PulteGroup (PHM) 10-Q 2001 Q2 Quarterly report

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2001
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-9804

PULTE HOMES, INC.
(Exact name of registrant as specified in its charter)

MICHIGAN
(State or other jurisdiction of
incorporation or organization) 38-2766606
(I.R.S. Employer
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         NO 

Number of shares of common stock outstanding as of July 31, 2001: 58,916,547

Total pages: 35

Listing of exhibits: 33

1

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
	ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
	CONDENSED CONSOLIDATED BALANCE SHEETS, JUNE 30, 2001 AND DECEMBER 31, 2000
	CONSOLIDATED STATEMENTS OF INCOME, FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
	CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
	CONSOLIDATED STATEMENTS OF CASH FLOWS, FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II OTHER INFORMATION
	ITEM 1 LEGAL PROCEEDINGS
	ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 6 EXHIBITS AND REPORT ON FORM 8-K
SIGNATURES

PULTE HOMES, INC.

INDEX

		Page No.
PART I FINANCIAL INFORMATION
	Item 1       Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets, June 30, 2001 and December 31, 2000		3
	Consolidated Statements of Income, for the Three and Six Months Ended June 30, 2001 and 2000		4
	Consolidated Statements of Shareholders’ Equity, for the Six Months Ended June 30, 2001 and 2000		5
	Consolidated Statements of Cash Flows, for the Six Months Ended June 30, 2001 and 2000		6
	Notes to Condensed Consolidated Financial Statements		7
	Item 2       Management’s Discussion and Analysis of Financial Condition		22
	and Results of Operations		22
	Item 3       Quantitative and Qualitative Disclosures About Market Risk		32
PART II OTHER INFORMATION
	Item 1       Legal Proceedings		32
	Item 4       Submission of Matters to a Vote of Security Holders		33
	Item 6       Exhibits and Reports on Form 8-K		33
SIGNATURES			35

2

PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

PULTE HOMES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000’s omitted)

			June 30,		December 31,
			2001		2000
			(Unaudited)		(Note)
ASSETS
Cash and equivalents			$	101,805	$	183,985
Unfunded settlements				47,604		83,147
House and land inventories				2,289,842		1,880,263
Residential mortgage loans available-for-sale				203,622		259,239
Other assets				539,954		423,277
Deferred income taxes				44,738		56,572
	Total assets		$	3,227,565	$	2,886,483
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Accounts payable and accrued liabilities, including book overdrafts
		of $121,585 and $111,211 in 2001 and 2000, respectively	$	750,987	$	708,178
	Collateralized short-term debt, recourse solely to financial services
		subsidiary assets		196,186		242,603
	Income taxes			36,104		10,169
	Subordinated debentures and senior notes			884,918		677,602
		Total liabilities		1,868,195		1,638,552
Shareholders’ equity				1,359,370		1,247,931
			$	3,227,565	$	2,886,483

Note:   The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

See accompanying Notes to Condensed Consolidated Financial Statements.

3

PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(000’s omitted, except per share data)
(Unaudited)

					Three Months Ended					Six Months Ended
					June 30,					June 30,
					2001			2000		2001			2000
Revenues:
	Homebuilding				$	1,005,985		$	971,993	$	1,823,305		$	1,737,581
	Financial services, interest and other					16,436			10,535		30,511			20,700
	Corporate					905			56		1,622			122
				Total revenues		1,023,326			982,584		1,855,438			1,758,403
Expenses:
	Homebuilding, principally cost of sales					899,789			886,359		1,651,411			1,606,568
	Financial services, interest and other					10,673			7,098		19,296			13,796
	Corporate, net					14,322			13,276		24,581			23,257
				Total expenses		924,784			906,733		1,695,288			1,643,621
Other income:
	Equity in income of Pulte-affiliates					25			1,639		2,025			2,170
Income from continuing operations before income
	taxes					98,567			77,490		162,175			116,952
Income taxes						37,948			29,830		62,437			45,023
Income from continuing operations						60,619			47,660		99,738			71,929
Income (loss) from discontinued operations						(825	)		32		(573	)		99
Net income					$	59,794		$	47,692	$	99,165		$	72,028
Per share data:
	Basic:
		Income from continuing operations			$	1.44		$	1.16	$	2.38		$	1.72
		Income (loss) from discontinued operations				(.02	)		—		(.01	)		—
		Net income			$	1.42		$	1.16	$	2.37		$	1.72
	Assuming dilution:
		Income from continuing operations			$	1.40		$	1.15	$	2.31		$	1.71
		Income (loss) from discontinued operations				(.02	)		—		(.01	)		—
		Net income			$	1.38		$	1.15	$	2.30		$	1.71
	Cash dividends declared				$	.04		$	.04	$	.08		$	.08
	Number of shares used in calculation:
		Basic:
			Weighted-average common shares outstanding			41,987			41,053		41,892			41,875
		Assuming dilution:
			Effect of dilutive securities			1,378			516		1,299			355
			Adjusted weighted-average common shares
				and effect of dilutive securities		43,365			41,569		43,191			42,230

See accompanying Notes to Condensed Consolidated Financial Statements.

4

PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
($000’s omitted)
(Unaudited)

											Accumulated
											Other
					Additional						Comprehensive
		Common			Paid-in			Unearned			Income			Retained
		Stock			Capital			Compensation			(Loss)			Earnings			Total
Shareholders’ Equity, December 31, 2000		$	416		$	109,593		$	—		$	185		$	1,137,737		$	1,247,931
Exercise of stock options			5			13,059			—			—			—			13,064
Issuance of restricted stock			1			5,557			(5,558	)		—			—			—
Amortization of restricted stock award			—			—			772			—			—			772
Cash dividends declared			—			—			—			—			(3,382	)		(3,382	)
Comprehensive income:
	Net income		—			—			—			—			99,165			99,165
	Change in fair value of derivatives		—			—			—			(312	)		—			(312	)
	Foreign currency translation adjustments		—			—			—			2,132			—			2,132
	Total comprehensive income																	100,985
Shareholders’ Equity, June 30, 2001		$	422		$	128,209		$	(4,786	)	$	2,005		$	1,233,520		$	1,359,370
Shareholders’ Equity, December 31, 1999		$	433		$	77,070		$	—		$	(259	)	$	1,016,075		$	1,093,319
Exercise of stock options			3			6,507			—			—			—			6,510
Cash dividends declared			—			—			—			—			(3,336	)		(3,336	)
Stock repurchases			(31	)		(5,649	)		—			—			(55,774	)		(61,454	)
Comprehensive income:
	Net income		—			—			—			—			72,028			72,028
	Foreign currency translation adjustments		—			—			—			197			—			197
	Total comprehensive income																	72,225
Shareholders’ Equity, June 30, 2000		$	405		$	77,928		$	—		$	(62	)	$	1,028,993		$	1,107,264

See accompanying Notes to Condensed Consolidated Financial Statements.

5

PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000’s omitted)
(Unaudited)

					Six Months Ended
					June 30,
					2001			2000
Continuing operations:
Cash flows from operating activities:
	Net income				$	99,165		$	72,028
	Adjustments to reconcile net income to net cash flows used in
		operating activities:
				Amortization, depreciation and other		9,937			7,531
				Deferred income taxes		11,834			1,843
				Increase (decrease) in cash due to:
				Inventories		(499,861	)		(301,293	)
				Residential mortgage loans available-for-sale		55,616			69,226
				Other assets		10,473			(17,828	)
				Accounts payable and accrued liabilities		22,427			21,355
				Income taxes		29,337			(5,701	)
Net cash used in operating activities						(261,072	)		(152,839	)
Cash flows from investing activities:
	Increase in covered assets and FRF receivables					(2,018	)		(1,844	)
	Other, net					781			(865	)
Net cash used in investing activities						(1,237	)		(2,709	)
Cash flows from financing activities:
	Proceeds from borrowings					218,852			264,157
	Repayment of borrowings					(46,417	)		(70,487	)
	Issuance of common stock					9,663			—
	Stock repurchases					—			(61,454	)
	Dividends paid					(3,382	)		(3,336	)
	Other, net					1,413			5,874
Net cash provided by financing activities						180,129			134,754
Net decrease in cash and equivalents						(82,180	)		(20,794	)
Cash and equivalents at beginning of period						183,985			51,797
Cash and equivalents at end of period					$	101,805		$	31,003
Supplemental disclosure of cash flow information- cash paid during the period for:
			Interest, net of amount capitalized		$	10,883		$	14,752
			Income taxes		$	18,345		$	38,265

See accompanying Notes to Condensed Consolidated Financial Statements.

6

PULTE HOMES, INC.
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 Homes, Inc., formerly Pulte Corporation (the “Company” or “Pulte”), and all of its significant subsidiaries. The Company’s direct subsidiaries include Pulte Diversified Companies, Inc. (PDCI) and other subsidiaries which are engaged primarily in the homebuilding business. PDCI’s operating subsidiaries include Pulte Home Corporation, Pulte International Corporation and other subsidiaries which are engaged in the homebuilding business. PDCI’s non-operating thrift subsidiary, First Heights Bank, fsb (First Heights), has been classified as a discontinued operation (See Note 2). The Company also has a mortgage banking company, Pulte Mortgage Company (PMC), which is a subsidiary of Pulte Home Corporation.

      The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 accounting principles generally accepted in the United States 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 six month period ended June 30, 2001, are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. 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, 2000.

      Certain amounts related to discontinued operations previously reported in the 2000 financial statements and notes thereto were reclassified to conform to the 2001 presentation.

Derivative Instruments and Hedging Activities

      Financial Accounting Standards Board Statement No. 133,“Accounting for Derivative Instruments and Hedging Activities,” as amended by Financial Accounting Standards Board Statement No. 138,“Accounting for Certain Derivative Instruments and Certain Hedging Activities,” requires companies to recognize all of their derivative instruments as either assets or liabilities at fair value in the statement of financial position. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as either a fair value hedge or a cash flow hedge.

      For derivative instruments that are designated and qualify as a fair value hedge (i.e., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings during the period of the change in fair values. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in current earnings during the period of change. The Company currently uses only cash flow hedge accounting.

7

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted, except per share information)
(Unaudited)

1. Basis of presentation and significant accounting policies (continued)

      Market risks arise from movements in interest rates and cancelled or modified commitments to lend. In order to reduce these risks, the Company uses derivative financial instruments. These financial instruments include cash forward placement contracts on mortgage-backed securities, whole loan investor commitments, options on treasury futures contracts, and options on cash forward placement contracts on mortgage-backed securities. The Company does not use any derivative financials instruments for trading purposes. When the Company commits to lend to the borrower (interest rate is locked to the borrower), the Company enters into one of the aforementioned derivative financial instruments. The change in the value of the loan commitment and the derivative financial instrument is recognized in current earnings during the period of change.

      The Company hedges portions of its forecasted cash flow from sales of closed mortgage loans with derivative financial instruments. For the six months ended June 30, 2001, the Company did not recognize any net gains or losses related to the ineffective portion of the hedging instrument excluded from the assessment of hedge effectiveness. In addition, the Company recognized $2, net of taxes, in losses during 2001, for cash flow hedges that were discontinued because it is probable that the original forecasted transaction will not occur. At June 30, the Company expects to reclassify $312, net of taxes, of net gains on derivative instruments from accumulated other comprehensive income to earnings during the next twelve months from sales of closed mortgage loans.

New Accounting Pronouncements

      In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141,“Business Combinations”, and No. 142,“Goodwill and Other Intangible Assets,” effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives.

      The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. Application of the nonamortization provisions of the Statement is expected to result in an increase in net income of approximately $4,100 ($0.09 per share) per year. Any goodwill recorded as a result of the July 2001 acquisition of Del Webb Corporation (Note 5) will not be amortized. During 2002, the Company will perform the first of the required impairment tests of goodwill as of January 1, 2002, and has not yet determined what the effect of these tests will be on the earnings and financial position of the Company.

2. Discontinued operations

      During the first quarter of 1994, the Company adopted a plan of disposal for First Heights and announced its strategy to exit the thrift industry and increase its focus on housing and related mortgage banking. First Heights sold all but one of its 32 bank branches and related deposits to two unrelated purchasers. The sale was substantially completed during the fourth quarter of 1994, although the Company held brokered deposits which were not liquidated until 1998.

8

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

2. Discontinued operations (continued)

      Although the Company in 1994 expected to complete the plan of disposal within a reasonable period of time, contractual disputes with the Federal Deposit Insurance Corporation (FDIC) prevented the prepayment of the FSLIC Resolution Fund (FRF) notes, thereby precluding the Company from completing the disposal in accordance with its original plan. To provide liquidity for the sale, First Heights liquidated its investment portfolios and its single-family residential loan portfolio and, as provided in the Assistance Agreement, entered into a Liquidity Assistance Note (LAN) with the FDIC acting in its capacity as manager of the FRF. The LAN is collateralized by the FRF notes and bears interest at a rate indexed to the Texas Cost of Funds plus a spread. The LAN and the FRF notes matured in September 1998; however, payment of these obligations is being withheld by both parties pending resolution of all open matters with the FDIC. As discussed in Note 4, the Company is involved in litigation with the FDIC and, as part of this litigation, the parties have asserted various claims with respect to obligations under promissory notes issued by each of the parties in connection with the thrift acquisition and activities.

      First Heights no longer holds any deposits, nor does it maintain an investment portfolio. First Heights’ day-to-day activities have been principally devoted to supporting residual regulatory compliance matters and the litigation with the FDIC; and are not reflective of the active operations of the former thrift, such as maintaining traditional transaction accounts, (e.g., checking and savings accounts) or making loans. Accordingly, such operations are presented as discontinued.

      Included in accounts payable and accrued liabilities are litigation-related accruals recorded by the Company, offset by accounts and notes receivable due from the FRF, of $29,129 as of June 30, 2001 and $30,250 as of December 31, 2000.

      Revenues of the Company’s discontinued thrift operations primarily represent interest income on the outstanding FRF notes and receivables, and for the three months ended June 30, 2001 and 2000, amounted to $344 and $961, respectively, with after-tax income (loss) of $(825) and $32, respectively. For the six months ended June 30, 2001 and 2000, revenue was $1,427 and $1,886, respectively, with after tax income (loss) of $(573) and $99, respectively.

3. Segment information

      The Company has three reportable segments: Homebuilding, Financial Services and Corporate. The Company’s Homebuilding segment consists of the following two business units:

• Domestic Homebuilding, the Company’s core business, is engaged in the acquisition and development of land primarily for residential purposes within the continental United States and the construction of housing on such land targeted for the first-time, first and second move-up and active adult home buyer groups.

• International Homebuilding is primarily engaged in the acquisition and development of land principally for residential purposes, and the construction of housing on such land in Mexico, Puerto Rico and Argentina.

      The Company’s Financial Services segment consists principally of mortgage banking operations conducted through PMC and its subsidiaries.

      Corporate is a non-operating business segment whose primary purpose is to support the operations of the Company’s subsidiaries as the internal source of financing, to develop and implement strategic initiatives centered on new business development and operating efficiencies, and to provide the necessary administrative functions to support the Company as a publicly traded entity.

9

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

3. Segment information (continued)

			Operating Data by Segment
			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2001			2000			2001			2000
Revenues:
	Homebuilding		$	1,005,985		$	971,993		$	1,823,305		$	1,737,581
	Financial Services			16,436			10,535			30,511			20,700
	Corporate			905			56			1,622			122
Total revenues				1,023,326			982,584			1,855,438			1,758,403
Cost of sales:
	Homebuilding			802,166			790,292			1,456,949			1,420,973
Selling, general and administrative:
	Homebuilding			102,250			88,504			191,052			171,269
	Financial Services			8,403			5,487			14,717			10,459
	Corporate			3,736			3,405			6,210			4,972
		Total selling, general and administrative		114,389			97,396			211,979			186,700
Interest:
	Homebuilding			8,296			6,489			14,236			11,567
	Financial Services			2,270			1,611			4,579			3,287
	Corporate			8,939			7,949			15,305			13,681
		Total interest		19,505			16,049			34,120			28,535
Other (income) expense, net:
	Homebuilding			(12,923	)		1,075			(10,826	)		2,760
	Financial Services			—			—			—			50
	Corporate			1,647			1,921			3,066			4,603
		Total other (income) expense, net		(11,276	)		2,996			(7,760	)		7,413
Total costs and expenses				924,784			906,733			1,695,288			1,643,621
Equity in income of joint ventures:
	Homebuilding			25			1,639			2,025			2,170
Income (loss) before income taxes:
	Homebuilding			106,221			87,272			173,919			133,182
	Financial Services			5,763			3,437			11,215			6,904
	Corporate			(13,417	)		(13,219	)		(22,959	)		(23,134	)
Total income before income taxes			$	98,567		$	77,490		$	162,175		$	116,952

10

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

3. Segment information (continued)

		Asset Data by Segment
					Financial
			Homebuilding		Services		Corporate		Total
At June 30, 2001:
	Inventory		$	2,289,842	$	—	$	—	$	2,289,842
	Identifiable assets			2,870,369		242,698		114,498	$	3,227,565
At December 31, 2000:
	Inventory		$	1,880,263	$	—	$	—	$	1,880,263
	Identifiable assets			2,443,540		283,265		159,678	$	2,886,483

4. Commitments and contingencies

      The Company is involved in various litigation incidental to its continuing business operations. Management believes that none of this litigation will have a material adverse impact on the results of operations or financial position of the Company.

First Heights-related litigation

      The Company is a party to three lawsuits relating to First Heights’ 1988 acquisition from the Federal Savings and Loan Insurance Corporation (FSLIC) and First Heights’ ownership of five failed Texas thrifts. The first lawsuit (the “District Court Case”) was filed on July 7, 1995, in the United States District Court, Eastern District of Michigan, by the Federal Deposit Insurance Corporation (FDIC) against the Company, PDCI and First Heights (collectively, the “Pulte Parties”). The second lawsuit (the “Court of Federal Claims Case”) was filed on December 26, 1996, in the United States Court of Federal Claims (Washington, D.C.) by the Pulte Parties against the United States. The third lawsuit was filed by First Heights on January 10, 2000, in the United States District Court, Eastern District of Michigan against the FDIC regarding the amounts, including interest, the FDIC is obligated to pay First Heights on two promissory notes which had been executed by the FDIC’s predecessor, the FSLIC. The FDIC filed a motion to dismiss the case and on April 12, 2000, the District Court dismissed First Heights’ complaint. First Heights has appealed the Court’s ruling to the Sixth Circuit Court of Appeals and that appeal remains pending.

      In the District Court Case, the FDIC seeks a declaration of rights and other relief related to the Assistance Agreement entered into between First Heights and the FSLIC. The FDIC is the successor to the FSLIC. The FDIC and the Pulte Parties disagreed 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 disputed the FDIC’s claims and believe that a proper interpretation of the Assistance Agreement limited the FDIC’s participation in the tax benefits. The Pulte Parties filed an answer and a counterclaim, seeking, among other things, a declaration that the FDIC has breached the Assistance Agreement in numerous respects. On December 24, 1996, the Pulte Parties voluntarily dismissed without prejudice certain of their claims in the District Court Case and on December 26, 1996, initiated the Court of Federal Claims Case.

11

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

4. Commitments and contingencies (continued)

First Heights-related litigation (continued)

      On March 5, 1999, the United States District Court (the Court), entered a “Final Judgment” against First Heights and PDCI (the Court had previously ruled that Pulte Corporation was not liable for monetary damages to the FDIC) resolving by summary judgment in favor of the FDIC most of the FDIC’s claims against the Pulte Parties. The Final Judgment requires PDCI and First Heights to pay the FDIC monetary damages totaling approximately $221,300, including interest but excluding costs (such as attorneys fees) to be determined in the future by the District Court and post-judgment interest. However, the FDIC acknowledged that it had already paid itself or withheld from assistance its obligation to pay to First Heights approximately $105,000, excluding interest thereon. The Company believes that it is entitled to a credit or actual payment of such amount plus interest. The Final Judgment does not address this issue. The Company disagreed with the District Court’s rulings and appealed the decision to the Sixth Circuit Court of Appeals.

      On October 12, 2000, the Sixth Circuit Court of Appeals rendered its opinion in which it affirmed in part, reversed in part and remanded the case to the District Court for further proceedings. The Sixth Circuit affirmed most of the District Court’s adverse liability rulings, including as to the sharing of certain tax benefits achieved in connection with First Heights’ 1988 acquisition and ownership of the five failed Texas thrifts and regarding the Company’s and First Heights’ amendment of a tax sharing and allocation agreement and rescission of a warrant assumption agreement between PDCI and First Heights. The Sixth Circuit, however, vacated the District Court’s damage calculations as to a number of issues, vacated the District Court’s pre-judgment interest award, and remanded to the District Court for a proper recalculation of all such amounts. The Sixth Circuit denied both the Company’s and the FDIC’s petition for rehearing. Since the Sixth Circuit opinion leaves certain significant issues to be resolved through further Court proceedings the Company is currently unable to precisely calculate the final amount it may owe. Based upon its reading of the Sixth Circuit opinion, however, the Company determined that an after-tax charge of $30,000 to Discontinued Operations was appropriate in 2000. The final settlement with the FDIC may be more or less than amounts provided because the outcome of the remaining litigation issues is uncertain. The Company and the FDIC are actively engaged in negotiations with respect to a possible settlement of this case.

      The Company does not believe that the claims in the Court of Federal Claims Case are in any way prejudiced by the rulings in the District Court Case. The Company is considering seeking relief in the Court of Federal Claims Case that would, if granted, recoup portions of the damages awarded in the District Court Case should they be upheld.

      The Court of Federal Claims Case contains similar claims as those that were voluntarily dismissed from the District Court Case. In their complaint, the Pulte Parties assert breaches of contract on the part of the United States in connection with the enactment of section 13224 of the Omnibus Budget Reconciliation Act of 1993. That provision repealed portions of the tax benefits that the Pulte Parties claim they were entitled to under the contract to acquire the failed Texas thrifts. The Pulte Parties also assert certain other claims concerning the contract, including claims that the United States (through the FDIC as receiver) has improperly attempted to amend the failed thrifts’ pre-acquisition tax returns and that this attempt was made in an effort to deprive the Pulte Parties of tax benefits they had contracted for, and that the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 breached the Government’s obligation not to require contributions of capital greater than those required by the contract.

12

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

5. Subsequent events

Debt

      In July 2001, the Company expanded its revolving credit facilities to a total of $560,000 in contemplation of its acquisition of Del Webb Corporation.

      In August 2001, the Company sold in a private placement pursuant to Rule 144A under the Securities Act, $500,000 of 7 7/8% Senior Notes due in 2011. Net proceeds received from the sale were used to repay certain indebtedness acquired in the Del Webb Corporation acquisition, to pay certain expenses associated with that acquisition and for general corporate purposes.

Del Webb Acquisition

      On July 31, 2001, the Company completed its acquisition of Del Webb Corporation (Del Webb), the nation’s leading developer of active adult communities. For the year ended June 30, 2001, Del Webb reported revenues of $1,936,117 on unit settlements of 7,038 homes. Backlog reported at June 30, 2001 was 3,682 units valued at approximately $994,000. Under the terms of the merger agreement, each outstanding share of Del Webb common stock was exchanged for approximately 0.894 shares of newly issued Company stock. Approximately 17 million shares were issued to Del Webb shareholders.

6. Supplemental Guarantor information

      The Company has the following outstanding Senior Note obligations: (1) $200,000, 8.125%, due 2011, (2) $175,000, 9.5%, due 2003, (3) $100,000, 7%, due 2003, (4) $112,000, 8.375%, due 2004, (5) $125,000, 7.3%, due 2005, and (6) $150,000, 7.625%, due 2017. Such obligations to pay principal, premium, if any, and interest are guaranteed jointly and severally on a senior basis by the Company’s wholly-owned domestic and active adult homebuilding subsidiaries (collectively, the Guarantors). Such guarantees are full and unconditional. The principal non-Guarantors include PDCI, Pulte International Corporation, PMC and First Heights.

      Supplemental consolidating financial information of the Company, specifically including such information for the Guarantors, is presented below. Investments in subsidiaries are presented using the equity method of accounting. Separate financial statements of the Guarantors are not provided as the consolidating financial information contained herein provides a more meaningful disclosure to allow investors to determine the nature of the assets held by and the operations of the combined groups.

13

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

6. Supplemental Guarantor information (continued)

CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2001

					Unconsolidated
													Consolidated
			Pulte		Guarantor		Non-Guarantor			Eliminating			Pulte
			Homes, Inc.		Subsidiaries		Subsidiaries			Entries			Homes, Inc.
ASSETS
Cash and equivalents			$	—	$	88,594	$	13,211		$	—		$	101,805
Unfunded settlements				—		47,956		(352	)		—			47,604
House and land inventories				—		2,248,431		41,411			—			2,289,842
Residential mortgage loans
	available-for-sale			—		—		203,622			—			203,622
Land held for sale and future
	development			—		185,344		—			—			185,344
Other assets				51,206		207,632		95,772			—			354,610
Deferred income taxes				44,738		—		—			—			44,738
Investment in subsidiaries				1,433,016		74,414		1,525,560			(3,032,990	)		—
Advances receivable — subsidiaries				930,295		24,313		43,656			(998,264	)		—
			$	2,459,255	$	2,876,684	$	1,922,880		$	(4,031,254	)	$	3,227,565
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities			$	127,044	$	576,717	$	47,226		$	—		$	750,987
Collateralized short-term debt, recourse solely to financial services subsidiary assets				—		—		196,186			—			196,186
Income taxes				36,104		—		—			—			36,104
Subordinated debentures and senior notes				858,347		19,571		7,000			—			884,918
Advances payable — subsidiaries				78,390		730,411		189,463			(998,264	)		—
		Total liabilities		1,099,885		1,326,699		439,875			(998,264	)		1,868,195
Shareholders’ equity				1,359,370		1,549,985		1,483,005			(3,032,990	)		1,359,370
			$	2,459,255	$	2,876,684	$	1,922,880		$	(4,031,254	)	$	3,227,565

14

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

6. Supplemental guarantor information (continued)

CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2000

					Unconsolidated
													Consolidated
			Pulte		Guarantor		Non-Guarantor			Eliminating			Pulte
			Homes, Inc.		Subsidiaries		Subsidiaries			Entries			Homes, Inc.
ASSETS
Cash and equivalents			$	—	$	133,860	$	50,125		$	—		$	183,985
Unfunded settlements				—		91,008		(7,861	)		—			83,147
House and land inventories				—		1,852,534		27,729			—			1,880,263
Residential mortgage loans available-for-sale				—		—		259,239			—			259,239
Land held for sale and future development				—		121,084		—			—			121,084
Other assets				41,136		196,627		64,430			—			302,193
Deferred income taxes				56,572		—		—			—			56,572
Investment in subsidiaries				1,419,923		27,704		1,497,150			(2,944,777	)		—
Advances receivable — subsidiaries				540,914		23,491		2,786			(567,191	)		—
			$	2,058,545	$	2,446,308	$	1,893,598		$	(3,511,968	)	$	2,886,483
LIABILITIES AND
	SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities			$	112,131	$	565,611	$	30,436		$	—		$	708,178
Collateralized short-term debt, recourse solely to financial services subsidiary assets				—		—		242,603			—			242,603
Income taxes				10,169		—		—			—			10,169
Subordinated debentures and senior notes				659,296		11,306		7,000			—			677,602
Advances payable — subsidiaries				29,018		373,171		165,002			(567,191	)		—
		Total liabilities		810,614		950,088		445,041			(567,191	)		1,638,552
Shareholders’ equity				1,247,931		1,496,220		1,448,557			(2,944,777	)		1,247,931
			$	2,058,545	$	2,446,308	$	1,893,598		$	(3,511,968	)	$	2,886,483

15

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

6. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended June 30, 2001

						Unconsolidated
														Consolidated
			Pulte			Guarantor		Non-Guarantor			Eliminating			Pulte
			Homes, Inc.			Subsidiaries		Subsidiaries			Entries			Homes, Inc.
Revenues:
	Homebuilding		$	—		$	997,712	$	8,273		$	—		$	1,005,985
	Financial services, interest and other			—			—		16,436			—			16,436
	Corporate			21			884		—			—			905
Total revenues				21			998,596		24,709			—			1,023,326
Expenses:
		Homebuilding:
		Cost of sales		—			795,145		7,021			—			802,166
		Selling, general and administrative and other expense		686			94,531		2,406			—			97,623
	Financial services, interest and other			—			—		10,673			—			10,673
	Corporate, net			12,151			2,308		(137	)		—			14,322
Total expenses				12,837			891,984		19,963			—			924,784
Other Income:
Equity in income of Pulte-affiliates				—			—		25			—			25
Income (loss) from continuing operations before income taxes and equity in income of subsidiaries				(12,816	)		106,612		4,771			—			98,567
Income taxes (benefit)				(7,071	)		41,079		3,940			—			37,948
Income (loss) from continuing operations before equity in income of subsidiaries				(5,745	)		65,533		831			—			60,619
Loss from discontinued operations				(717	)		—		(108	)		—			(825	)
Income (loss) before equity in income
		of subsidiaries		(6,462	)		65,533		723			—			59,794
Equity in income (loss) of subsidiaries:
	Continuing operations			66,364			3,572		61,957			(131,893	)		—
	Discontinued operations			(108	)		—		—			108			—
				66,256			3,572		61,957			(131,785	)		—
Net income			$	59,794		$	69,105	$	62,680		$	(131,785	)	$	59,794

16

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

6. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF OPERATIONS
For the six months ended June 30, 2001

						Unconsolidated
														Consolidated
			Pulte			Guarantor		Non-Guarantor			Eliminating			Pulte
			Homes, Inc.			Subsidiaries		Subsidiaries			Entries			Homes, Inc.
Revenues:
	Homebuilding		$	—		$	1,803,508	$	19,797		$	—		$	1,823,305
	Financial services, interest and other			—			—		30,511			—			30,511
	Corporate			50			1,572		—			—			1,622
Total revenues				50			1,805,080		50,308			—			1,855,438
Expenses:
		Homebuilding:
		Cost of sales		—			1,439,695		17,254			—			1,456,949
		Selling, general and administrative and other expense		1,334			188,903		4,225			—			194,462
	Financial services, interest and other			—			—		19,296			—			19,296
	Corporate, net			21,114			4,055		(588	)		—			24,581
Total expenses				22,448			1,632,653		40,187			—			1,695,288
Other Income:
Equity in income of Pulte-affiliates				—			—		2,025			—			2,025
Income (loss) from continuing operations before income taxes and equity in income of subsidiaries				(22,398	)		172,427		12,146			—			162,175
Income taxes (benefit)				(11,234	)		66,506		7,165			—			62,437
Income (loss) from continuing operations before equity in income of subsidiaries				(11,164	)		105,921		4,981			—			99,738
Income (loss) from discontinued operations				(1,045	)		—		472			—			(573	)
Income (loss) before equity in income
		of subsidiaries		(12,209	)		105,921		5,453			—			99,165
Equity in income of subsidiaries:
	Continuing operations			110,902			6,951		103,775			(221,628	)		—
	Discontinued operations			472			—		—			(472	)		—
				111,374			6,951		103,775			(222,100	)		—
Net income			$	99,165		$	112,872	$	109,228		$	(222,100	)	$	99,165

17

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

6. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended June 30, 2000

					Unconsolidated
													Consolidated
			Pulte			Guarantor		Non-Guarantor		Eliminating			Pulte
			Homes, Inc.			Subsidiaries		Subsidiaries		Entries			Homes, Inc.
Revenues:
	Homebuilding		$	—		$	967,291	$	4,702	$	—		$	971,993
	Financial services, interest and other			—			—		10,535		—			10,535
	Corporate			56			—		—		—			56
Total revenues				56			967,291		15,237		—			982,584
Expenses:
		Homebuilding:
		Cost of sales		—			785,990		4,302		—			790,292
		Selling, general and administrative and other expense		320			95,670		77		—			96,067
	Financial services, interest and other			—			—		7,098		—			7,098
	Corporate, net			11,540			1,701		35		—			13,276
Total expenses				11,860			883,361		11,512		—			906,733
Other Income:
Equity in income of Pulte-affiliates				—			—		1,639		—			1,639
Income (loss) from continuing operations before income taxes and equity in income of subsidiaries				(11,804	)		83,930		5,364		—			77,490
Income taxes (benefit)				(5,037	)		32,318		2,549		—			29,830
Income (loss) from continuing operations before equity in income of subsidiaries				(6,767	)		51,612		2,815		—			47,660
Income (loss) from discontinued operations				(476	)		—		508		—			32
Income (loss) before equity in income
		of subsidiaries		(7,243	)		51,612		3,323		—			47,692
Equity in income of subsidiaries:
	Continuing operations			54,427			2,132		54,285		(110,844	)		—
	Discontinued operations			508			—		—		(508	)		—
				54,935			2,132		54,285		(111,352	)		—
Net income			$	47,692		$	53,744	$	57,608	$	(111,352	)	$	47,692

18

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

6. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF OPERATIONS
For the six months ended June 30, 2000

						Unconsolidated
														Consolidated
			Pulte			Guarantor		Non-Guarantor			Eliminating			Pulte
			Homes, Inc.			Subsidiaries		Subsidiaries			Entries			Homes, Inc.
Revenues:
	Homebuilding		$	—		$	1,730,239	$	7,342		$	—		$	1,737,581
	Financial services, interest and other			—			—		20,700			—			20,700
	Corporate			92			30		—			—			122
Total revenues				92			1,730,269		28,042			—			1,758,403
Expenses:
		Homebuilding:
		Cost of sales		—			1,414,354		6,619			—			1,420,973
		Selling, general and administrative and other expense		547			183,983		1,065			—			185,595
	Financial services, interest and other			—			—		13,796			—			13,796
	Corporate, net			20,749			3,504		(996	)		—			23,257
Total expenses				21,296			1,601,841		20,484			—			1,643,621
Other Income:
Equity in income of Pulte-affiliates				—			—		2,170			—			2,170
Income (loss) from continuing operations before income taxes and equity in income of subsidiaries				(21,204	)		128,428		9,728			—			116,952
Income taxes (benefit)				(9,951	)		49,932		5,042			—			45,023
Income (loss) from continuing operations before equity in income of subsidiaries				(11,253	)		78,496		4,686			—			71,929
Income (loss) from discontinued operations				(884	)		—		983			—			99
Income (loss) before equity in income of subsidiaries				(12,137	)		78,496		5,669			—			72,028
Equity in income of subsidiaries:
	Continuing operations			83,182			4,285		84,462			(171,929	)		—
	Discontinued operations			983			—		—			(983	)		—
				84,165			4,285		84,462			(172,912	)		—
Net income			$	72,028		$	82,781	$	90,131		$	(172,912	)	$	72,028

19

PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

6. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2001

			Unconsolidated
																Consolidated
				Pulte			Guarantor			Non-Guarantor			Eliminating			Pulte
				Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Homes, Inc.
Continuing operations:
Cash flows from operating activities:
	Net income			$	99,165		$	112,872		$	109,228		$	(222,100	)	$	99,165
	Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
		Equity in income of subsidiaries			(111,374	)		(6,951	)		(103,775	)		222,100			—
		Amortization, depreciation and other			1,050			9,037			(150	)		—			9,937
		Deferred income taxes			11,834			—			—			—			11,834
		Increase (decrease) in cash due to:
		Inventories			—			(486,179	)		(13,682	)		—			(499,861	)
		Residential mortgage loans available-for-sale			—			—			55,616			—			55,616
		Other assets			(10,070	)		49,326			(28,783	)		—			10,473
		Accounts payable and accrued liabilities			13,194			4,116			5,117			—			22,427
		Income taxes			(41,630	)		66,506			4,461			—			29,337
Net cash provided by (used in) operating activities					(37,831	)		(251,273	)		28,032			—			(261,072	)
Cash flows from investing activities:
	Change in FRF assets				—			—			(2,018	)		—			(2,018	)
	Dividends received from subsidiaries				100,000			1,000			100,000			(201,000	)		—
	Investment in subsidiary				—			(447	)		—			447			—
	Advances to affiliates				(318,414	)		(822	)		(40,870	)		360,106			—
	Other, net				1,820			(408	)		(631	)		—			781
Net cash provided by (used in) investing activities					(216,594	)		(677	)		56,481			159,553			(1,237	)
Cash flows from financing activities:
	Proceeds from borrowings				198,772			15,950			4,130			—			218,852
	Repayment of borrowings				—			—			(46,417	)		—			(46,417	)
	Capital contributions from parent				—			—			447			(447	)		—
	Advances from affiliates				49,372			290,734			20,000			(360,106	)		—
	Issuance of common stock				9,663			—			—			—			9,663
	Dividends paid				(3,382	)		(100,000	)		(101,000	)		201,000			(3,382	)
	Other, net				—			—			1,413			—			1,413
Net cash provided by (used in) financing activities					254,425			206,684			(121,427	)		(159,553	)		180,129
Net decrease in cash and equivalents					—			(45,266	)		(36,914	)		—			(82,180	)
Cash and equivalents at beginning of period					—			133,860			50,125			—			183,985
Cash and equivalents at end of period				$	—		$	88,594		$	13,211		$	—		$	101,805

20

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
($000’s omitted)
(Unaudited)

6. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2000

					Unconsolidated
																	Consolidated
					Pulte			Guarantor			Non-Guarantor			Eliminating			Pulte
					Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Homes, Inc.
Continuing operations:
Cash flows from operating activities:
	Net income				$	72,028		$	82,781		$	90,131		$	(172,912	)	$	72,028
	Adjustments to reconcile net income
				to net cash flows provided by (used in)
		operating activities:
		Equity in income of subsidiaries				(84,165	)		(4,285	)		(84,462	)		172,912			—
			Amortization, depreciation and other			97			7,958			(524	)		—			7,531
		Deferred income taxes				1,843			—			—			—			1,843
		Increase (decrease) in cash due to:
			Inventories			—			(298,428	)		(2,865	)		—			(301,293	)
			Residential mortgage loans
				available-for-sale		—			—			69,226			—			69,226
			Other assets			(1,593	)		1,525			(17,760	)		—			(17,828	)
			Accounts payable and accrued liabilities			4,660			14,845			1,850			—			21,355
			Income taxes			(57,256	)		49,918			1,637			—			(5,701	)
Net cash provided by (used in) operating
	activities					(64,386	)		(145,686	)		57,233			—			(152,839	)
Cash flows from investing activities:
	Change in FRF assets					—			—			(1,844	)		—			(1,844	)
	Dividends received from subsidiaries					—			2,000			—			(2,000	)		—
	Investment in subsidiary					(100	)		(308	)		—			408			—
	Advances to affiliates					(160,382	)		2,933			1,699			155,750			—
	Other, net					—			—			(865	)		—			(865	)
Net cash provided by (used in) investing
	activities					(160,482	)		4,625			(1,010	)		154,158			(2,709	)
Cash flows from financing activities:
	Proceeds from borrowings					263,278			879			—			—			264,157
	Repayment of borrowings					—			(5,557	)		(64,930	)		—			(70,487	)
	Capital contributions from parent					—			—			408			(408	)		—
	Advances from affiliates					20,682			128,511			6,557			(155,750	)		—
	Stock repurchases					(61,454	)		—			—			—			(61,454	)
	Dividends paid					(3,336	)		—			(2,000	)		2,000			(3,336	)
	Other, net					5,648			—			226			—			5,874
Net cash provided by (used in)
	financing activities					224,818			123,833			(59,739	)		(154,158	)		134,754
Net decrease in cash and equivalents						(50	)		(17,228	)		(3,516	)		—			(20,794	)
Cash and equivalents at beginning of
				period		50			44,206			7,541			—			51,797
Cash and equivalents at end of period					$	—		$	26,978		$	4,025		$	—		$	31,003

21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
($000’s omitted)

Overview:

      A summary of the Company’s operating results by business segment for the three and six month periods ended June 30, 2001 and 2000 is as follows:

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2001			2000			2001			2000
Pre-tax income (loss):
	Homebuilding operations	$	106,221		$	87,272		$	173,919		$	133,182
	Financial Services operations		5,763			3,437			11,215			6,904
	Corporate		(13,417	)		(13,219	)		(22,959	)		(23,134	)
Pre-tax income from continuing operations			98,567			77,490			162,175			116,952
Income taxes			37,948			29,830			62,437			45,023
Income from continuing operations			60,619			47,660			99,738			71,929
Income (loss) from discontinued operations			(825	)		32			(573	)		99
Net income		$	59,794		$	47,692		$	99,165		$	72,028

      A comparison of pre-tax income (loss) for the three and six month periods ended June 30, 2001 and 2000 is as follows:

• Pre-tax income of the Company’s homebuilding business segment increased 22% and 31%, respectively, due primarily to the improvement in Domestic Homebuilding operations where pre-tax income increased 26% and 32%, respectively. Domestic gross margins improved 160 and 190 basis points and domestic average unit selling price increased by 10% and 11%, respectively.

• Pre-tax income of the Company’s financial services business segment increased 68% and 62%, respectively. The improved results were a result of higher revenues driven by increased capture rates, combined with a more favorable pricing environment.

• Pre-tax loss of the Company’s corporate business segment was flat at $13,417 and $22,959, respectively, for the three and six month periods ended June 30, 2001.

22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000’s omitted)

Homebuilding Operations:

      The Company’s Homebuilding segment consists of the following business units:

• Domestic Homebuilding operations are conducted in 41 markets, located throughout 26 states. Domestic Homebuilding offers a broad product line to meet the needs of the first-time, first and second move-up and active adult home buyer.

• International Homebuilding operations are conducted through subsidiaries of Pulte International Corporation in Mexico, Puerto Rico and Argentina. International Homebuilding product offerings focus on the demand of first-time buyers and social interest housing in Mexico and Puerto Rico. Housing for middle-to-upper income consumer groups is also available in Puerto Rico and Argentina. The Company has agreements in place with multi-national corporations to provide social interest and employee housing in Mexico.

      No individual market within the Company’s Homebuilding segment represented more than 10% of total segment net new orders, unit settlements or revenues for the three and six months ended June 30, 2001. The Metropolitan Atlanta market accounted for 10% of the unit net new orders and unit settlements for the three and six month periods ended June 30, 2000.

      Certain operating data relating to the Company’s joint ventures and homebuilding operations for the three and six months ended June 30, 2001 and 2000, are as follows:

			Three Months Ended					Six Months Ended
			June 30,					June 30,
			2001			2000		2001			2000
Pulte/Pulte-affiliate homebuilding revenues:
	Domestic		$	997,712		$	967,291	$	1,803,508		$	1,730,239
	International			47,575			44,682		97,507			74,239
Total homebuilding			$	1,045,287		$	1,011,973	$	1,901,015		$	1,804,478
Pre-tax income (loss):
	Domestic		$	107,680		$	85,631	$	174,245		$	131,902
	International			(1,459	)		1,641		(326	)		1,280
Total homebuilding operations			$	106,221		$	87,272	$	173,919		$	133,182
Pulte and Pulte-affiliate settlements — units:
	Domestic			4,551			4,826		8,319			8,724
	International:
		Pulte		54			55		143			86
		Pulte-affiliated entities		1,590			2,089		3,275			3,585
	Total International			1,644			2,144		3,418			3,671
Total Pulte and Pulte-affiliate settlements — units				6,195			6,970		11,737			12,395

23

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 unit represents the Company’s core business. Operations are conducted in 41 markets, located throughout 26 states, and are organized into five groups as follows:

Northeast:	Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Virginia
Southeast:	Florida, Georgia, North Carolina, South Carolina, Tennessee
Midwest:	Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Ohio
Central:	Colorado, Texas
West:	Arizona, California, Nevada

      The following table presents selected unit information for Pulte’s Domestic Homebuilding operations:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2001		2000		2001		2000
Unit settlements:
	Northeast		451		444		844		816
	Southeast		1,751		1,951		3,360		3,613
	Midwest		742		771		1,190		1,362
	Central		870		859		1,502		1,460
	West		737		801		1,423		1,473
			4,551		4,826		8,319		8,724
Net new orders — units:
	Northeast		655		563		1,187		1,084
	Southeast		1,954		2,049		4,487		4,480
	Midwest		871		653		1,974		1,563
	Central		914		888		2,268		1,992
	West		784		1,006		1,717		2,003
			5,178		5,159		11,633		11,122
Net new orders — dollars		$	1,078,000	$	1,073,000	$	2,477,000	$	2,328,000
Unit backlog:
	Northeast						1,153		1,108
	Southeast						3,268		3,013
	Midwest						1,691		1,193
	Central						1,580		1,324
	West						1,099		1,192
							8,791		7,830
Backlog at June 30 - dollars						$	2,010,000	$	1,778,000

24

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000’s omitted)

Homebuilding Operations (continued):

Domestic Homebuilding (continued):

      For the three months ended June 30, 2001, unit settlements declined 6% primarily due to delays in the opening of certain communities related to the timing of land development approvals, coupled with a lower inventory of completed homes available for sale. The net new order pace continued to be strong with a slight increase from the prior year to 5,178 units as demand continued at high levels. For the six months ended June 30, 2001, unit settlements declined 5% due to the delays discussed earlier. Net new orders for the same six month period increased 5% to a record 11,633 units as most regions of the country experienced improvements over the prior year period. As a result of the increases in net new orders, higher average selling prices and reduced deliveries during the period, unit backlog increased 12% to an all-time record value of over $2 billion.

      The following table presents a summary of pre-tax income for Pulte’s Domestic Homebuilding operations for the three and six months ended June 30, 2001 and 2000:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2001			2000			2001			2000
Revenues	$	997,712		$	967,291		$	1,803,508		$	1,730,239
Cost of sales		(795,145	)		(785,990	)		(1,439,695	)		(1,414,354	)
Selling, general and administrative expense		(99,596	)		(87,155	)		(185,798	)		(168,764	)
Interest (a)		(8,296	)		(6,489	)		(14,236	)		(11,567	)
Other income (expense), net		13,005			(2,026	)		10,466			(3,652	)
Pre-tax income	$	107,680		$	85,631		$	174,245		$	131,902
Average sales price	$	219		$	200		$	217		$	198

^(a) The Company capitalizes interest cost into homebuilding inventories and charges the interest to homebuilding interest expense when the related inventories are closed.

      Gross profit margins were 20.3% and 20.2%, respectively, for the three and six month periods ended June 30, 2001, compared to 18.7% and 18.3%, respectively, in the same period of the prior year. A higher average sales price, lower operating costs and lower material costs contributed to these increases.

      As a percentage of sales, selling, general and administrative expenses increased 100 basis points for the three month period ended June 30, 2001 and 50 basis points for the six months then ended. This increase reflects higher startup costs associated with new communities and increased compensation related expenses.

      Other income (expense) net, includes net land activity and other homebuilding-related expenses. For the three and six month periods ended 2001, net land activity amounted to $14,882 and $12,399, respectively, compared to $4,543 and $5,208, respectively, for the prior year periods. Net land activity relates to gains/losses on the sale of land, the impact of decisions not to pursue certain land acquisitions and options, the write-off of related pre-acquisition costs and land inventory valuation reserves on land held for sale. The increase in net land activity in 2001 represents a significant increase in land sale gains during the second quarter of 2001.

25

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000’s omitted)

Homebuilding Operations (continued):

Domestic Homebuilding (continued):

      The average selling price for the three and six month periods ended June 30, 2001, was $219 and $200, respectively, an increase from the average selling price of $217 and $198 in the comparable periods of the prior year. Changes in average selling price reflect a number of factors, including changes in market selling prices and the mix of products closed during a period.

      Pulte’s Domestic Homebuilding operations controlled approximately 79,000 and 67,000 lots, of which approximately 44,200 and 43,300 lots were owned, and approximately 34,800 and 23,700 lots were controlled through option agreements at June 30, 2001 and 2000, respectively. Domestic Homebuilding inventory at June 30, 2001, was approximately $2,217,900 of which $1,556,400 is related to land and land development. At June 30, 2000, inventory was approximately $1,926,200 of which $1,296,700 was related to land and land development. Included in other assets is approximately $177,500 in land held for disposition as of June 30, 2001, as compared to $131,000 in the prior year.

International Homebuilding:

      International Homebuilding operations are primarily conducted through subsidiaries of Pulte International Corporation (International) in Mexico, Puerto Rico and Argentina.

      Mexico International’s 100%-owned subsidiary, Pulte International-Mexico, Inc., conducts its operations primarily through five joint ventures located throughout Mexico. Its net investment in these joint ventures approximated $35,400 at June 30, 2001. The largest of these ventures, Condak-Pulte S. De R.L. De C.V. (Condak-Pulte), is located in the city of Juarez. Condak-Pulte is currently developing communities in Juarez, Chihuahua, Nuevo Laredo, Monterrey, Reynosa and Matamoros, under agreements with Delphi Automotive Systems, Sony Magneticos de Mexico, S.A. de C.V., an affiliate of Sony Electronics, Inc and Centro Comerciales Coriana, S.A. De C. V. As of June 30, 2001, International’s net investment in Condak-Pulte approximated $27,200.

      Desarrollos Residenciales Turisticos, S.A. de C.V., another of its joint ventures in Mexico, is constructing primarily social interest housing in Central Mexico. Current development plans for this venture include housing projects in the Bajio region surrounding Mexico City, targeting the cities of Puebla, Queretaro, San Jose du Iturbide, San Juan del Rio and Zamora. At June 30, 2001, International’s net investment in this joint venture approximated $6,900.

      Puerto Rico Operations in Puerto Rico are primarily conducted through International’s 100%-owned subsidiary, Pulte International Caribbean Corporation. Desarrolladores Urbanos (Canovanas), S.E., its Puerto Rican joint venture is developing 121 acres located in Metropolitan San Juan. At June 30, 2001, its net investment in this joint venture approximated $3,900.

      Argentina Operations in Argentina are conducted through Pulte SRL, International’s 100%-owned Argentine subsidiary which recorded its first closings during the second quarter.

26

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000’s omitted)

Homebuilding Operations (continued):

International Homebuilding (continued):

      The following table presents selected financial data for Pulte’s International Homebuilding operations for the three and six months ended June 30, 2001 and 2000.

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2001			2000			2001			2000
Revenues		$	8,273		$	4,702		$	19,797		$	7,342
Cost of sales			(7,021	)		(4,302	)		(17,254	)		(6,619	)
Selling, general and administrative expense			(2,654	)		(1,349	)		(5,254	)		(2,505	)
Other income (expense), net			(82	)		951			360			892
Equity in income of Mexico operations			25			1,639			2,025			2,170
Pre-tax income (loss)		$	(1,459	)	$	1,641		$	(326	)	$	1,280
Unit settlements:
	Pulte		54			55			143			86
	Pulte-affiliated entities		1,590			2,089			3,275			3,585
Total Pulte and Pulte-affiliates			1,644			2,144		$	3,418		$	3,671

      The pre-tax losses of $1,459 and $326 for the three and six month periods ended June 30, 2001, as compared to pre-tax income of $1,641 and $1,280 for the three and six months ended June 30, 2000, were primarily driven by decreased closings from the Mexican operations where changes in government lending practices slowed mortgage funding during the second quarter of 2001 and start-up costs in Argentina.

Financial Services Operations:

      The Company conducts its financial services operations principally through Pulte Mortgage Corporation (PMC), the Company’s mortgage banking subsidiary. Pre-tax income of the Company’s financial services operations for the three and six month periods ended June 30, 2001 was $5,763 and $11,215, respectively compared to $3,437 and $6,904, respectively for the prior year periods. This growth is a result of increased capture rates and a favorable pricing environment.

      The following table presents mortgage origination data for PMC:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2001		2000		2001		2000
Total originations:
	Loans		4,013		3,206		7,271		5,643
	Principal	$	613,700	$	458,200	$	1,102,800	$	800,400
Originations for Pulte customers:
	Loans		3,094		2,661		5,396		4,693
	Principal	$	470,100	$	394,500	$	835,300	$	690,200

27

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000’s omitted)

Financial Services Operations (continued):

      Mortgage origination unit volume for the three and six month periods ended June 30, 2001, increased 25% and 29%, respectively, from the comparable 2000 periods as the Company realized an increase in capture rate due to improved market penetration in those markets that the Company’s mortgage operations entered last year. In addition, refinancings represented 12% of total loan originations for the six month period ended June 30, 2001, as compared to 2% of total loan originations for 2000. For the three and six month periods ended June 30, 2001, pricing and marketing gains increased $5,346 and $8,652, respectively, due to higher production volume and a favorable production mix. Increased general and administrative expenses primarily due to higher production and the integration of new markets partially offset these gains during 2001. At June 30, 2001, loan application backlog increased 33% to $991,000 as compared with $745,000 at June 30, 2000. Pulte continues to hedge its mortgage pipeline in the normal course of its business and there has been no change in PMC’s strategy or use of derivative financial instruments in this regard.

      Financial Accounting Standards Board Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by Financial Accounting Standards Board Statement No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities,” requires companies to recognize all of their derivative instruments as either assets or liabilities in the statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as either a fair value hedge or a cash flow hedge.

      The Company hedges portions of its forecasted cash flow from sales of closed mortgage loans with derivative financial instruments. During the six months ended June 30, 2001, the Company did not recognize any net gains or losses related to the ineffective portion of the hedging instrument excluded from the assessment of hedge effectiveness. In addition, the Company recognized $2, net of taxes, in losses during 2001, for cash flow hedges that were discontinued because it is probable that the original forecasted transaction will not occur. At June 30, the Company expects to reclassify $312, net of taxes, of net gains on derivative instruments from accumulated other comprehensive income to earnings during the next twelve months from sales of closed mortgage loans.

Corporate:

      Corporate is a non-operating business segment whose primary purpose is to support the operations of the Company’s subsidiaries as the internal source of financing, to develop and implement strategic initiatives centered on new business development and operating efficiencies, and to provide the administrative support associated with being a publicly traded entity. As a result, the corporate segment’s operating results will vary from quarter to quarter as these strategic initiatives evolve.

28

ITEM 2. 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 six months ended June 30, 2001 and 2000:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2001		2000		2001		2000
Net interest expense	$	8,034	$	7,893	$	13,683	$	13,559
Other corporate expenses, net		5,383		5,326		9,276		9,575
Loss before income taxes	$	13,417	$	13,219	$	22,959	$	23,134

      Pre-tax loss of the Company’s corporate business segment was relatively flat for the three and six month periods ended June 30, 2001, as both net interest expense and other corporate expenses, net were in line with the prior year. Interest incurred for the three and six month periods ended June 30, 2001, excluding interest incurred by the Company’s financial services operations, was approximately $19,200 and $35,500, respectively.

      Net interest expense is net of amounts capitalized into homebuilding inventories. Amounts capitalized are charged to homebuilding interest expense when the related inventories are closed. Information related to interest in inventory is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2001			2000			2001			2000
Interest in inventory at beginning of period	$	28,189		$	21,901		$	24,202		$	19,092
Interest capitalized		10,296			8,608			20,223			16,495
Interest expensed		(8,296	)		(6,489	)		(14,236	)		(11,567	)
Interest in inventory at end of period	$	30,189		$	24,020		$	30,189		$	24,020

Liquidity and Capital Resources:

Continuing Operations:

      The Company’s net cash used in operating activities amounted to $261,072, reflecting an increase in the use of operating funds as compared with the same period last year. This increase is primarily attributable to increases in land inventory from levels at December 31, 2000. Net cash from investing activities was relatively consistent with the prior year. Net cash from financing activities increased from $134,754 to $180,129 in 2001 as the Company did not repurchase stock under its stock repurchase plan during 2001 as it did during 2000.

      The Company finances its homebuilding land acquisitions, development and construction activities from internally generated funds and existing credit agreements. The Company had no borrowings under its $390,000 unsecured revolving credit facilities at June 30, 2001. PMC provides mortgage financing for many of its home sales and uses its own funds and borrowings made available pursuant to various committed and uncommitted credit arrangements which, at June 30, 2001, amounted to $325,000, an amount deemed adequate to cover foreseeable needs. There were approximately $196,000 of borrowings outstanding under the $325,000 PMC arrangement at June 30, 2001. Mortgage loans originated by PMC are subsequently sold, principally to outside investors. The Company anticipates that there will be adequate mortgage financing available for purchasers of its homes.

29

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 June 30, 2001, the Company had cash and equivalents of $101,805 and total long-term indebtedness of $884,918. The Company’s total long-term indebtedness includes $858,347 of unsecured senior notes, a $7,000 unsecured promissory note and other Pulte limited recourse debt of $19,571. The Company also has other non-recourse short-term notes payable of $54,700 and First Heights advances of $760.

      The Company’s income tax liabilities are affected by a number of factors. Management anticipates that the Company’s effective tax rate for 2001 will be between 38% and 39%.

      Sources of the Company’s working capital at June 30, 2001, include its cash and equivalents, and its $390,000 committed unsecured revolving credit facilities. The Company routinely monitors current operational requirements and financial market conditions to evaluate the utilization of available financial sources, including securities offerings.

      In July 2001, the Company expanded its revolving credit facilities to a total of $560,000 in contemplation of its acquisition of Del Webb Corporation.

      In August 2001, the Company sold in a private placement pursuant to Rule 144A under the Securities Act, $500,000 of 7 7/8% Senior Notes due in 2011. Net proceeds received from the sale were used to repay certain indebtedness acquired in the Del Webb Corporation acquisition, to pay certain expenses associated with that acquisition and for general corporate purposes.

Discontinued Operations:

      The Company’s remaining investment in First Heights at June 30, 2001, approximated $32,500. The Company’s thrift assets are subject to regulatory restrictions and a court order and thus are not available for general corporate purposes. The final liquidation of the Company’s thrift operations is dependent on the final resolution of outstanding matters with the Federal Deposit Insurance Corporation (FDIC), manager of the FSLIC Resolution Fund. As discussed in Note 4 of Notes to Condensed Consolidated Financial Statements, the Company vigorously disagrees with the final judgment entered by the United States District Court and has appealed to the Sixth Circuit Court of Appeals. The Company has posted bonds in the amount of $117,000. Based upon the Company’s assessment of its legal position in the District Court litigation with the FDIC, as well as the expected duration of the legal process in this case, the Company does not currently believe that the judgment ordered by the District Court against Pulte Diversified Companies, Inc. and First Heights will have a material impact on the Company’s liquidity.

Inflation:

      The Company and the homebuilding industry in general, may be adversely affected during periods of high inflation, because of higher land and construction costs. Inflation also increases the Company’s financing, labor and material costs. In addition, higher mortgage interest rates significantly affect the affordability of permanent mortgage financing to prospective homebuyers. The Company attempts to pass through to its customers any increases in its costs through increased sales prices and, to date, inflation has not had a material adverse effect on the Company’s results of operations. However, there is no assurance that inflation will not have a material adverse impact on the Company’s future results of operations.

30

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
($000’s omitted, except per share information)

Del Webb Acquisition:

      On July 31, 2001, the Company completed its acquisition of Del Webb Corporation (Del Webb). Under the terms of the merger agreement, each outstanding share of Del Webb common stock was exchanged for approximately 0.894 shares of newly issued Company stock. Approximately 17 million shares were issued to Del Webb shareholders.

      Del Webb is primarily a homebuilder with operations in six states. For the fiscal year ended June 30, 2001, Del Webb reported net income of $91,200 on revenues of $1,936,117 and 7,038 unit settlements. Backlog reported at June 30, 2001 was 3,682 units valued at approximately $994,000.

New Accounting Pronouncements:

      In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, “Business Combinations,” and No. 142, “Goodwill and Other Intangible Assets,” effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives.

      The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. Application of the nonamortization provisions of the Statement is expected to result in an increase in net income of approximately $4,100 ($0.09 per share) per year. Any goodwill recorded as a result of the July 2001 acquisition of Del Webb Corporation will not be amortized. During 2002, the Company will perform the first of the required impairment tests of goodwill as of January 1, 2002, and has not yet determined what the effect of these tests will be on the earnings and financial position of the Company.

31

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative disclosure:

There have been no material changes in the Company’s market risk during the three months ended June 30, 2001.

Qualitative disclosure:

This information is set forth on pages 26 and 27 of Part II, of Item 7A., Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and is incorporated herein by reference.

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” and Item 3., “Quantitative and Qualitative Disclosures About Market Risk”, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such matters involve risks and uncertainties, including:

• the Company’s exposure to certain market risks, changes in economic conditions, tax and interest rates, increases in raw material and labor costs, issues and timing surrounding land entitlement and development, weather conditions, and general competitive factors, that may cause actual results to differ materially;

• its ability to integrate the recently acquired business operations of Del Webb Corporation, including Del Webb Corporation’s activities, management and corporate culture, with its own, and its ability to develop and manage active adult communities which differ from the Company’s historical homebuilding business; and

• its ability to resolve all outstanding matters related to First Heights (including the outcome of the Company’s appeal in the District Court litigation with the FDIC).

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 4, Notes to Condensed Consolidated Financial Statements, which is contained in Part I, Item 1, of this Quarterly Report on Form 10-Q and which is incorporated by reference into this response.

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PART II. OTHER INFORMATION (continued)

Item 4. Submission of Matters to a Vote of Security Holders

      The Company’s Annual Meeting of Shareholders was held on May 17, 2001. The following matters were considered and acted upon, with the results indicated below.

						Shares
			Shares			Withholding
	Shares		Voted	Shares		Authority
	Voted For		Against	Abstaining		To Vote
Election of Directors
The election of Director for term
expiring 2002:
William B. Smith		38,312,271	–		142,897	–
The election of Director for term
expiring 2004:
David N. McCammon		38,312,271	–		142,897	–
William J. Pulte		38,312,271	–		142,897	–
Francis J. Sehn		38,310,316	–		144,852	–
Proposal to change the Company’s Name from “Pulte Corporation” to “Pulte Homes, Inc.”		38,288,983	70,329		95,856	–
Shareholder proposal to adopt an executive compensation policy that all future stock option grants to senior executives have exercise prices linked to an industry performance index associated with the peer group companies used for stock price comparisons in the Company’s proxy statement		9,740,511	25,009,192		184,275	3,521,190

Item 6. Exhibits and Report on Form 8-K

(a) Exhibits

		Page Herein or Incorporated
Exhibit Number and Description		By Reference From
(2)(a)	Plan and Agreement of merger dated as of April 30, 2001, among Del Webb Corporation, Pulte Corporation and Pulte Acquisition Corporation	Filed as Exhibit 2.1 to the Company’s Registrant’s Statement on Form S-4 (Registration Statement No 33-62518)
(3)(a)	Articles of Incorporation, as amended	Filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (Registration Statement No 33-62518)

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PART II. OTHER INFORMATION (continued)

(a) Exhibits (continued)

		Page Herein or Incorporated
Exhibit Number and Description		By Reference From
(3)(b)	By-laws, as amended	Filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (Registration Statement No 33-62518)
(10)(a)	Employment Separation Agreement and Release of all Liability, dated May 11, 2001, between Pulte Corporation and Robert K. Burgess	Filed as Exhibit 10.13 to the Company’s Registration Statement on Form S-4 (Registration Statement No 33-62518)

(b) Report on Form 8-K

      On July 25, 2001, the Company filed a Current Report on Form 8-K which included a press release dated July 24, 2001, wherein it provided information regarding the share exchange ratio for its pending acquisition of Del Webb Corporation.

      On July 26, 2001, the Company filed a Current Report on Form 8-K which included a press release dated July 24, 2001, wherein it provided updated financial and other information.

      On July 27, 2001, the Company filed a Current Report on Form 8-K which included a press release dated July 27, 2001, wherein it announced that the stockholders of Del Webb Corporation voted to approve the acquisition of Del Webb Corporation by the Company and that the shareholders of the Company approved the issuance of Company shares to Del Webb Corporation stockholders in the transaction.

      On July 31, 2001, the Company filed a Current Report on Form 8-K which included a press release dated July 31, 2001, wherein it announced that it had completed its acquisition of Del Webb Corporation.

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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 HOMES, INC

_______________________________
Roger A. Cregg
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)

_______________________________
Vincent J. Frees
Vice President and Controller
(Principal Accounting Officer)

Date: August 14, 2001

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