest (A) .............................. 5,206 4,762 12,644 12,085
Other income, net ......................... (192) (326) (8,705) (1,936)
----------- ----------- ----------- -----------
Pre-tax income ............................ $ 36,562 $ 33,435 $ 73,811 $ 70,226
=========== =========== =========== ===========
Average sales price ....................... $ 165 $ 163 $ 161 $ 159
=========== =========== =========== ===========
<FN>
Note (A): The Company capitalizes interest cost into homebuilding inventories
and charges the interest to homebuilding interest expense when the related
inventories are closed.
</TABLE>
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Homebuilding Operations (continued):
The number of active communities as of the end of each respective period are
as follows:
<TABLE>
<S> <C>
September 30, 1997................. 423
June 30, 1997...................... 428
March 31, 1997..................... 406
December 31, 1996.................. 392
September 30, 1996................. 387
</TABLE>
Pulte conducts its domestic homebuilding operations in 40 markets located
throughout 25 states, as well as in Puerto Rico. No one individual market
within the 41 markets represented more than 10% of total Pulte net new
orders, unit settlements or revenues during the three and nine month periods
ended September 30, 1997.
Net new orders during the third quarter of 1997 increased by 494 units, or
approximately 14%, over the third quarter of 1996 to a Company third quarter
record of 3,907 units. Contributing to a majority of this increase were Pulte
markets in the Southeast, Texas, the Midwest, the Southwest and Rocky
Mountains. Approximately one-third of this increase can be attributed to the
expansion of Pulte's Canterbury Communities. Canterbury Communities is
Pulte's site-built, affordable housing product offering. For the nine months
ended September 30, 1997, net new orders amounted to 12,232 units, which is a
9% increase over the comparable period of the prior year. For this nine-month
period, Pulte markets in the Southeast, Texas, the Southwest and Rocky
Mountains were responsible for most of the improvement in net new orders.
Pulte's Canterbury Communities and Active Adult product offerings contributed
to more than half of the growth in net new orders for the nine months ended
September 30, 1997.
Unit settlements during the three and nine month periods ended September 30,
1997, increased 6% and 2%, respectively, over the similar periods of 1996.
Favorable comparisons between the three month periods ended September 30,
1997 and 1996 were noted for Pulte markets in the Southeast and Southwest,
principally as the result of the Company's Canterbury Communities product
offerings. For the comparable year-to-date periods, favorable results were
noted for Pulte markets in the Southeast, Florida and the Southwest, offset
somewhat by unfavorable comparisons for Pulte markets in the Midwest. These
favorable year-to-date comparisons are principally the result of the
Company's Canterbury Communities and Active Adult product offerings. The
unfavorable year-to-date comparisons were primarily due to a shortfall of
available communities resulting from communities selling out faster than
expected during 1996 and a general decline in market demand.
The average selling price during the three month period ended September 30,
1997 was $165, an increase from the average selling price of $163 in the
comparable period of the prior year and $159 for the three month period ended
June 30, 1997. Changes in average selling price are primarily due to the mix
of product closed during a period.
Gross profit margins were 14.9% and 14.8% for the three and nine month
periods ended September 30, 1997, respectively, compared with 15.1% and
14.8%, respectively, in the similar periods of the prior year. The
unfavorable comparison between the three month periods ended September 30,
1997 and 1996, is the result of the favorable market demand conditions which
were present during the early portion of 1996, when sales contracts were
written which related to third quarter 1996 unit settlements, and the mix of
product settled during each period. The Company continues to realize margin
improvement on a sequential-period basis as a result of its ongoing process
improvement initiatives which are focused on lowering house costs through
improved operational efficiencies.
Selling, general and administrative expenses for the three and nine month
periods ended September 30, 1997, increased $1,618, or 3%, and $10,910, or
7%, respectively, over the comparable periods in 1996. These increases are
primarily related to the addition of expenses for three markets that were not
in operation during all of the first nine months of 1996 (Jacksonville, Rhode
Island, and Southern California), as well as an increase in the number of
selling communities as compared to the comparable period of a year ago.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Homebuilding Operations (continued):
Other income, net, includes gains on land sales, the pre-tax results of BSL
and other homebuilding-related expenses. For the nine months ended September
30, 1997, other income, net, was favorably impacted by improvement of
approximately $5,100 in the operating results of BSL compared to the similar
prior year period, as well as approximately $2,900 of proceeds from the
settlement of certain litigation.
Information related to interest in inventory is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest in inventory at beginning of period......... $ 15,512 $ 13,421 $ 12,846 $ 12,261
Interest capitalized................................. 5,194 4,391 15,298 12,874
Interest expensed ................................... (5,206) (4,762) (12,644) (12,085)
---------- ---------- ---------- ----------
Interest in inventory at end of period............... $ 15,500 $ 13,050 $ 15,500 $ 13,050
========== ========== ========== ==========
</TABLE>
At September 30, 1997, Pulte owned approximately 30,200 lots in communities
in which homes are being constructed. In addition, Pulte had approximately
18,900 lots under option.
Financial Services Operations:
Mortgage Banking Operations:
The Company's mortgage banking operations are conducted by Pulte Mortgage
Corporation (Pulte Mortgage). The following table presents mortgage
origination data for Pulte Mortgage:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Production:
Total originations:
Loans....................................... 2,730 2,628 6,970 7,685
========== ========== ========== ==========
Principal................................... $ 339,400 $ 320,800 $ 848,600 $ 912,000
========== ========== ========== ==========
Funded originations:
Loans....................................... 2,548 2,431 6,529 7,116
========== ========== ========== ==========
Principal................................... $ 313,700 $ 291,400 $ 789,600 $ 829,300
========== ========== ========== ==========
Originations for Pulte customers:
Loans....................................... 1,980 1,778 5,172 4,941
========== ========== ========== ==========
Principal................................... $ 251,400 $ 226,000 $ 649,000 $ 613,400
========== ========== ========== ==========
</TABLE>
Mortgage origination volume for the three month period ended September 30,
1997, increased 4% compared to the similar 1996 period. This increase was
solely the result of increased loan originations for Pulte customers. For the
nine months ended September 30, 1997, mortgage origination volume decreased
9% from the level of the preceding year. This decrease is the result of lower
retail loan production offset by a 5% increase in loan originations for Pulte
customers, as Pulte Mortgage continues its emphasis on expanding in Pulte's
existing and new markets. Because of this focus, the volume of originations
for Pulte customers has increased to 78% and 79% of funded originations for
the three and nine month periods ended September 30, 1997, respectively. This
compares to 73% and 69% of funded originations for the similar periods of
1996. Pulte Mortgage continues to hedge its mortgage pipeline in the normal
course of its business and there has been no change in Pulte Mortgage's
strategy or use of derivative financial instruments in this regard.
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Financial Services Operations (continued):
Mortgage Banking Operations (continued):
For the three months ended September 30, 1997, marketing gains from the sales
of mortgages increased $570, or 13%, as compared to the similar period of a
year ago. This increase is due to the higher level of loan originations
experienced during the third quarter of 1997. During the nine month period
ended September 30, 1997, marketing gains from the sales of mortgages
decreased by $1,378, or 10%, compared with the similar period of 1996. This
decrease is attributable to a lower volume of loan originations during the
first half of 1997.
During the three and nine month periods ended September 30, 1997, Pulte
Mortgage's operating expenses decreased from the comparable periods of 1996
by 14% and 21% to $5,841 and $16,899, respectively. These reductions of
expenses are the result of Pulte Mortgage's centralization of its mortgage
underwriting, processing and closing functions in Denver, Colorado, through
implementation of a mortgage operations center (MOC) during 1996.
Net interest income decreased by approximately $300 and $800, respectively,
during the three and nine month periods ended September 30, 1997, as compared
with the similar periods of a year ago. This decrease resulted from a
reduction in the number of funded originations during 1997, as well as from
dividends paid by Pulte Mortgage to Pulte throughout 1996.
In 1995, Pulte Mortgage acquired a minority ownership interest in a Mexican
mortgage banking company, Su Casita. Su Casita is a limited purpose financial
institution under Mexican law, licensed to originate and service home
mortgage loans. Pulte Mortgage's investment was made to facilitate the
Company's homebuilding joint ventures in Mexico. For the reportable periods,
Pulte Mortgage's equity in the earnings of Su Casita was $553, of which $390
represented current earnings and $163 represented its share of foreign
currency gains. At September 30, 1997, Pulte Mortgage's investment in Su
Casita approximated $1,500.
At September 30, 1997, loan application backlog was $385,000 compared with
$342,000 at September 30, 1996, and $246,000 at December 31, 1996.
Financing Activities:
The Company's secured financing operations are conducted by the
limited-purpose subsidiaries of Pulte Financial Companies, Inc. (PFCI). Such
subsidiaries have engaged in the acquisition of mortgage loans and
mortgage-backed securities financed principally through the issuance of
long-term bonds secured by such mortgage loans and mortgage-backed
securities. At September 30, 1997, one bond series with a principal amount of
$39,289 was outstanding. For the three and nine months ended September 30,
1997, PFCI's pre-tax operating losses were $28 and $100, respectively. This
compares to pre-tax income of $418 and $10,614, respectively, for the
comparable periods of 1996. During the three and nine month periods ended
September 30, 1996, PFCI recorded net gains on sales of collateral of $292
and $10,285, respectively. No such sales took place during the first nine
months of 1997. Net interest income continues to decrease as a result of
lower average outstanding balances on the collateral and bond portfolios.
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 and by implementing and maturing strategic initiatives centered
on new business development and improving operating efficiencies. The Company
views this corporate function as a form of research and development, a
prelude to adding these initiatives to existing business segments or
necessitating the creation of new business segments. As a result, the
corporate segment's operating results will vary from quarter to quarter as
these strategic initiatives evolve.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Corporate (continued):
The following table presents corporate results of operations for the three
and nine month periods ended September 30, 1997 and 1996:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net interest expense............................... $ 4,105 $ 2,084 $ 9,601 $ 4,296
Other corporate expenses, net...................... 5,314 5,266 15,059 14,427
---------- ---------- ---------- ----------
Loss before income taxes........................... $ 9,419 $ 7,350 $ 24,660 $ 18,723
========== ========== ========== ==========
</TABLE>
The increase in pre-tax loss for the three and nine month periods ended
September 30, 1997, is due primarily to an increase in net interest expense
over the comparable prior year periods. The utilization of approximately
$174,000 to reacquire nearly 6.2 million shares of the Company's common stock
during 1996 and the first four months of 1997 adversely affected net interest
expense comparisons. In addition, for the nine months ended September 30,
1997, the Company incurred $1,100 of additional expense in its start-up of
manufactured home retail centers. On October 8, 1997, the Company and
Fleetwood Enterprises, Inc. announced that they will jointly form a new
corporation, Expression Homes, that will own and operate manufactured home
retail centers. The Company will own 51% of the new corporation and Fleetwood
will own 49%. Expression Homes will initially focus on retail sales of
manufactured homes and related activities such as home financing and
insurance services. It is expected that growth will come through a
combination of selective acquisitions of existing high-quality retail
operations and development of new retail locations.
During the three and nine months ended September 30, 1997, the Company
recorded losses of $527 and $1,009, respectively, related to its Mexico
operations. This compares with losses of $266 and $892, respectively, in the
similar periods of 1996. For the three and nine months ended September 30,
1997, settlements of the Company's Mexico joint ventures aggregated 195 units
and 1,130 units, respectively, while settlements of the comparable periods of
1996 aggregated 142 units and 212 units, respectively. The increased losses
recorded in the reportable periods of 1997 are principally the result of
heightened overhead levels associated with increased development activity.
Pulte conducts its Mexico homebuilding operations through three joint venture
investments owned by a foreign subsidiary. In January 1996, the Company's
Monterrey joint venture partner assigned its interest in the joint venture to
the Company. The Company's net investment in the Monterrey venture
approximated $2,900 as of September 30, 1997. The Company intends to
liquidate the Monterrey assets (2 communities) in the normal course of
business. The Company's Juarez joint venture is currently developing 13
communities in the cities of Juarez, Chihuahua, Nuevo Laredo, Reynosa and
Matamoros. Additionally, during 1996, the Company announced that its Juarez
joint venture had entered into two separate agreements to construct homes in
Mexico; one with Delphi Automotive Systems, a division of General Motors
Corporation (GM) and one with Sony Magneticos de Mexico, S.A. de C.V., an
affiliate of Sony Electronics, Inc. (Sony). The first unit settlements under
the GM contract are expected to commence in the fourth quarter of 1997. The
Company's net investment in the Juarez joint venture approximated $20,200 as
of September 30, 1997. Also during 1996, the Company entered into a joint
venture to build 20 middle income housing units in Mexico City which are
expected to close by the end of 1997. The Company's net investment in this
joint venture approximated $400 as of September 30, 1997.
Liquidity and Capital Resources:
Continuing Operations:
The Company's net cash used in operating activities increased from $91,715
for the nine month period ended September 30, 1996 to $101,642 for the nine
month period ended September 30, 1997. This is principally due to a higher
level of net cash investment in inventories during the 1997 period. Net cash
provided by investing activities
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Liquidity and Capital Resources (continued):
Continuing Operations (continued):
decreased from $189,792 for the nine month period ended September 30, 1996,
to $6,060 for the nine month period ended September 30, 1997, primarily as a
result of an approximately $168,000 in proceeds from sales of mortgage-backed
securities of PFCI during the 1996 period. The Company's net cash used in
financing activities decreased from $271,405 for the nine month period ended
September 30, 1996, to $37,655 for the nine month period ended September 30,
1997. This resulted primarily from an approximately $165,000 decrease in the
amount of PFCI's mortgage-backed bonds redeemed, an approximately $59,000
increase in the amount of proceeds received from short-term borrowings and an
approximately $18,000 decrease in the amount of cash utilized for stock
repurchases, offset by an approximately $15,000 increase in repaid borrowings
during the 1997 period.
At September 30, 1997, the Company had cash and equivalents of $56,388 and
total indebtedness of $740,752. Total indebtedness includes $339,429 of
unsecured senior notes, $22,405 of unsecured senior subordinated debentures,
$72,700 of short-term borrowings under the Company's unsecured revolving
credit facility, other Pulte non-recourse and limited recourse debt of
$39,999 and $23,962, respectively, $81,243 of First Heights' deposits and
advances, $39,289 of mortgage-backed bonds payable for PFCI and $121,725 of
notes and drafts payable for Pulte Mortgage. On October 15, 1997, pursuant to
the universal shelf registrations filed in September 1995 and October 9,
1997, the Company issued $150,000, 7.625% unsecured Senior Notes, due 2017,
which are guaranteed by Pulte and certain wholly-owned subsidiaries of Pulte.
The Company used a portion of the net proceeds of the sale of the Senior
Notes to repay the outstanding borrowings under its unsecured revolving
credit facility which bore a variety of floating interest rates. The
remaining net proceeds from the sale of the Senior Notes were added to the
Company's general funds to be used for general corporate purposes which may
include, but are not limited to, capital contributions to the Company's
subsidiaries to strengthen such subsidiaries' continuing operations and to
fund acquisitions.
The Company believes it has adequate financial resources and sufficient
credit facilities to meet its current working capital needs. Sources of the
Company's working capital include its cash, its $250,000 committed unsecured
revolving credit facility, and other committed and uncommitted credit lines,
which at September 30, 1997, consisted of $20,000 and $250,000 related to
Pulte and Pulte Mortgage operations, respectively. Over the next twelve
months, management anticipates that homebuilding and corporate working
capital requirements will be principally funded with internally generated
funds and the previously mentioned credit facilities. The Company routinely
monitors current operational requirements and financial market conditions to
evaluate the utilization of available financing sources.
The Company finances its land acquisitions, development and construction
activities from internally generated funds and existing credit agreements.
The Company had a maximum borrowing of $126,000 under its $250,000 unsecured
revolving credit facility during the first nine months of 1997, and $72,700
remained outstanding at September 30, 1997. Subsequent to September 30, 1997,
the Company utilized a portion of the net proceeds from its issuance of
$150,000 unsecured Senior Notes, due 2017, to repay the outstanding balance
of the revolving credit facility. Pulte Mortgage provides mortgage financing
for many of Pulte's home sales and uses its own funds and borrowings made
available pursuant to various committed and uncommitted credit arrangements
which, at September 30, 1997, amounted to $250,000, an amount deemed adequate
to cover foreseeable needs. There were approximately $121,725 of borrowings
outstanding under the $250,000 (Pulte Mortgage) arrangement at September 30,
1997. Mortgage loans originated by Pulte Mortgage are subsequently sold,
principally to outside investors. The Company anticipates that there will be
adequate mortgage financing available for purchasers of its homes.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Liquidity and Capital Resources (continued):
Continuing Operations (continued):
In the fourth quarter of 1994, the Company initiated a share repurchase
program with the intention of enhancing shareholder value by utilizing excess
corporate capital to acquire its shares at favorable prices and increasing
leverage. As of the date of the most recent share reacquisition, April 17,
1997, the Company has utilized in excess of $188,000 of available cash and,
to a lesser extent, funds drawn on its unsecured revolving credit facility to
reacquire 6,847,800 shares, or nearly 25% of the common stock outstanding
prior to the inception of this program. Management does not anticipate making
additional share repurchases in the foreseeable future.
Discontinued Operations:
The Company's income taxes have been significantly impacted by its thrift
operations, principally because payments received from FSLIC Resolution Fund
(FRF) are exempt from federal income taxes. The Company's thrift assets are
subject to regulatory restrictions and are not available for general
corporate purposes. The final liquidation and wind-down of the Company's
thrift operations is dependent on the final resolution of outstanding matters
with the Federal Deposit Insurance Corporation (FDIC), manager of FRF. The
Company is currently involved in litigation with the FDIC. The Company is
uncertain as to when this matter might be resolved. At September 30, 1997,
the Company had a remaining investment in First Heights of approximately
$28,200.
Special Notes Concerning Forward-looking Statements:
Item 2, Management's Discussion and Analysis of Financial Condition and
Results of Operations, "Restructuring", contains certain forward-looking
statements relating to the possible impact of a one-time restructuring
charge. These forward-looking statements are based on current expectations
and include various assumptions. Such assumptions principally relate to
achieving estimated cost reductions as a result of realigning senior
operating and corporate staff roles and responsibilities while maintaining
work flow in the areas affected. The failure of such assumptions to be
realized may cause the actual restructuring charge and annual cost savings to
differ materially from the estimates set forth herein.
As an additional cautionary note, except for the historical information
contained herein, certain matters discussed in Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations, are
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such matters involve risks and uncertainties ,
including changes in economic conditions and interest rates, increases in raw
material and labor costs, weather conditions, and general competitive
factors, that may cause actual results to differ materially.
28
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit number and description Page Number
------------------------------ -----------
11 Statement Regarding Computation of
Per Share Earnings 30
27 Financial Data Schedule
All other exhibits are omitted from this report
because they are not applicable.
Reports on Form 8-K
-------------------
The Company did not file any reports on Form 8-K
during the quarter ended September 30, 1997.
<TABLE>
<CAPTION>
PULTE CORPORATION
EXHIBIT 11 - STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
(000's omitted, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary
Net income.................................... $ 19,710 $ 127,631 $ 35,820 $ 152,905
========== ========== ========== ==========
Weighted average common shares
outstanding................................ 21,137 23,944 21,930 25,467
Common stock equivalents - stock options..... 233 197 171 225
---------- ---------- ---------- ----------
Total .................................... 21,370 24,141 22,101 25,692
========== ========== ========== ==========
Net income per share.......................... $ .92 $ 5.29 $ 1.62 $ 5.95
========== ========== ========== ==========
Fully diluted
Net income ................................... $ 19,710 $ 127,631 $ 35,820 $ 152,905
========== ========== ========== ==========
Weighted average common shares
outstanding................................ 21,137 23,944 21,930 25,467
Common stock equivalents - stock options...... 249 197 184 225
---------- ---------- ---------- ----------
Total.................................. 21,386 24,141 22,114 25,692
========== ========== ========== ==========
Net income per share.......................... $ .92 $ 5.29 $ 1.62 $ 5.95
========== ========== ========== ==========
</TABLE>
30
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PULTE CORPORATION
/s/ MICHAEL D. HOLLERBACH
----------------------------------
Michael D. Hollerbach
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ VINCENT J. FREES
----------------------------------
Vincent J. Frees
Vice President and Controller
(Principal Accounting Officer)
Date: November 13, 1997
31
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1997
AND FOR THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 56,388
<SECURITIES> 0
<RECEIVABLES> 41,138
<ALLOWANCES> 0
<INVENTORY> 1,222,233
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,015,818
<CURRENT-LIABILITIES> 0
<BONDS> 361,834<F1>
<COMMON> 212
0
0
<OTHER-SE> 794,658
<TOTAL-LIABILITY-AND-EQUITY> 2,015,818
<SALES> 1,647,615<F2>
<TOTAL-REVENUES> 1,677,906
<CGS> 1,403,575<F2>
<TOTAL-COSTS> 1,625,107
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,644<F3>
<INCOME-PRETAX> 52,799
<INCOME-TAX> 20,328
<INCOME-CONTINUING> 32,471
<DISCONTINUED> 3,349
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,820
<EPS-PRIMARY> 1.62
<EPS-DILUTED> 1.62
<FN>
<F1> Bonds are comprised of subordinated debentures and senior notes.
<F2> Relates to homebuilding operations.
<F3> Relates to homebuilding operations. The Company capitalizes interest
cost into homebuilding inventories and charges the interest to homebuilding
interest expense when the related inventories are sold.
</TABLE>
