==============================================================================
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 March 31, 1998
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 April 30, 1998: 21,321,205
Total pages: 32
Listing of exhibits: 30
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<PAGE>
PULTE CORPORATION
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets, March 31, 1998 and
December 31, 1997................................................. 3
Condensed Consolidated Statements of Income, Three Months Ended
March 31, 1998 and 1997........................................... 4
Condensed Consolidated Statement of Shareholders' Equity,
Three Months Ended March 31, 1998................................. 5
Condensed Consolidated Statements of Cash Flows, Three Months Ended
March 31, 1998 and 1997........................................... 6
Notes to Condensed Consolidated Financial Statements................... 8
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 19
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K................................ 30
SIGNATURES............................................................. 31
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($000's omitted)
March 31, December 31,
1998 1997
----------- -----------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Cash and equivalents............................... $ 302,929 $ 245,156
Unfunded settlements............................... 41,280 69,768
House and land inventories......................... 1,100,026 1,141,952
Mortgage-backed and related securities............. 37,175 39,467
Residential mortgage loans and other
securities available-for-sale.................... 135,155 185,018
Other assets....................................... 308,399 358,464
Discontinued operations............................ 150,215 110,940
---------- ----------
$2,075,179 $2,150,765
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities,
including book overdrafts of $65,050 and
$84,623 in 1998 and 1997, respectively...... $ 421,040 $ 497,733
Collateralized short-term debt, recourse
solely to applicable subsidiary assets...... 121,310 162,707
Mortgage-backed bonds, recourse solely
to applicable subsidiary assets............. 35,427 37,413
Income taxes................................... 13,868 13,001
Subordinated debentures and senior notes....... 540,030 546,900
Discontinued operations........................ 119,370 80,174
---------- ----------
Total liabilities........................... 1,251,045 1,337,928
Shareholders' equity............................... 824,134 812,837
---------- ----------
$2,075,179 $2,150,765
========== ==========
<FN>
Note: The balance sheet at December 31, 1997 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
<PAGE>
<TABLE>
<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(000's omitted, except per share data)
(Unaudited)
For The
Three Months Ended
March 31,
------------------
1998 1997
---- -----
<S> <C> <C>
Revenues:
Homebuilding......................................... $508,635 $423,215
Mortgage banking and financing,
interest and other................................. 8,359 6,727
Corporate ........................................... 3,577 1,758
-------- --------
Total revenues............................. 520,571 431,700
-------- --------
Expenses:
Homebuilding, principally cost of sales.............. 491,041 415,390
Mortgage banking and financing,
interest and other................................. 5,971 6,649
Corporate, net....................................... 7,872 7,744
-------- --------
Total expenses............................. 504,884 429,783
-------- --------
Other income:
Equity in income of Pulte-affiliates................. 2,165 90
-------- --------
Income from continuing operations before
income taxes.......................................... 17,852 2,007
Income taxes............................................ 6,962 773
-------- --------
Income from continuing operations....................... 10,890 1,234
Income from discontinued thrift operations,
net of income taxes................................... 371 1,003
-------- --------
Net income.............................................. $ 11,261 $ 2,237
======== ========
Per share data:
Basic:
Income from continuing operations .............. $ .51 $ .05
Income from discontinued operations................ .02 .04
-------- --------
Net income......................................... $ .53 $ .09
======== ========
Assuming dilution:
Income from continuing operations .............. $ .50 $ .05
Income from discontinued operations................ .02 .04
-------- --------
Net income......................................... $ .52 $ .09
======== ========
Cash dividends declared.............................. $ .06 $ .06
======== ========
Number of shares used in calculation:
Basic:
Weighted-average common shares outstanding...... 21,294 23,296
Assuming dilution:
Effect of dilutive securities - stock options... 330 172
-------- --------
Adjusted weighted-average common shares
and effect of dilutive securities........... 21,624 23,468
======== ========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
($000's omitted)
(Unaudited)
Additional
Common Paid-in Unrealized Retained
Stock Capital Gains Earnings Total
------ ---------- ---------- -------- -----
<S> <C> <C> <C> <C> <C>
Shareholders' Equity, December 31, 1997 ............. $213 $61,835 $ 1,687 $ 749,102 $ 812,837
Exercise of stock options ........................... -- 1,511 -- -- 1,511
Cash dividends declared ............................. -- -- -- (1,278) (1,278)
Change in unrealized gains on securities
available-for-sale, net of income taxes of $62 ..... -- -- (197) -- (197)
Net income .......................................... -- -- -- 11,261 11,261
---- ------- ------- --------- ---------
Shareholders' Equity, March 31, 1998 ................ $213 $63,346 $ 1,490 $ 759,085 $ 824,134
==== ======= ======= ========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
------------------
1998 1997
---- ----
Continuing operations:
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations ........................ $ 10,890 $ 1,234
Adjustments to reconcile income from continuing
operations to net cash flows provided by
(used in) operating activities:
Amortization, depreciation and other .............. 1,672 322
Deferred income taxes ............................. (4,028) (1,116)
Increase (decrease) in cash due to:
Inventories ............................... 41,926 (95,836)
Residential mortgage loans held for sale .. 49,863 63,838
Other assets .............................. 73,953 12,832
Accounts payable and accrued liabilities .. (71,568) (54,378)
Income taxes .............................. 7,599 (377)
-------- ---------
Net cash provided by (used in) operating activities ........ 110,307 (73,481)
-------- ---------
Cash flows from investing activities:
Principal payments of mortgage-backed securities ......... 2,014 2,028
Other, net ............................................... (255) 68
-------- ---------
Net cash provided by investing activities .................. 1,759 2,096
-------- ---------
Cash flows from financing activities:
Payment of long-term debt and bonds ...................... (9,227) (2,373)
Proceeds from borrowings ................................. -- 4,702
Repayment of borrowings .................................. (45,053) (59,304)
Dividends paid ........................................... (1,278) --
Other, net ............................................... 1,265 1,006
-------- ---------
Net cash used in financing activities ...................... (54,293) (55,969)
-------- ---------
Net increase (decrease) in cash and equivalents -
continuing operations .................................... $ 57,773 $(127,354)
-------- ---------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
-------------------
1998 1997
---- ----
<S> <C> <C>
Discontinued Operations:
Cash flows from operating activities:
Income from discontinued operations ................. $ 371 $ 1,003
Change in deferred taxes ............................ 6,181 (635)
Change in income taxes .............................. (6,486) 133
Other changes, net .................................. (2) (595)
Cash flows from investing activities:
Purchase of securities available-for-sale ........... (21,809) (12,828)
Principal payments of mortgage-backed securities .... 7,654 7,539
Net proceeds from sale of investments ............... -- 2,330
Decrease in Covered Assets and (FRF) receivables .... 30,764 30,646
Cash flows from financing activities:
Increase (decrease) in deposit liabilities .......... 37,092 (9,347)
Repayment of borrowings ............................. (31,560) (31,560)
Increase in Federal Home Loan Bank (FHLB) advances .. 1,900 13,000
--------- ---------
Net increase (decrease) in cash and equivalents-
discontinued operations ............................... 24,105 (314)
--------- ---------
Net increase (decrease) in cash and equivalents ......... 81,878 (127,668)
Cash and equivalents at beginning of period ............. 247,308 192,202
--------- ---------
Cash and equivalents at end of period ................... $ 329,186 $ 64,534
========= =========
Cash - continuing operations ............................ $ 302,929 $ 62,271
Cash - discontinued operations .......................... 26,257 2,263
--------- ---------
$ 329,186 $ 64,534
========= =========
Supplemental disclosure of cash flow information-
cash paid during the period for:
Interest, net of amount capitalized;
Continuing operations ............................. $ 3,420 $ 3,614
Discontinued operations ........................... 628 508
--------- ---------
$ 4,048 $ 4,122
========= =========
Income taxes ........................................ $ 3,194 $ 2,223
========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
7
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($000's omitted)
(Unaudited)
1. Basis of presentation and significant accounting policies
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
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 three month period ended March 31,
1998 are not necessarily indicative of the results that may be expected
for the year ended December 31, 1998. These financial statements should
be read in conjunction with the Company's consolidated financial
statements and footnotes thereto included in the Company's annual report
on Form 10-K for the year ended December 31, 1997.
Certain 1997 classifications have been changed to conform with the 1998
presentation.
In March 1998, the Accounting Standards Executive Committee (AcSEC) of
the American Institute of Certified Public Accountants (AICPA) issued
Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of
Software Developed or Obtained for Internal Use". This SOP requires
internal costs (i.e., salaries and related benefits and interest cost)
to be capitalized during the application development stage for
internal-use software. SOP 98-1 is effective for years beginning after
December 15, 1998, with early adoption encouraged. The Company has
adopted, on a prospective basis, the provisions of SOP 98-1 effective
January 1, 1998 and, accordingly, has capitalized $700 of such costs
during the three months ended March 31, 1998. The Company had
historically expensed similar costs to operations when they were
incurred.
2. Discontinued operations
Revenues of the Company's discontinued thrift operations for the three
months ended March 31, 1998 and 1997, were $1,787 and $2,425,
respectively. For the three months ended March 31, 1998 and 1997,
discontinued thrift operations provided after-tax income of $371 and
$1,003, respectively.
3. Segment information
The Company has three reportable segments: Homebuilding, Financial
Services and Corporate. The Company's Homebuilding segment consists of
the following three business lines:
o Domestic Homebuilding, the Company's core business, which is
engaged in the construction of housing within the continental
United States targeting primarily the first-time and move-up
customer group.
o International Homebuilding, which is engaged in the construction of
first-time and social interest housing in Puerto Rico and Mexico.
o Active Adult, which is engaged in the development of amenitized,
age-targeted or age-restricted communities throughout the
continental United States appealing to a growing demographic group
in their pre-retirement/retirement years. As of March 26, 1998, the
Company's Active Adult operations reflect its 50% interest in a
joint venture with the Blackstone Real Estate Advisors, an
affiliate of the Blackstone Group.
<PAGE>
The Company's Financial Services segment consists principally of Pulte
Mortgage, its mortgage banking subsidiary, and to a lesser extent, the
operations of PFCI, its financing subsidiary. 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.
8
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted, except per share data)
(Unaudited)
3. Segment information (continued)
<TABLE>
<CAPTION>
Financial
Homebuilding Services Corporate Consolidated
------------ --------- --------- ------------
Three Months Ended March 31, 1998:
<S> <C> <C> <C> <C>
Continuing Operations:
Revenues:
Unaffiliated customers .............. $ 508,635 $ 8,359 $ 3,577 $ 520,571
========== ======== ========= ==========
Income (loss) before income taxes ... $ 19,759 $ 2,388 $ (4,295) $ 17,852
========== ======== ========= ==========
At March 31, 1998:
Identifiable assets ................. $1,328,938 $186,977 $ 409,049 $1,924,964
========== ======== =========
Assets of discontinued operations .. 150,215
----------
Total assets ........................ $2,075,179
==========
Three Months Ended March 31, 1997:
Continuing Operations:
Revenues:
Unaffiliated customers .............. $ 423,215 $ 6,727 $ 1,758 $ 431,700
========== ======== ========= ==========
Income (loss) before income taxes ... $ 7,915 $ 78 $ (5,986) $ 2,007
========== ======== ========= ==========
At March 31, 1997:
Identifiable assets ................. $1,386,045 $165,640 $ 180,345 $1,732,030
========== ======== =========
Assets of discontinued operations ... 146,436
----------
Total assets ........................ $1,878,466
==========
</TABLE>
4. Subsequent event
On May 7, 1998, the Company announced that its Board of Directors had
declared a two-for-one stock split to be effected in the form of a 100%
stock dividend. The additional shares will be distributed on June 1,
1998, to the shareholders of record as of May 18, 1998. Additionally,
the Board of Directors authorized a 33% increase in the Company's
quarterly dividend, raising it from $.06 per share to $.08 per share on
a pre-split basis.
5. Commitments and contingencies
First Heights-Related Litigation
The Company is a party to two 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
9
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
5. Commitments and contingencies (continued)
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 have 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.
On March 5, 1998, the Company reported that an opinion and order had
been issued by the United States District Court (the "Court") which
resolved by summary judgment four of the interpretational issues which
had been raised in the District Court Case. On three issues, the Court
ruled in favor of the FDIC, and on one issue, the Court ruled in favor
of the Company. On March 12, 1998, the Court resolved by summary
judgment two additional interpretational issues in the District Court
Case. On both issues the Court ruled in favor of the FDIC. The Company
vigorously disagrees with all of the Court's rulings in favor of the
FDIC and intends to appeal if these rulings become part of any final
judgment. If the Company were unsuccessful on appeal and if all other
issues in such litigation were resolved in favor of the FDIC, the
Company would, at such time, take an after-tax charge against
discontinued operations in an amount which would range from a nominal
amount to as much as $40,000. The Company does not believe that the
claims in the Court of Federal Claims Case are affected by the rulings
in the District Court Case.
6. Supplemental guarantor information
The Company has the following outstanding Senior Note obligations; (1)
$100,000, 7%, due 2003, (2) $115,000, 8.375%, due 2004, (3) $125,000,
7.3%, due 2005, and (4) $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 Pulte and all of Pulte's wholly-owned
homebuilding subsidiaries (collectively, the Guarantors). Such
guarantees are full and unconditional. The principal non-Guarantors
include PDCI, Pulte Mortgage, First Heights, and PFCI. See Note 1 for
additional information on the Company's Guarantor and non-Guarantor
subsidiaries.
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.
10
<PAGE>
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000's omitted)
(Unaudited)
6. Supplemental Guarantor Information (continued)
<TABLE>
<CAPTION>
CONSOLIDATING BALANCE SHEET
MARCH 31, 1998
Unconsolidated
-----------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and equivalents ....................... $ 261,691 $ 37,667 $ 3,571 $ -- $ 302,929
Unfunded settlements ....................... -- 41,280 -- -- 41,280
House and land inventories ................. -- 1,100,026 -- -- 1,100,026
Mortgage-backed and related securities ..... -- -- 37,175 -- 37,175
Residential mortgage loans and other
securities available-for-sale ............ -- -- 135,155 -- 135,155
Land held for sale and future development .. -- 28,516 -- -- 28,516
Other assets ............................... 16,238 84,080 72,317 -- 172,635
Deferred income taxes ...................... 108,242 -- (994) -- 107,248
Discontinued operations .................... -- -- 150,215 -- 150,215
Investment in subsidiaries ................. 886,700 11,769 877,948 (1,776,417) --
Advances receivable - subsidiaries ......... 136,754 -- 21,775 (158,529) --
---------- ---------- ----------- ----------- ----------
$1,409,625 $1,303,338 $ 1,297,162 $(1,934,946) $2,075,179
========== ========== =========== =========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities ... $ 62,548 $ 313,095 $ 45,397 $ -- $ 421,040
Collateralized short-term debt, recourse
solely to applicable subsidiary assets ... -- -- 121,310 -- 121,310
Mortgage-backed bonds, recourse solely to
applicable subsidiary assets ............. -- -- 35,427 -- 35,427
Income taxes ............................... 13,868 -- -- -- 13,868
Subordinated debentures and senior notes ... 487,351 52,679 -- 540,030
Discontinued operations .................... -- -- 119,370 -- 119,370
Advances payable - subsidiaries ............ 21,724 107,762 29,043 (158,529) --
---------- ---------- ----------- ----------- ----------
Total liabilities ................... 585,491 473,536 350,547 (158,529) 1,251,045
Shareholders' equity ....................... 824,134 829,802 946,615 (1,776,417) 824,134
---------- ---------- ----------- ----------- ----------
$1,409,625 $1,303,338 $ 1,297,162 $(1,934,946) $2,075,179
========== ========== =========== =========== ==========
</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, 1997
Unconsolidated
-----------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and equivalents ....................... $ 195,946 $ 46,466 $ 2,744 $ -- $ 245,156
Unfunded settlements ....................... -- 69,768 -- -- 69,768
House and land inventories ................. -- 1,141,952 -- -- 1,141,952
Mortgage-backed and related securities ..... -- -- 39,467 -- 39,467
Residential mortgage loans and other
securities available-for-sale ........... -- -- 185,018 -- 185,018
Land held for sale and future development .. -- 24,984 -- -- 24,984
Other assets ............................... 18,305 164,032 41,804 -- 224,141
Deferred income taxes ...................... 110,395 -- (1,056) -- 109,339
Discontinued operations .................... -- -- 110,940 -- 110,940
Investment in subsidiaries ................. 970,897 11,890 995,248 (1,978,035) --
Advances receivable - subsidiaries ......... 100,663 -- 20,517 (121,180) --
---------- ---------- ----------- ----------- ----------
$1,396,206 $1,459,092 $ 1,394,682 $(2,099,215) $ 2,150,765
========== ========== =========== =========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued
liabilities ............................. $ 58,470 $ 390,397 $ 48,866 $ -- $ 497,733
Collateralized short-term debt, recourse
solely to applicable subsidiary assets .. -- -- 162,707 -- 162,707
Mortgage-backed bonds, recourse solely
to applicable subsidiary assets ......... -- -- 37,413 -- 37,413
Income taxes ............................... 13,001 -- -- -- 13,001
Subordinated debentures and senior
notes ................................... 487,303 59,597 -- -- 546,900
Discontinued operations .................... -- -- 80,174 -- 80,174
Advances payable - subsidiaries ............ 24,595 61,994 34,591 (121,180) --
---------- ---------- ----------- ----------- ----------
Total liabilities ................... 583,369 511,988 363,751 (121,180) 1,337,928
Shareholders' equity ....................... 812,837 947,104 1,030,931 (1,978,035) 812,837
---------- ---------- ----------- ----------- ----------
$1,396,206 $1,459,092 $ 1,394,682 $(2,099,215) $2,150,765
========== ========== =========== =========== ==========
</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 three months ended March 31, 1998
Unconsolidated
-----------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Homebuilding .............................. $ -- $ 508,635 $ -- $ -- $508,635
Mortgage banking and financing,
interest and other ................... -- -- 8,359 -- 8,359
Corporate ................................. 2,546 1,031 -- -- 3,577
-------- --------- -------- -------- --------
Total revenues .............................. 2,546 509,666 8,359 -- 520,571
-------- --------- -------- -------- --------
Expenses:
Homebuilding:
Cost of sales ........................... -- 430,000 -- -- 430,000
Selling, general and administrative
and other expense .................... 465 60,576 -- -- 61,041
Mortgage banking and financing, interest
and other ............................ -- -- 5,971 -- 5,971
Corporate, net .......................... 9,661 (3,190) 1,401 -- 7,872
-------- --------- -------- -------- --------
Total expenses .............................. 10,126 487,386 7,372 -- 504,884
-------- --------- -------- -------- --------
Other Income:
Equity in income of Pulte-affiliates ...... -- -- 2,165 -- 2,165
-------- --------- -------- -------- --------
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries ........................... (7,580) 22,280 3,152 -- 17,852
Income taxes (benefit) ...................... (3,471) 9,055 1,378 -- 6,962
-------- --------- -------- -------- --------
Income (loss) from continuing operations
before equity in income of subsidiaries ... (4,109) 13,225 1,774 -- 10,890
Income from discontinued operations ........ 305 -- 66 -- 371
-------- --------- -------- -------- --------
Income (loss) before equity in income
(loss) of subsidiaries .................... (3,804) 13,225 1,840 -- 11,261
-------- --------- -------- -------- --------
Equity in income (loss) of subsidiaries:
Continuing operations ..................... 14,999 1,460 13,225 (29,684) --
Discontinued operations ................... 66 -- -- (66) --
-------- --------- -------- -------- --------
15,065 1,460 13,225 (29,750) --
-------- --------- -------- -------- --------
Net income .................................. $ 11,261 $ 14,685 $ 15,065 $(29,750) $ 11,261
======== ========= ======== ======== ========
</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 March 31, 1997
Unconsolidated
-----------------------------------------
Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Homebuilding .............................. $ -- $423,215 $ -- $ -- $423,215
Mortgage banking and financing,
interest and other ................... -- -- 6,727 -- 6,727
Corporate ................................. 790 968 -- 1,758
------- -------- ------- ------- --------
Total revenues .............................. 790 424,183 6,727 -- 431,700
------- -------- ------- ------- --------
Expenses:
Homebuilding:
Cost of sales ........................ -- 360,005 -- -- 360,005
Selling, general and administrative
and other expense .................... 160 55,225 -- -- 55,385
Mortgage banking and financing, interest
and other ............................ -- -- 6,649 -- 6,649
Corporate, net .......................... 6,760 1,359 (375) -- 7,744
------- -------- ------- ------- --------
Total expenses .............................. 6,920 416,589 6,274 -- 429,783
------- -------- ------- ------- --------
Other Income:
Equity in income of Pulte-affiliates ...... -- -- 90 -- 90
------- -------- ------- ------- --------
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries ........................... (6,130) 7,594 543 -- 2,007
Income taxes (benefit) ...................... (2,470) 2,984 259 -- 773
------- -------- ------- ------- --------
Income (loss) from continuing operations
before equity in income of subsidiaries ... (3,660) 4,610 284 -- 1,234
Income (loss) from discontinued operations .. 1,720 -- (717) -- 1,003
------- -------- ------- ------- --------
Income (loss) before equity in income
(loss) of subsidiaries .................... (1,940) 4,610 (433) -- 2,237
------- -------- ------- ------- --------
Equity in income (loss) of subsidiaries:
Continuing operations ..................... 4,894 38 4,610 (9,542) --
Discontinued operations ................... (717) -- -- 717 --
------- -------- ------- ------- --------
4,177 38 4,610 (8,825) --
------- -------- ------- ------- --------
Net income .................................. $ 2,237 $ 4,648 $ 4,177 $(8,825) $ 2,237
======= ======== ======= ======= ========
</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 CASH FLOWS
For the three months ended March 31, 1998
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 ........ $ 10,890 $ 14,685 $ 14,999 $ (29,684) $ 10,890
Adjustments to reconcile income from
continuing operations to net
cash flows provided by (used in)
operating activities:
Equity in income of subsidiaries ....... (14,999) (1,460) (13,225) 29,684 --
Amortization, depreciation and other ... 48 1,491 133 -- 1,672
Deferred income taxes .................. (4,028) -- -- -- (4,028)
Increase (decrease) in cash due to:
Inventories ............................ -- 41,926 -- -- 41,926
Residential mortgage loans
available-for-sale .................. -- -- 49,863 -- 49,863
Other assets ........................... 2,067 102,466 (30,580) -- 73,953
Accounts payable and accrued
liabilities ......................... 3,143 (73,561) (1,150) -- (71,568)
Income taxes ........................... (2,638) 9,055 1,182 -- 7,599
--------- --------- --------- --------- ---------
Net cash provided by (used in)
operating activities ..................... (5,517) 94,602 21,222 -- 110,307
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Decrease in funds held by trustee ........ -- -- 2,014 -- 2,014
Dividends received from subsidiaries ..... 132,040 2,500 132,040 (266,580) --
Other, net ............................... -- -- (255) -- (255)
Investment in subsidiary ................. (32,040) -- -- 32,040 --
Advances to affiliates ................... (25,854) -- (1,437) 27,291 --
--------- --------- --------- --------- ---------
Net cash provided by (used in)
investing activities ..................... 74,146 2,500 132,362 (207,249) 1,759
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Payment of long-term debt and bonds ...... -- (6,918) (2,309) -- (9,227)
Repayment of borrowings .................. -- (3,656) (41,397) -- (45,053)
Capital contributions from parent ........ -- -- 32,040 (32,040) --
Advances from affiliates ................. (2,871) 36,713 (6,551) (27,291) --
Dividends paid ........................... (1,278) (132,040) (134,540) 266,580 (1,278)
Other, net ............................... 1,265 -- -- -- 1,265
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities ..................... (2,884) (105,901) (152,757) 207,249 (54,293)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
equivalents - continuing operations ...... $ 65,745 $ (8,799) $ 827 $ -- $ 57,773
--------- --------- --------- --------- ---------
</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 CASH FLOWS (continued)
For the three months ended March 31, 1998
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 ......................... $ 371 $ -- $ 66 $(66) $ 371
Change in deferred income taxes .......... 6,181 -- -- -- 6,181
Equity in income of subsidiaries ......... (66) -- -- 66 --
Change in income taxes ................... (6,486) -- -- -- (6,486)
Other changes, net ....................... -- -- (2) -- (2)
Cash flows from investing activities:
Purchase of securities available-
for-sale ............................ -- -- (21,809) -- (21,809)
Principal payments of mortgage-backed
securities .......................... -- -- 7,654 -- 7,654
Decrease in Covered Assets and FRF
receivables ......................... -- -- 30,764 -- 30,764
Cash flows from financing activities:
Increase in deposit liabilities .......... -- -- 37,092 -- 37,092
Repayment of borrowings .................. -- -- (31,560) -- (31,560)
Increase in FHLB advances ................ -- -- 1,900 -- 1,900
--------- -------- -------- ---- ---------
Net increase in cash and equivalents-
discontinued operations .................. -- -- 24,105 -- 24,105
--------- -------- -------- ---- ---------
Net increase (decrease) in cash
and equivalents .......................... 65,745 (8,799) 24,932 -- 81,878
Cash and equivalents at beginning of
period ................................... 195,946 46,466 4,896 -- 247,308
--------- -------- -------- ---- ---------
Cash and equivalents at end of period ...... $ 261,691 $ 37,667 $ 29,828 $-- $ 329,186
========= ======== ======== ==== =========
</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 three months ended March 31, 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 ........ $ 1,234 $ 4,599 $ 4,894 $ (9,493) $ 1,234
Adjustments to reconcile income from
continuing operations to net
cash flows provided by (used in)
operating activities:
Equity in income of subsidiaries ....... (4,894) (124) (4,475) 9,493 --
Amortization, depreciation and other ... 22 -- 300 -- 322
Deferred income taxes .................. (1,116) -- -- -- (1,116)
Increase (decrease) in cash due to:
Inventories ............................ -- (95,836) -- -- (95,836)
Residential mortgage loans
available-for-sale .................. -- -- 63,838 -- 63,838
Other assets ........................... (1,402) 18,337 (4,103) -- 12,832
Accounts payable and accrued
liabilities ......................... (1,270) (49,677) (3,431) -- (54,378)
Income taxes ........................... (3,576) 2,984 215 -- (377)
--------- --------- -------- --------- ---------
Net cash provided by (used in)
operating activities ..................... (11,002) (119,717) 57,238 -- (73,481)
--------- --------- -------- --------- ---------
Cash flows from investing activities:
Principal payments of
mortgage- backed securities ............. -- -- 2,028 -- 2,028
Decrease in funds held by trustee ........ -- -- 68 -- 68
Dividends received from subsidiaries ..... -- 4,500 -- (4,500) --
Advances to affiliates ................... (100,736) 276 (1,697) 102,157 --
--------- --------- -------- --------- ---------
Net cash provided by (used in)
investing activities ..................... (100,736) 4,776 399 97,657 2,096
--------- --------- -------- --------- ---------
Cash flows from financing activities:
Payment of long-term debt and bonds ...... -- -- (2,373) -- (2,373)
Proceeds from borrowings ................. -- 4,702 -- -- 4,702
Repayment of borrowings .................. -- -- (59,304) -- (59,304)
Advances from affiliates ................. 1,293 92,940 7,924 (102,157) --
Dividends paid ........................... -- -- (4,500) 4,500 --
Other, net ............................... 1,015 -- (9) -- 1,006
--------- --------- -------- --------- ---------
Net cash provided by (used in)
financing activities ..................... 2,308 97,642 (58,262) (97,657) (55,969)
--------- --------- -------- --------- ---------
Net decrease in cash and
equivalents - continuing operations ...... $(109,430) $ (17,299) $ (625) $ -- $(127,354)
--------- --------- -------- --------- ---------
</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 three months ended March 31, 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 (loss) from discontinued
operations ......................... $ 1,003 $ -- $ (717) $ 717 $ 1,003
Change in deferred income taxes .......... (635) -- -- -- (635)
Equity in income of subsidiaries ......... 717 -- -- (717) --
Change in income taxes ................... 133 -- -- -- 133
Other changes, net ....................... (1,218) -- 623 -- (595)
Cash flows from investing activities:
Purchase of securities available-
for-sale ............................ -- -- (12,828) -- (12,828)
Principal payments of mortgage-backed
securities .......................... -- -- 7,539 -- 7,539
Net proceeds from sale of investment ..... -- -- 2,330 -- 2,330
Decrease in Covered Assets and FRF
receivables ......................... -- -- 30,646 -- 30,646
Cash flows from financing activities:
Increase in deposit liabilities .......... -- -- (9,347) -- (9,347)
Repayment of borrowings .................. -- -- (31,560) -- (31,560)
Increase in FHLB advances ................ -- -- 13,000 -- 13,000
--------- -------- -------- ----- ---------
Net decrease in cash and equivalents-
discontinued operations .................. -- -- (314) -- (314)
--------- -------- -------- ----- ---------
Net decrease in cash and equivalents ....... (109,430) (17,299) (939) -- (127,668)
Cash and equivalents at beginning of
period ................................... 114,585 71,599 6,018 -- 192,202
--------- -------- -------- ----- ---------
Cash and equivalents at end of period ...... $ 5,155 $ 54,300 $ 5,079 $-- $ 64,534
========= ======== ======== ===== =========
</TABLE>
18
<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 month periods ended March 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Pre-tax income (loss):
Homebuilding operations .................. $ 19,759 $ 7,915
Financial Services operations ............ 2,388 78
Corporate ................................ (4,295) (5,986)
-------- -------
Pre-tax income from continuing operations ... 17,852 2,007
Income taxes ................................ (6,962) (773)
-------- -------
Income from continuing operations ........... 10,890 1,234
Income from discontinued operations ......... 371 1,003
-------- -------
Net income .................................. $ 11,261 $ 2,237
======== =======
Per share data - assuming dilution:
Income from continuing operations ........ $ .50 $ .05
Income from discontinued operations ...... .02 .04
-------- -------
Net income ............................... $ .52 $ .09
======== =======
</TABLE>
A comparison of pre-tax income (loss) for the three months ended March 31,
1998 and 1997 is as follows:
o Pre-tax income of the Company's homebuilding business segment increased
$11,844, or 150%, over the comparable 1997 period. This increase is
primarily the result of a dramatic improvement in domestic homebuilding
operations for which pre-tax income increased $11,359, to $20,355, for
the first quarter of 1998. A 14% increase in domestic unit settlements,
coupled with a 50 basis point improvement in gross margins and a 230
basis point improvement in selling, general and administrative expense
leverage, were responsible for this increase in domestic homebuilding
pre-tax income.
o Pre-tax income of the Company's financial services business segment
increased $2,310, substantially above the amount recognized for the
first three months of 1997. This increase is entirely attributable to
the Company's mortgage banking operation which benefited from a 38%
increase in mortgage origination volume, providing a 60% increase in
origination fees and a 51% increase in pricing and marketing gains, and
a 9% decrease in operating expenses. Operating costs per mortgage
origination reflect improved leverage, declining by 32% from first
quarter 1997 levels.
o Pre-tax loss of the Company's corporate business segment decreased
$1,691, or 28%, from the first three months of 1997. This is primarily
the result of the gain recognized from the sale of the Company's
interest in Expression Homes offset by a significant increase in net
interest expense associated with the issuance of $150,000 of Senior
Notes during the fourth quarter of 1997.
19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Restructuring:
During the fourth quarter of 1997, a pre-tax charge of $20,000 was recorded
in connection with the reorganization of the Company's operations. This
reorganization entailed:
o the realignment of homebuilding operations into business lines which
focus on specific customer segments;
o the creation of a mortgage applications center, which increased overhead
leverage by moving Pulte Mortgage's loan officers from field branches to
a central location in Denver, Colorado; and
o the right-sizing of its workforce on a company-wide basis.
The 1997 restructuring charge included $11,787 of separation and other costs
for approximately 150 employees, $7,000 of asset impairments and $1,213 of
other costs, principally for office leases. The after-tax effect of this
charge was $12,300 or $.56 per diluted share. As of March 31, 1998, the
Company has severed employment with approximately 120 employees.
The following table displays a rollforward of the liabilities accrued for the
Company's restructuring from December 31, 1997 to March 31, 1998:
<TABLE>
<CAPTION>
Balance at 1998 Balance at
December 31, Reserve March 31,
Type of Cost 1997 Uses 1998
- ------------ ------------ ------- ----------
<S> <C> <C> <C>
Homebuilding operations:
Employee separation and other ..... $ 6,057 $1,630 $4,427
Other ............................. 900 242 658
------- ------ ------
6,957 1,872 5,085
------- ------ ------
Mortgage Banking operations:
Employee separation and other ..... 1,177 328 849
Other ............................. 280 68 212
------- ------ ------
1,457 396 1,061
------- ------ ------
Corporate:
Employee separation and other ..... 2,530 750 1,780
------- ------ ------
$10,944 $3,018 $7,926
======= ====== ======
</TABLE>
Management believes that the remaining reserves for business restructuring
costs are adequate to complete its plan and that a substantial portion of the
remaining accrual will be utilized during 1998.
20
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Homebuilding Operations:
During 1997, the Company reorganized its homebuilding operations into three
distinct business lines; Domestic, International, and Active Adult.
o Domestic Homebuilding operations represent Pulte's primary business line
and are conducted in 40 markets, located throughout 27 states. Domestic
Homebuilding product offerings focus primarily on the first-time and
move-up buyer segments, as well as Canterbury Communities (affordable,
site-built housing).
o International Homebuilding operations are conducted in Puerto Rico,
through a Pulte subsidiary, and in Mexico through Pulte-affiliated
entities. International Homebuilding product offerings focus on the
demand of first-time buyers and social interest housing in Mexico. The
Company has several agreements in place with multi-national corporations
to support social interest housing in Mexico.
o Active Adult Homebuilding operations through March 25, 1998, were
conducted through Pulte subsidiaries. On March 25, 1998, the Company
announced the formation of a new venture in which both the Company and
Blackstone Real Estate Advisors (BRE), an affiliate of the Blackstone
Group, have committed investment capital for the purpose of acquiring
and developing major active adult residential communities. In an initial
transaction, the venture purchased and will continue to develop four of
the Company's existing active adult communities. Both the Company and
BRE maintain a 50% ownership interest in this new venture. Active Adult
homebuilding operations focus on the development of amenitized
age-targeted or age-restricted communities appealing to a growing
demographic group in their pre-retirement/retirement years.
Certain operating data relating to the Company's homebuilding operations for
the three months ended March 31, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1998 1997
---- ----
<S> <C> <C>
Pre-tax income (loss):
Homebuilding operations:
Domestic ............................... $ 20,355 $ 8,996
International .......................... 864 (215)
Active Adult ........................... (1,460) (866)
-------- -------
Total Homebuilding operations .......... $ 19,759 $ 7,915
======== =======
Pulte and Pulte-affiliate settlements - units:
Domestic .................................. 2,980 2,604
-------- -------
International:
Pulte .................................. 52 53
Pulte-affiliated entities .............. 1,410 557
-------- -------
Total International .................. 1,462 610
-------- -------
Active Adult:
Pulte .................................. 64 41
Pulte-affiliated entity ................ 16 --
-------- -------
Total Active Adult ................... 80 41
-------- -------
Total Pulte and Pulte-affiliate
settlements - units .................. 4,522 3,255
======== =======
</TABLE>
21
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Homebuilding Operations (continued):
Domestic Homebuilding:
The domestic homebuilding business line represents the Company's core
business. Operations are conducted in 40 markets, located throughout 27
states, and are organized into nine regions as follows:
Pulte Home East:
- ----------------
Mid-Atlantic Region Connecticut, Delaware, Maryland, Massachusetts,
New Jersey, New Hampshire,
Pennsylvania, Rhode Island, Virginia
Southeast Region Georgia, North Carolina, South Carolina
Florida Region Florida
Pulte Home Central:
- -------------------
Great Lakes Region Indiana, Michigan, Missouri, Ohio, Kansas
Midwest Region Illinois, Minnesota, Wisconsin
Texas Region Texas
Pulte Home West:
- ----------------
Southwest Region Arizona, Nevada
Rocky Mountain Region Colorado, Utah
California Region California
No one individual market within the 40 markets represented more than 10% of
total domestic homebuilding net new orders, unit settlements or revenues
during the three month period ended March 31, 1998.
The following table presents selected unit information for Pulte's domestic
homebuilding operations for the three month periods ended March 31, 1998 and
1997.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Unit settlements:
Pulte Home East ...................... 1,428 1,275
Pulte Home Central ................... 813 721
Pulte Home West ...................... 739 608
-------- --------
2,980 2,604
======== ========
Net new orders - units:
Pulte Home East ...................... 2,209 1,803
Pulte Home Central ................... 1,718 1,258
Pulte Home West ...................... 1,006 906
-------- --------
4,933 3,967
======== ========
Net new orders - dollars ............... $857,000 $644,000
======== ========
Backlog - units:
Pulte Home East ...................... 2,341 2,144
Pulte Home Central ................... 1,921 1,517
Pulte Home West ...................... 1,084 945
-------- --------
5,346 4,606
======== ========
Backlog at March 31 - dollars .......... $979,000 $803,000
======== ========
</TABLE>
22
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Homebuilding Operations (continued):
Domestic Homebuilding (continued):
Net new orders increased during the first quarter of 1998 by 966 units, or
approximately 24%, over the first quarter of 1997 to a Company record of
4,933 units. Contributing to a majority of this increase were Pulte markets
in the Southeast, Mid-Atlantic, Texas, Great Lakes, California, and Midwest
Regions. In general, macro-economic and weather conditions favorably affected
the new order environment during the first quarter of 1998.
Unit settlements during the three months ended March 31, 1998, increased
approximately 14% from the comparable prior year period, to 2,980 units. This
is due primarily to the 5% higher unit backlog noted at December 31, 1997
from the backlog at December 31, 1996. Positive comparisons between the three
month periods ended March 31, 1998 and 1997 were noted for Pulte markets in
the Southeast, Southwest, California, and Midwest Regions.
As a result of the favorable environment surrounding new orders during the
first quarter of 1998, unit backlog at March 31, 1998 increased by 740 units,
or approximately 16%, from the balance noted at March 31, 1997, and increased
by 1,953 units, or approximately 58%, from unit backlog at December 31, 1997.
The following table presents a summary of pre-tax income for Pulte's domestic
homebuilding operations for the three month periods ended March 31, 1998 and
1997:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Revenues........................................ $ 495,367 $ 414,315
Cost of sales................................... (419,117) (352,456)
Selling, general and administrative expense..... (50,958) (52,383)
Interest (a).................................... (3,886) (3,352)
Other income (expense), net..................... (1,051) 2,872
--------- ---------
Pre-tax income.................................. $ 20,355 $ 8,996
========= =========
Average sales price............................. $ 166 $ 159
========= =========
<FN>
(a)The Company capitalizes interest cost into homebuilding inventories and
charges the interest to homebuilding interest expense when the related
inventories are closed.
</TABLE>
23
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Homebuilding Operations (continued):
Domestic Homebuilding (continued):
Gross profit margins were 15.4% for the three month period ended March 31,
1998, compared with 14.9% in the similar period of the prior year. This
favorable comparison between quarters is the result of the favorable market
demand conditions which were present during the latter portion of 1997, as
well as results from the Company's ongoing process improvement initiatives
which are aimed towards reducing the component costs of house construction.
These initiatives continue to provide margin improvement on a
sequential-period basis as indicated in the improvement from 14.9% gross
margins realized for the fourth quarter of 1997.
During the first three months of 1998, selling, general and administrative
expenses (SG&A) began to reflect savings from the corporate reorganization
effected in the second half of 1997. During the first quarter of 1998, the
absolute amount of SG&A decreased $1,425, or 3%, from prior year levels while
SG&A as a percentage of sales revenues declined from 12.6% for the three
months ended March 31, 1997, to 10.3% for the three months ended March 31,
1998, a 230 basis-point improvement.
Other income, net, includes gains on land sales and other
homebuilding-related expenses. Other income, net, has also historically
included the net operating results of Pulte's Builder Supply & Lumber (BSL)
subsidiary prior to its sale on March 20, 1998. For the three months ended
March 31, 1998, other income, net, was unfavorably impacted by results
attributable to BSL. In the first quarter of 1998, Pulte recognized a loss
from operations and sales transaction costs aggregating $1,700 as compared to
profit from operations of $1,800 for the comparative period.
The average selling price during the three month period ended March 31, 1998
was $166, a 4% increase from the average selling price of $159 in the
comparable period of the prior year. The average selling price for the fourth
quarter of 1997 was $166. Changes in average selling price are primarily due
to the mix of product closed during a period.
Information related to interest in inventory is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Interest in inventory at beginning of period....... $14,719 $12,846
Interest capitalized............................... 5,049 4,151
Interest expensed ................................ (3,886) (3,352)
------- -------
Interest in inventory at end of period............. $15,882 $13,645
======= =======
</TABLE>
At March 31, 1998, Pulte's domestic homebuilding operations controlled
approximately 46,600 lots, of which approximately 26,700 lots were owned and
approximately 19,900 lots were controlled through option agreements.
24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Homebuilding Operations (continued):
International Homebuilding:
International Homebuilding operations are conducted in Puerto Rico, through a
Pulte subsidiary, and in Mexico through three joint venture investments owned
by a foreign subsidiary.
The following table presents selected financial data for Pulte's
international homebuilding operations for the three month periods ended
March 31, 1998 and 1997.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Pre-tax income (loss):
Revenues...................................... $ 4,116 $ 3,248
Cost of sales................................. (3,572) (2,798)
Selling, general and administrative expense... (1,293) (758)
Other income, net............................. 12 3
Equity in income of Mexico operations......... 1,601 90
------- -------
Pre-tax income (loss)......................... $ 864 $ (215)
======= =======
Unit settlements:
Pulte....................................... 52 53
Pulte-affiliated entities................... 1,410 557
------- -------
Total Pulte and Pulte-affiliates.......... 1,462 610
======= =======
</TABLE>
Pre-tax income of the Company's international operations improved by $1,079
as a result of an $1,511 increase in the equity in income from the Mexico
joint venture operations. This improvement is principally due to a 50%
increase in the number of unit closings relating to the Company's housing
agreement with Delphi Automotive Systems, a division of General Motors
Corporation (GM).
In early 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 $1,600 as of March 31, 1998. 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 communities in the cities of Juarez, Chihuahua, Nuevo Laredo,
Reynosa and Matamoros. During 1996, the Company announced that its Juarez
joint venture had entered into two separate agreements to construct homes in
Mexico; one with GM and one with Sony Magneticos de Mexico, S.A. de C.V., an
affiliate of Sony Electronics, Inc. (Sony). The Company's net investment in
the Juarez joint venture approximated $17,000 as of March 31, 1998. The
Company is a party to a joint venture to build 50 upper income housing units
in Mexico City which are expected to close by the end of 1998. The Company's
net investment in this joint venture approximated $600 as of March 31, 1998.
25
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Homebuilding Operations (continued):
Active Adult Homebuilding:
Active Adult Homebuilding operations through March 25, 1998, were conducted
through Pulte subsidiaries. On March 25, 1998, the Company announced the
formation of a new venture in which both the Company and Blackstone Real
Estate Advisors (BRE), an affiliate of the Blackstone Group, have committed
investment capital for the purpose of acquiring and developing major active
adult residential communities. In an initial transaction, the venture
purchased and will continue to develop four of the Company's existing active
adult communities. Both the Company and BRE maintain a 50% ownership interest
in this new venture. Active Adult homebuilding operations focus on the
development of amenitized age-targeted or age-restricted communities
appealing to a growing demographic group in their pre-retirement/retirement
years.
The following table presents selected financial data for Pulte's Active Adult
homebuilding operations for the three month periods ended March 31, 1998 and
1997. The three month period ended March 31, 1998, includes the operating
results of the Company's subsidiaries from January 1, 1998, through March 25,
1998, and the operating results of the joint venture entity from March 26,
1998 through March 31, 1998.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1998 1997
---- ----
<S> <C> <C>
Pre-tax income (loss):
Revenues ...................................... $ 9,152 $ 5,652
Cost of sales ................................. (7,311) (4,751)
Selling, general and administrative expense ... (3,598) (1,726)
Other income, net ............................. (267) (41)
Equity in income of joint venture ............. 564 --
-------- --------
Pre-tax income (loss) ......................... $ (1,460) $ (866)
======== ========
Pulte and Pulte-affiliate:
Average sales price ........................... $ 171 $ 138
======== ========
Unit settlements .............................. 80 41
======== ========
Net new orders - units ........................ 215 121
======== ========
Net new orders - dollars ...................... $ 39,500 $ 16,200
======== ========
Backlog - units ............................... 249 186
======== ========
Backlog - dollars ............................. $ 44,600 $ 26,200
======== ========
</TABLE>
Net new orders increased during the first quarter of 1998 by 94 units. These
units primarily relate to two communities for which sales operations had not
yet commenced in the comparable prior year period. Unit settlements for the
three months ended March 31, 1998 increased by 39 units from the first
quarter of 1997, primarily as a result of one community which recognized its
first closings during the 1998 period. Sixteen of the unit settlements
reported are attributable to the 5 days of operations of the new joint
venture. The increased revenues and cost of sales are the result of the
increased unit settlements and a higher average selling price. Selling,
general and administrative expenses increased during the first quarter of
1998 principally due to costs associated with starting up operations at two
new communities. The increases in average selling price and average selling
price in backlog are due to the mix of products sold and communities
operating in each respective period. Equity in income of joint venture
represents the income recognized by the Company during the first quarter of
1998 relating to the operations of the joint venture entity.
26
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Financial Services Operations:
The Company conducts its financial services operations principally through
Pulte Mortgage Corporation (Pulte Mortgage), the Company's mortgage banking
subsidiary, and to a limited extent by Pulte Financial Companies, Inc.
(PFCI), the Company's financing subsidiary. Pre-tax income (loss) of the
Company's financial services operations for the three month periods ended
March 31, 1998 and 1997, is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Pre-tax income (loss):
Mortgage banking ...................... $ 2,411 $ 120
Financing activities .................. (23) (42)
------- -----
Pre-tax income ...................... $ 2,388 $ 78
======= =====
</TABLE>
Mortgage Banking:
The following table presents mortgage origination data for Pulte Mortgage:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
Total originations:
Loans .................................. 2,372 1,827
========= =========
Principal .............................. $ 305,400 $ 221,100
========= =========
Originations for Pulte customers:
Loans .................................. 1,795 1,467
========= =========
Principal .............................. $ 234,900 $ 184,800
========= =========
</TABLE>
Mortgage origination volume for the three months ended March 31, 1998,
increased 38% compared to the similar 1997 period. This increase was
primarily the result of increased loan originations for Pulte customers and
increased volume of refinancings. The volume of originations for Pulte
customers decreased to 76% of total originations for the three months ended
March 31, 1998, from 80% of total originations for the similar period of
1997. This decrease is the result of the increased volume of refinancings
during the first quarter of 1998. 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. At March 31, 1998, loan application backlog
increased 32% to $459,000 compared with $294,000 at December 31, 1997, and
$347,000 at March 31, 1997.
During the first three months of 1998, origination fees increased $333 and
pricing and marketing gains increased $2,040 from the comparable period of
the prior year due to an increase in servicing retained originations. Net
interest income decreased $256 during the first three months of 1998
primarily due to the payment of dividends in excess of current earnings by
Pulte Mortgage to Pulte and due to the flattening of the yield curve during
the latter half of 1997. Pulte Mortgage's operating expenses decreased $435
during the first quarter of 1998 primarily as a result of the mortgage
operations center and mortgage application center initiatives implemented
during late 1996 and 1997, respectively. Pulte Mortgage believes that these
new processes will speed up the loan approval process while lowering its
total cost from application to closing.
27
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Financial Services Operations (continued):
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 March 31, 1998, one bond series with a principal amount of
$35,427 was outstanding. For the three months ended March 31, 1998, PFCI's
pre-tax operating loss was $23. This compares to a pre-tax loss of $42 for
the comparable period 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.
The following table presents corporate results of operations for the three
month periods ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Net interest expense............................. $3,464 $ 2,443
Other corporate expenses, net.................... 831 3,543
------ -------
Loss before income taxes......................... $4,295 $ 5,986
====== =======
</TABLE>
The decrease in pre-tax loss for the three month period ended March 31, 1998,
is primarily due to the net of the following:
o recognition of a one-time gain of $5,000 from the sale of the Company's
interest in Expression Homes;
o an increase in net interest expense associated with the issuance of
$150,000 of 7.625% Senior Notes, due 2017, during the fourth quarter of
1997; and
o provisions for the write-down of certain projects and alternative
building component investments.
Liquidity and Capital Resources :
Continuing Operations:
The Company's net cash flows from operating activities increased from a use
of $73,481 for the three months ended March 31, 1997, to source of $110,307
for the three months ended March 31, 1998. This is principally due to an
approximately $120,000 decrease in the level of net cash investment in
inventories as compared to the 1997 period and an approximately $61,000
decrease in other assets resulting from the proceeds from the sale of BSL and
the proceeds from the sale of one-half of the Company's interest in certain
Active Adult communities to the new Pulte / Blackstone joint venture. Net
cash provided by investing activities decreased from $2,096 for the three
months ended March 31, 1997 to $1,759 for the three months ended March 31,
1998. The Company's net cash used in financing activities decreased from
$55,969 for the three months ended March 31,1997, to $54,293 for the three
months ended March 31, 1998.
28
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000's omitted)
Liquidity and Capital Resources (continued):
Continuing Operations (continued):
At March 31, 1998, the Company had cash and equivalents of $302,929 and total
long-term indebtedness of $607,988. The Company's total indebtedness includes
$487,351 of unsecured senior notes, $22,405 of unsecured senior subordinated
debentures, other Pulte non-recourse and limited recourse debt of $30,274 and
$26,771, respectively, $5,760 of First Heights' advances and $35,427 of
mortgage-backed bonds payable for PFCI.
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 and equivalents, its $210,000
committed unsecured revolving credit facility, and other committed and
uncommitted credit lines, which at March 31, 1998, consisted of $20,000 and
$250,000 related to Pulte and Pulte Mortgage operations, respectively. During
the remainder of 1998, management anticipates that homebuilding and corporate
working capital requirements, as well as cash payments associated with the
Company's restructuring plan, 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,
including securities offerings.
The Company finances its land acquisitions, development and construction
activities from internally generated funds and existing credit agreements.
The Company had no borrowings under its $210,000 unsecured revolving credit
facility during the first quarter of 1998 and no balance was outstanding at
March 31, 1998. Pulte Mortgage 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 March 31,
1998, amounted to $250,000, an amount deemed adequate to cover foreseeable
needs. There were approximately $121,310 of borrowings outstanding under the
$250,000 (Pulte Mortgage) arrangement at March 31, 1998. 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.
Discontinued Operations:
Since the acquisition of First Heights, the Company's income taxes have been
significantly impacted by its thrift operations, principally because payments
received from the 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 negotiating and involved in
litigation with the FDIC. Although there is no certainty as to the time frame
for resolution of these matters, the Company believes that they might be
resolved within the next twelve months. At March 31, 1998, the Company had a
remaining investment in First Heights of approximately $26,000.
Forward-Looking Statements:
As a 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.
29
<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 32
(27) Financial Data Schedule
Allother exhibits are omitted from this report because they are
not applicable.
Reports on Form 8-K during the quarter ended March 31, 1998
Form 8-K dated March 20, 1998:
Item 5. Other Events
Disclosed that indenture supplements were entered into with (1) The
Bank of New York concerning $100,000,000 aggregated principal
amount of 7% senior notes of the Company due 2003, and $115,000,000
aggregated principal amount of 8-3/8% senior notes of the Company
due 2004 and (2) The First National Bank of Chicago concerning
$125,000,000 aggregated principal amount of 7.3% senior notes of
the Company due 2005.
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/ ROGER A CREGG
---------------------------------
Roger A. Cregg
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ VINCENT J. FREES
---------------------------------
Vincent J. Frees
Vice President and Controller
(Principal Accounting Officer)
Date: May 15, 1998
31
<TABLE>
<CAPTION>
PULTE CORPORATION
EXHIBIT 11 - STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
(000's omitted, except per share data)
Three Months Ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Basic:
Numerator:
Net income ........................................ $11,261 $ 2,237
======= =======
Denominator:
Weighted average common shares outstanding ........ 21,294 23,296
======= =======
Net income per share .............................. $ .53 $ .09
======= =======
Assuming dilution:
Numerator:
Net income ........................................ $11,261 $ 2,237
======= =======
Denominator:
Weighted average common shares outstanding ........ 21,294 23,296
Effect of dilutive securities - stock options ..... 330 172
------- -------
Total .......................................... 21,624 23,468
======= =======
Net income per share .............................. $ .52 $ .09
======= =======
</TABLE>
32
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31,
1998 AND FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 302,929
<SECURITIES> 0
<RECEIVABLES> 41,280
<ALLOWANCES> 0
<INVENTORY> 1,100,026
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,075,179
<CURRENT-LIABILITIES> 0
<BONDS> 540,030<F1>
<COMMON> 213
0
0
<OTHER-SE> 823,921
<TOTAL-LIABILITY-AND-EQUITY> 2,075,179
<SALES> 508,635<F2>
<TOTAL-REVENUES> 520,571
<CGS> 430,000<F2>
<TOTAL-COSTS> 504,884
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,886<F3>
<INCOME-PRETAX> 17,852
<INCOME-TAX> 6,962
<INCOME-CONTINUING> 10,890
<DISCONTINUED> 371
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,261
<EPS-PRIMARY> 0.53<F4>
<EPS-DILUTED> 0.52
<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.
<F4> Relates to basic EPS.
</TABLE>
