===============================================================================
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, 1996
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 (810) 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, 1996: 25,667,655
Total pages: 28
Listing of exhibits: 26
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PULTE CORPORATION
INDEX
Page
No.
----
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
Condensed Consolidated Balance Sheets, March 31,
1996 and December 31, 1995 .................... 3
Condensed Consolidated Statements of Income,
Three Months Ended March 31, 1996
and 1995 ...................................... 4
Condensed Consolidated Statements of
Shareholders' Equity, Three Months Ended March
31, 1996 and 1995 ............................. 5
Condensed Consolidated Statements of Cash Flows,
Three Months Ended March 31, 1996 and 1995 .... 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 ......... 26
SIGNATURES .......................................... 28
2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PULTE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($000's omitted)
(Unaudited)
March 31, December 31,
1996 1995
-------- ------------
ASSETS
Cash and equivalents ................................ $ 174,828 $ 292,227
Unfunded settlements ................................ 80,506 80,131
House and land inventories .......................... 920,817 859,735
Mortgage-backed and related securities .............. 187,002 254,170
Residential mortgage loans and other securities
available-for-sale ................................ 116,717 178,302
Other assets ........................................ 288,147 227,289
Discontinued operations ............................. 153,028 156,617
---------- ----------
$1,921,045 $2,048,471
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities, including
book overdrafts of $58,473 and $60,976 in 1996
and 1995, respectively .......................... $ 369,050 $ 381,407
Collateralized short-term debt, recourse solely to
applicable subsidiary assets .................... 96,250 140,578
Mortgage-backed bonds, recourse solely to
applicable subsidiary assets .................... 164,757 225,272
Income taxes ...................................... 47,657 45,397
Subordinated debentures and senior notes .......... 363,893 363,957
Discontinued operations ........................... 125,245 130,857
---------- ----------
Total liabilities ............................... 1,166,852 1,287,468
Shareholders' equity ................................ 754,193 761,003
---------- ----------
$1,921,045 $2,048,471
========== ==========
<FN>
See accompanying notes.
3
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(000's omitted, except per share data)
(Unaudited)
For The Three Months Ended
March 31,
--------------------------
1996 1995
---- ----
Revenues:
Homebuilding ...................................... $413,220 $308,649
Mortgage banking and financing:
Interest and other .............................. 16,133 10,543
Gain on sale of servicing ....................... 9,288
Corporate, principally interest ................... 3,166 4,395
-------- --------
Total revenues ................................ 432,519 332,875
Expenses:
Homebuilding, principally cost of sales ........... 405,915 311,712
Mortgage banking and financing, principally
interest ........................................ 11,295 13,315
Corporate, net .................................... 6,695 8,550
-------- --------
Total expenses ................................ 423,905 333,577
-------- --------
Income (loss) from continuing operations before
income taxes .................................... 8,614 (702)
Income taxes (benefit) .............................. 3,506 (276)
-------- --------
Income (loss) from continuing operations ............ 5,108 (426)
Income from discontinued thrift operations, net of
income taxes ...................................... 1,972 3,893
-------- --------
Net income .......................................... $ 7,080 $ 3,467
======== ========
Income per share -- primary and fully diluted:
Income (loss) from continuing operations .......... $ .19 $ (.01)
Income from discontinued operations ............... .07 .14
-------- --------
Net income ........................................ $ .26 $ .13
======== ========
Shares used in earnings per share calculations:
Primary ........................................... 27,250 27,654
======== ========
Fully diluted ..................................... 27,250 27,665
======== ========
Cash dividends declared per common share ............ $ .06 $ .06
======== ========
<FN>
See accompanying notes.
4
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
($000's omitted, except per share data)
(Unaudited)
Additional
Common Paid-in Unrealized Retained
Stock Capital Gains Earnings Total
------ ---------- ---------- -------- -----
Three months ended March 31, 1996:
Balance, January 1, 1996 ............................ $270 $65,934 $ 8,223 $686,576 $761,003
Exercise of stock options ........................... 132 132
Cash dividends declared ($.06 per share) ............ (1,622) (1,622)
Stock repurchases ................................... (3) (817) (8,441) (9,261)
Change in unrealized gains on securities
available-for-sale, net of income taxes of $2,092 . (3,139) (3,139)
Net income .......................................... 7,080 7,080
---- ------- ------- -------- --------
Balance, March 31, 1996 ............................. $267 $65,249 $ 5,084 $683,593 $754,193
==== ======= ======= ======== ========
Three months ended March 31, 1995:
Balance, January 1, 1995 ............................ $275 $75,595 $634,719 $710,589
Exercise of stock options ........................... 126 126
Cash dividends declared ($.06 per share) ............ (1,630) (1,630)
Stock repurchases ................................... (2) (4,321) (4,323)
Net income .......................................... 3,467 3,467
---- ------- ------- -------- --------
Balance, March 31, 1995 ............................. $273 $71,400 $636,556 $708,229
==== ======= ======= ======== ========
<FN>
See accompanying notes.
5
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($000's omitted)
(Unaudited)
For The Three Months Ended
March 31,
--------------------------
1996 1995
---- ----
Continuing operations:
Cash flows from operating activities:
Income (loss) from continuing operations .......... $ 5,108 $ (426)
Adjustments to reconcile income (loss) from
continuing operations to net cash flows used in
operating activities:
Amortization, depreciation and other .......... 1,639 1,180
Deferred income taxes ......................... (4,627) (416)
Gain on sale of securities .................... (4,495)
Increase (decrease) in cash due to:
Inventories ................................. (61,082) (78,974)
Residential mortgage loans available-for-sale 58,514 25,100
Other assets ................................ (8,407) 11,262
Accounts payable and accrued liabilities .... (7,242) (22,653)
Income taxes ................................ 6,977 (881)
--------- --------
Net cash used in operating activities ............... (13,615) (65,808)
Cash flows from investing activities:
Proceeds from sale of securities available-for-sale 61,076
Principal payments of mortgage-backed securities .. 8,431 10,088
(Increase) decrease in funds held by trustee ...... (49,432) 1,313
Other, net ........................................ (3,064) (3,388)
--------- --------
Net cash provided by investing activities ........... 17,011 8,013
Cash flows from financing activities:
Payment of long-term debt and bonds ............... (60,784) (13,689)
Proceeds from borrowings .......................... 9,506
Repayment of borrowings ........................... (49,210) (451)
Stock repurchases ................................. (9,261) (4,323)
Dividends paid .................................... (1,622) (1,630)
Other, net ........................................ 82 72
--------- --------
Net cash used in financing activities ............... (120,795) (10,515)
--------- --------
Net decrease in cash and equivalents -- continuing
operations ........................................ $(117,399) $(68,310)
6
PULTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -- (continued)
($000's omitted)
(Unaudited)
For The Three Months Ended
March 31,
--------------------------
1996 1995
---- ----
Discontinued Operations:
Cash flows from operating activities:
Income from discontinued operations ............... $ 1,972 $ 3,893
Other changes, net ................................ (3,669) 1,022
Cash flows from investing activities:
Purchase of securities available-for-sale ......... (9,560) (23,857)
Principal payments of mortgage-backed securities .. 13,133 1,939
Decrease in Covered Assets and FSLIC Resolution
Fund (FRF) receivables .......................... 31,283 32,258
Cash flows from financing activities:
Repayment of borrowings ........................... (31,560) (31,560)
Decrease in Federal Home Loan Bank (FHLB) advances (1,900)
--------- --------
Net decrease in cash and equivalents -- discontinued
operations ........................................ (301) (16,305)
--------- --------
Net decrease in cash and equivalents ................ (117,700) (84,615)
Cash and equivalents at beginning of period ......... 295,163 281,490
--------- --------
Cash and equivalents at end of period ............... $ 177,463 $196,875
========= ========
Cash -- continuing operations ....................... $ 174,828 $ 91,282
Cash -- discontinued operations ..................... 2,635 105,593
--------- --------
$ 177,463 $196,875
========= ========
Supplemental disclosure of cash flow information --
cash paid during the period for:
Interest, net of amount capitalized
Continuing operations ........................... $ 8,591 $ 5,735
Discontinued operations ......................... 732 3,645
--------- --------
$ 9,323 $ 9,380
========= ========
Income taxes ...................................... $ 1,155 $ 1,017
========= ========
<FN>
See accompanying notes.
7
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($000's omitted)
(Unaudited)
1. Basis of presentation and significant accounting policies
Basis of presentation
The condensed consolidated financial statements include the accounts of
Pulte Corporation (the Company), and all of its significant subsidiaries. The
Company's continuing operations include its homebuilding (Pulte Home
Corporation) and financial services subsidiaries, which include ICM Mortgage
Corporation (ICM) and Pulte Financial Companies, Inc. (PFCI). The Company's
thrift subsidiary, First Heights Bank, fsb (First Heights), has been
classified as discontinued operations (See Note 2). The Company's direct
subsidiaries consist of PFCI and Pulte Diversified Companies, Inc. (PDCI).
PDCI's direct subsidiaries are Pulte Home Corporation (Pulte) and First
Heights. ICM is a direct subsidiary of Pulte.
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, 1996 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Registrant Company and Subsidiaries' annual report on Form 10-K for the
year ended December 31, 1995.
Certain 1995 classifications have been changed to conform with the 1996
presentation.
Significant accounting policies
Interest Expense
The Company capitalizes interest cost into homebuilding inventories and
charges the interest to homebuilding interest expense when the related
inventories are closed.
Income per share
Income per share has been computed using the weighted average number of
common and common equivalent shares outstanding. Common equivalent shares are
determined using the treasury stock method.
Impact of recently issued accounting standards
On January 1, 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
SFAS No. 121 also addresses the accounting for long-lived assets that are
expected to be disposed of. The effect of adopting SFAS No. 121 was not
material to the results of operations or financial position of the Company.
2. Discontinued operations
During the fourth quarter of 1994, First Heights sold substantially all
of its bank branches and related liabilities (primarily deposits). Accordingly,
such operations are being presented as discontinued.
8
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
2. Discontinued operations -- (continued)
Revenues of the discontinued operations for the three month periods
ended March 31, 1996 and 1995 were $3,304 and $7,540, respectively. For the
three months ended March 31, 1996 and 1995, thrift operations resulted in net
income of $1,972 and $3,893, respectively. Discounts of approximately $7,700
at March 31, 1996, are being amortized into income over the life of the
related FRF notes at a rate of approximately $1,200 per quarter. Additional
contingent gains related to possible income tax benefits, which could amount
to $90,000, have not been recognized for financial statement purposes because
of uncertainty of realization.
Assets of discontinued operations included in the consolidated balance
sheets at March 31, 1996 and December 31, 1995 were $153,028 and $156,617,
respectively. Related liabilities included in these same balance sheets were
$125,245 and $130,857, respectively.
3. Segment Information
Mortgage
Homebuilding Banking
(Pulte) (ICM) Financing Corporate Consolidated
------------ -------- --------- --------- ------------
Three Months Ended March 31, 1996:
Continuing Operations:
Revenues:
Unaffiliated customers .................... $ 413,220 $ 7,523 $ 8,610 $ 3,166 $ 432,519
========== ======== ======== ======== ==========
Income (loss) before income taxes ........... $ 7,305 $ 457 $ 4,381 $ (3,529) $ 8,614
========== ======== ======== ======== ==========
At March 31, 1996:
Identifiable assets ........................... $1,174,440 $136,886 $236,830 $219,861 $1,768,017
========== ======== ======== ========
Assets of discontinued operations ............. 153,028
----------
Total assets .................................. $1,921,045
Three Months Ended March 31, 1995: ==========
Continuing Operations:
Revenues:
Unaffiliated customers .................... $ 308,649 $ 12,490 $ 7,341 $ 4,395 $ 332,875
========== ======== ======== ======== ==========
Income (loss) before income taxes ........... $ (3,063) $ 6,231 $ 285 $ (4,155) $ (702)
========== ======== ======== ======== ==========
At March 31, 1995:
Identifiable assets ........................... $1,036,704 $129,338 $326,447 $164,692 $1,657,181
========== ======== ======== ========
Assets of discontinued operations ............. 249,777
----------
Total assets .................................. $1,906,958
==========
4. Stock options
In January 1996, the Company granted 47,000 options with an exercise
price of $30.06 per share under the 1990 Stock Incentive Plan for Key
Employees. As of March 31, 1996, 2,940 shares remain available for grant under
the Plan.
9
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
5. Income taxes
Continuing Operations:
The following table reconciles the expected federal income tax rate to
the effective income tax rate for continuing operations:
Three Months Ended
March 31,
------------------
1996 1995
---- ----
Income taxes (benefit) at federal statutory rate .... 35.0% (35.0)%
Effect of state and other income taxes .............. 5.7% (4.3)%
---- -----
Effective rate ...................................... 40.7% (39.3)%
==== =====
6. Commitments and contingencies
Federal Deposit Insurance Corporation
On July 7, 1995, a lawsuit was filed in the United States District
Court, Eastern District of Michigan, by the Federal Deposit Insurance
Corporation (FDIC) against the Company and its subsidiary PDCI and PDCI's
subsidiary First Heights.
The lawsuit seeks a declaration of rights under the assistance agreement
entered into between First Heights and the Federal Savings and Loan Insurance
Corporation (FSLIC). The FDIC is the successor to FSLIC. The FDIC and Pulte
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 from FSLIC, and First Heights'
ownership of, five failed Texas thrifts. The lawsuit 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 Company disputes the
FDIC's claims and believes that a proper interpretation of the assistance
agreement limits the FDIC's participation in the tax benefits to amounts
established on First Heights' books.
On September 8, 1995, the Company filed an answer and counter-claim in
this case. The Company intends to vigorously defend itself and pursue its
counter-claims. While it is impossible to verify the precise amount requested
by the FDIC at this time, the Company believes that even if the FDIC were to
prevail in its claims, it would not have a material adverse effect on the
financial condition or results of operations of the Company.
7. Supplemental Guarantor Information
The Company has filed a universal shelf registration of up to $250,000
of debt or equity securities (of which $125,000 of 7.3% unsecured Senior Notes
were issued in October, 1995), and has previously issued $100,000, 7%, and
$115,000, 8.375%, unsecured Senior Notes. Such obligations to pay principal,
premium, if any, and interest are guaranteed jointly and severally on a senior
basis by Pulte, all of Pulte's wholly-owned homebuilding subsidiaries and
Builders' Supply & Lumber Co., Inc. which is a Pulte wholly-owned subsidiary
(collectively, the Guarantors). Such guarantees are full and unconditional.
The principal non-Guarantors include PDCI, the parent company of Pulte,
ICM, a wholly-owned subsidiary of Pulte, First Heights, and PFCI. See Note 1
for additional information on the Company's Guarantor and non-Guarantor
subsidiaries.
10
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
7. Supplemental Guarantor Information--(continued)
Supplemental combining 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.
COMBINING BALANCE SHEET
March 31, 1996
Unconsolidated
------------------------------------------ Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
ASSETS
Cash and equivalents .......................... $ 120,047 $ 51,284 $ 3,497 $ 174,828
Unfunded settlements .......................... 80,506 80,506
House and land inventories .................... 920,817 920,817
Mortgage-backed and related securities ........ 187,002 187,002
Residential mortgage loans and other
securities available-for-sale .............. 116,717 116,717
Land held for sale and future development ..... 37,682 37,682
Other assets .................................. 91,738 84,151 74,576 250,465
Discontinued operations ....................... 153,028 153,028
Investment in subsidiaries .................... 731,192 28,339 771,009 $(1,530,540) 0
Advances receivable -- subsidiaries ........... 261,435 4,858 14,242 (280,535) 0
---------- ---------- ---------- ----------- ----------
$1,204,412 $1,207,637 $1,320,071 $(1,811,075) $1,921,045
========== ========== ========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities ...... $ 41,368 $ 290,779 $ 36,903 $ 369,050
Collateralized short-term debt, recourse
solely to applicable subsidiary assets ..... 96,250 96,250
Mortgage-backed bonds, recourse solely to
applicable subsidiary assets ............... 164,757 164,757
Income taxes .................................. 47,657 47,657
Subordinated debentures and senior notes ...... 339,302 24,591 363,893
Discontinued operations ....................... 7,656 117,589 125,245
Advances payable -- subsidiaries .............. 14,236 167,140 99,159 $ (280,535) 0
---------- ---------- ---------- ----------- ----------
Total liabilities ......................... 450,219 482,510 514,658 (280,535) 1,166,852
Shareholders' equity .......................... 754,193 725,127 805,413 (1,530,540) 754,193
---------- ---------- ---------- ----------- ----------
$1,204,412 $1,207,637 $1,320,071 $(1,811,075) $1,921,045
========== ========== ========== =========== ==========
11
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
7. Supplemental Guarantor Information--(continued)
COMBINING BALANCE SHEET
DECEMBER 31, 1995
Unconsolidated
------------------------------------------ Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
ASSETS
Cash and equivalents .......................... $ 220,782 $ 71,012 $ 433 $ 292,227
Unfunded settlements .......................... 80,131 80,131
House and land inventories .................... 859,735 859,735
Mortgage-backed and related securities ........ 254,170 254,170
Residential mortgage loans and other
securities available-for-sale .............. 178,302 178,302
Land held for sale and future development ..... 36,980 36,980
Other assets .................................. 86,685 76,230 27,394 190,309
Discontinued operations ....................... 156,617 156,617
Investment in subsidiaries .................... 725,689 42,065 752,630 $(1,520,384) 0
Advances receivable -- subsidiaries ........... 171,117 14,942 (186,059) 0
---------- ---------- ---------- ------------ ----------
$1,204,273 $1,166,153 $1,384,488 $(1,706,443) $2,048,471
========== ========== ========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities ...... $ 35,369 $ 300,990 $ 45,048 $ 381,407
Collateralized short-term debt, recourse
solely to applicable subsidiary assets ..... 140,578 140,578
Mortgage-backed bonds, recourse solely to
applicable subsidiary assets ............... 225,272 225,272
Income taxes .................................. 45,397 45,397
Subordinated debentures and senior notes ...... 339,280 24,677 363,957
Discontinued operations ....................... 8,875 121,982 130,857
Advances payable -- subsidiaries .............. 14,349 120,012 51,698 $ (186,059) 0
---------- ---------- ---------- ------------ ----------
Total liabilities ......................... 443,270 445,679 584,578 (186,059) 1,287,468
Shareholders' equity .......................... 761,003 720,474 799,910 (1,520,384) 761,003
---------- ---------- ---------- ------------ ----------
$1,204,273 $1,166,153 $1,384,488 $(1,706,443) $2,048,471
========== ========== ========== =========== ==========
12
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
7. Supplemental Guarantor Information--(continued)
COMBINING STATEMENT OF OPERATIONS
For the three months ended March 31, 1996
Unconsolidated
------------------------------------------ Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
Revenues:
Homebuilding ............................. $413,220 $413,220
Mortgage banking and financing:
Interest and other...................... $16,133 16,133
Corporate, principally interest .......... $ 2,808 358 3,166
------- -------- ------- --------
Total revenues ............................. 2,808 413,220 16,491 432,519
Expenses:
Homebuilding:
Cost of sales .......................... 352,685 352,685
Selling, general and administrative
and other expense ................... 53,230 53,230
Mortgage banking and financing,
principally interest .................. 11,295 11,295
Corporate, net ........................... 6,254 441 6,695
------- -------- ------- --------
Total expense .............................. 6,254 405,915 11,736 423,905
------- -------- ------- --------
Income (loss) from continuing
operations before income taxes and
equity in net income of subsidiaries ..... (3,446) 7,305 4,755 8,614
Income taxes (benefit) ..................... (1,333) 2,922 1,917 3,506
------- -------- ------- --------
Income (loss) from continuing operations
before equity in net income of
subsidiaries ............................ (2,113) 4,383 2,838 5,108
Income from discontinued operations ........ 1,315 657 1,972
------- -------- ------- --------
Income (loss) before equity in net
income of subsidiaries .................. (798) 4,383 3,495 7,080
Equity in net income of subsidiaries:
Continuing operations .................... 7,221 274 4,383 $(11,878) 0
Discontinued operations .................. 657 (657) 0
------- -------- ------- -------- --------
7,878 274 4,383 (12,535) 0
------- -------- ------- -------- --------
Net income ................................. $ 7,080 $ 4,657 $ 7,878 $(12,535) $ 7,080
======= ======== ======= ======== ========
13
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
7. Supplemental Guarantor Information--(continued)
COMBINING STATEMENT OF OPERATIONS
For the three months ended March 31, 1995
Unconsolidated
------------------------------------------ Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
Revenues:
Homebuilding .................................. $308,649 $308,649
Mortgage banking and financing:
Interest and other .......................... $10,543 10,543
Gain on sale of servicing ................... 9,288 9,288
Corporate, principally interest ............... $ 3,963 432 4,395
------- -------- ------- --------
Total revenues .................................. 3,963 308,649 20,263 332,875
Expenses:
Homebuilding:
Cost of sales ............................... 263,930 263,930
Selling, general and administrative
and other expense ........................ 47,782 47,782
Mortgage banking and financing,
principally interest ....................... 13,315 13,315
Corporate, net ................................ 6,342 2,208 8,550
------- -------- ------- --------
Total expense ................................... 6,342 311,712 15,523 333,577
------- -------- ------- --------
Income (loss) from continuing
operations before income taxes and
equity in net income of subsidiaries .......... (2,379) (3,063) 4,740 (702)
Income taxes (benefit) .......................... (1,680) (1,225) 2,629 (276)
------- -------- ------- --------
Income (loss) from continuing operations
before equity in net income of subsidiaries .. (699) (1,838) 2,111 (426)
Income from discontinued operations ............. 1,179 2,714 3,893
------- -------- ------- --------
Income (loss) before equity in net income of
subsidiaries .................................. 480 (1,838) 4,825 3,467
Equity in net income (loss) of subsidiaries:
Continuing operations ......................... 273 3,739 (1,838) $(2,174) 0
Discontinued operations ....................... 2,714 (2,714) 0
------- -------- ------- ------- --------
2,987 3,739 (1,838) (4,888) 0
------- -------- ------- ------- --------
Net income ...................................... $ 3,467 $ 1,901 $ 2,987 $(4,888) $ 3,467
======= ======== ======= ======= ========
14
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
7. Supplemental Guarantor Information--(continued)
COMBINING STATEMENT OF CASH FLOWS
For the three months ended March 31, 1996
Unconsolidated
------------------------------------------ Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- -----------
Continuing operations:
Cash flows from operating activities:
Income from continuing operations ................. $ 5,108 $ 4,657 $ 7,221 $(11,878) $ 5,108
Adjustments to reconcile income from continuing
operations to net cash flows provided by (used
in) operating activities:
Equity in subsidiaries ........................ (7,221) (274) (4,383) 11,878 0
Amortization, depreciation and other .......... 22 1,404 213 1,639
Deferred income taxes ......................... (4,627) (4,627)
Gain on sale of securities .................... (4,495) (4,495)
Increase (decrease) in cash due to:
Inventories ................................. (61,082) (61,082)
Residential mortgage loans available-for-sale 58,514 58,514
Other assets ................................ (4,996) (8,610) 5,199 (8,407)
Accounts payable and accrued liabilities .... 5,996 (5,791) (7,447) (7,242)
Income taxes ................................ 2,138 2,922 1,917 6,977
-------- -------- -------- -------- --------
Net cash provided by (used in) operating activities . (3,580) (66,774) 56,739 0 (13,615)
Cash flows from investing activities:
Proceeds from sale of securities available-
for-sale ........................................ 61,076 61,076
Principal payments of mortgage-backed securities .. 8,431 8,431
Increase in funds held by trustee ................. (49,432) (49,432)
Dividends received from subsidiaries .............. 14,000 (14,000) 0
Investment in subsidiaries ........................ (762) 762 0
Advances to affiliates ............................ (85,592) 310 (2,056) 87,338 0
Other, net ........................................ (2,309) (755) (3,064)
-------- -------- -------- -------- --------
Net cash provided by (used in) investing activities . $(86,354) $ 12,001 $ 17,264 $ 74,100 $ 17,011
15
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
7. Supplemental Guarantor Information--(continued)
COMBINING STATEMENT OF CASH FLOWS (continued)
For the three months ended March 31, 1996
Unconsolidated
------------------------------------------ Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
Cash flows from financing activities:
Payment of long-term debt and bonds ............... $(60,784) $ (60,784)
Repayment of borrowings ........................... $ (4,510) (44,700) (49,210)
Capital contributions from parent ................. 762 $ (762) 0
Advances from affiliates .......................... 39,555 47,783 (87,338) 0
Stock repurchases ................................. $ (9,261) (9,261)
Dividends paid .................................... (1,622) (14,000) 14,000 (1,622)
Other, net ........................................ 82 82
--------- -------- -------- -------- ---------
Net cash provided by (used in) financing
activities . ...................................... (10,801) 35,045 (70,939) (74,100) (120,795)
--------- -------- -------- -------- ---------
Net increase (decrease) in cash and equivalents --
continuing operations ............................. (100,735) (19,728) 3,064 0 (117,399)
Discontinued operations:
Cash flows from operating activities:
Income from discontinued operations ............... 1,972 657 (657) 1,972
Equity in subsidiaries ............................ (657) 657 0
Other changes, net ................................ (1,315) (2,354) (3,669)
Cash flows from investing activities:
Purchase of securities available-for-sale ......... (9,560) (9,560)
Principal payments of mortgage-backed securities .. 13,133 13,133
Decrease in Covered Assets and FRF receivables .... 31,283 31,283
Cash flows from financing activities:
Repayment of borrowings ........................... (31,560) (31,560)
Decrease in FHLB advances ......................... (1,900) (1,900)
--------- -------- -------- -------- ---------
Net decrease in cash and equivalents --
discontinued operations ........................... 0 0 (301) 0 (301)
--------- -------- -------- -------- ---------
Net increase (decrease) in cash and equivalents ..... (100,735) (19,728) 2,763 0 (117,700)
Cash and equivalents at beginning of period ......... 220,782 71,012 3,369 295,163
--------- -------- -------- -------- ---------
Cash and equivalents at end of period ............... $ 120,047 $ 51,284 $ 6,132 $ 0 $ 177,463
========= ======== ======== ======== =========
16
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
7. Supplemental Guarantor Information--(continued)
COMBINING STATEMENT OF CASH FLOWS
For the three months ended March 31, 1995
Unconsolidated
------------------------------------------ Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
Continuing operations:
Cash flows from operating activities:
Income (loss) from continuing operations .......... $ (426) $ 1,901 $ 273 $ (2,174) $ (426)
Adjustments to reconcile income (loss) from
continuing operations to net cash flows provided
by (used in) operating activities:
Equity in subsidiaries ........................ (273) (3,739) 1,838 2,174 0
Amortization, depreciation and other .......... 19 1,159 2 1,180
Deferred income taxes ......................... (416) (416)
Increase (decrease) in cash due to:
Inventories ................................. (78,974) (78,974)
Residential mortgage loans available-for-sale 25,100 25,100
Other assets ................................ 398 7,120 3,744 11,262
Accounts payable and accrued liabilities .... (1,577) (20,454) (622) (22,653)
Income taxes ................................ (2,285) (1,225) 2,629 (881)
-------- -------- ------- -------- --------
Net cash provided by (used in) operating activities . (4,560) (94,212) 32,964 0 (65,808)
Cash flows from investing activities:
Principal payments of mortgage-backed securities .. 10,088 10,088
Decrease in funds held by trustee ................. 1,313 1,313
Dividends received from subsidiaries .............. 40,000 (40,000) 0
Investment in subsidiaries ........................ (754) 754 0
Advances to affiliates ............................ (57,246) (4,969) 722 61,493 0
Other, net ........................................ (872) (2,516) (3,388)
-------- -------- ------- -------- --------
Net cash provided by (used in) investing activities . $(58,000) $ 34,159 $ 9,607 $ 22,247 $ 8,013
17
PULTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(continued)
($000's omitted)
(Unaudited)
7. Supplemental Guarantor Information--(continued)
COMBINING STATEMENT OF CASH FLOWS (continued)
For the three months ended March 31, 1995
Unconsolidated
------------------------------------------ Consolidated
Pulte Guarantor Non-Guarantor Eliminating Pulte
Corporation Subsidiaries Subsidiaries Entries Corporation
----------- ------------ ------------- ----------- ------------
Cash flows from financing activities:
Payment of long-term debt and bonds ............... $(13,689) $(13,689)
Proceeds from borrowings .......................... 9,506 9,506
Repayment of borrowings ........................... $ (352) (99) (451)
Capital contributions from parent ................. 754 $ (754) 0
Advances from affiliates .......................... 59,644 1,849 (61,493) 0
Stock repurchases ................................. $ (4,323) (4,323)
Dividends paid .................................... (1,630) (40,000) 40,000 (1,630)
Other, net ........................................ 72 72
-------- ------- -------- -------- --------
Net cash provided by (used in) financing activities . (5,881) 59,292 (41,679) (22,247) (10,515)
-------- ------- -------- -------- --------
Net increase (decrease) in cash and equivalents --
continuing operations ............................. (68,441) (761) 892 0 (68,310)
Discontinued operations:
Cash flows from operating activities:
Income from discontinued operations ............... 3,893 2,714 (2,714) 3,893
Equity in subsidiaries ............................ (2,714) 2,714 0
Other changes, net ................................ (1,179) 2,201 1,022
Cash flows from investing activities:
Purchase of securities available-for-sale ......... (23,857) (23,857)
Principal payments of mortgage-backed securities .. 1,939 1,939
Decrease in Covered Assets and FRF receivables .... 32,258 32,258
Cash flows from financing activities:
Repayment of borrowings ........................... (31,560) (31,560)
-------- ------- -------- -------- --------
Net decrease in cash and equivalents -- discontinued
operations ........................................ 0 0 (16,305) 0 (16,305)
-------- ------- -------- -------- --------
Net decrease in cash and equivalents ................ (68,441) (761) (15,413) 0 (84,615)
Cash and equivalents at beginning of period ......... 115,546 43,547 122,397 281,490
-------- ------- -------- -------- --------
Cash and equivalents at end of period ............... $ 47,105 $42,786 $106,984 $ 0 $196,875
======== ======= ======== ======== ========
18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
($000's omitted, except per share data)
For the quarter ended March 31, 1996, Pulte Corporation's net income was
$7,080, $.26 per share, compared with $3,467, $.13 per share, in 1995.
A summary of these results by business segment is as follows:
For the
Three Months Ended
March 31,
------------------
1996 1995
---- ----
Pre-tax income (loss):
Homebuilding Operations:
Pulte Home Corporation .......................... $ 7,305 $(3,063)
Financial Services Operations:
Mortgage banking -- ICM ......................... 457 6,231
Financing activities ............................ 4,381 285
------- -------
Total Financial Services pre-tax income ........... 4,838 6,516
Corporate pre-tax loss ............................ (3,529) (4,155)
------- -------
Pre-tax income (loss) from continuing operations .... 8,614 (702)
Income taxes (benefit) .............................. 3,506 (276)
------- -------
Income (loss) from continuing operations ............ 5,108 (426)
Income from discontinued operations ................. 1,972 3,893
------- -------
Net income .......................................... $ 7,080 $ 3,467
======= =======
19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS--(continued)
($000's omitted)
Homebuilding Operations
The following table presents selected financial data for Pulte Home
Corporation (Pulte) for the quarters ended March 31, 1996 and 1995.
For the Three Months Ended
March 31,
--------------------------
1996 1995
---- ----
Unit settlements:
Pulte Home North ................................ 387 355
Pulte Home South ................................ 776 538
Pulte Home Central .............................. 982 661
Pulte Home West ................................. 587 473
-------- --------
2,732 2,027
Net new orders -- units:
Pulte Home North ................................ 662 619
Pulte Home South ................................ 1,274 783
Pulte Home Central .............................. 1,468 1,208
Pulte Home West ................................. 847 613
-------- --------
4,251 3,223
Net new orders -- dollars ......................... $683,000 $504,000
Backlog at March 31 -- units:
Pulte Home North ................................ 1,013 709
Pulte Home South ................................ 1,449 800
Pulte Home Central .............................. 1,773 1,294
Pulte Home West ................................. 983 680
-------- --------
5,218 3,483
Backlog -- dollars ................................ $876,000 $582,000
Revenues .......................................... $413,220 $308,649
Average sales price ............................... 151 152
Cost of sales ..................................... 352,685 263,930
Selling, general and administrative expense ....... 49,698 42,620
Interest (A) ...................................... 3,206 1,993
Other expense, net ................................ 326 3,169
-------- --------
Pre-tax income (loss) ............................. $ 7,305 $ (3,063)
<FN>
Note (A): The Company capitalizes interest cost into homebuilding inventories
and charges the interest to homebuilding interest expense when the related
inventories are closed.
The number of active communities as of the end of the period are as
follows:
March 31, 1996 ...................................... 380
December 31, 1995 ................................... 352
September 30, 1995 .................................. 355
June 30, 1995 ....................................... 346
March 31, 1995 ...................................... 314
20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS--(continued)
($000's omitted)
Homebuilding Operations--(continued)
Pulte conducts its domestic homebuilding operations through 39 markets
in 24 states which are organized into four operating companies -- Pulte Home
North (PHN), Pulte Home South (PHS), Pulte Home Central (PHC) and Pulte Home
West (PHW). No one individual market within the 39 markets represents more
than 10% of total Pulte net new orders, unit settlements or revenues during
the three months ended March 31, 1996.
Net new orders during the first quarter of 1996 increased by 32% to a
Company record 4,251 units, compared with the previous record of 3,223 units
for the first quarter of 1995. The Company's existing markets, as well as the
new markets entered during 1994 and early 1995, all contributed to the
positive first quarter net new order activity. In addition, all operating
companies posted positive year-over-year net new order comparisons for the
fourth consecutive quarter. Both PHS and PHC experienced very strong growth in
net new orders due to continued positive response to new product offerings,
combined with favorable contributions from their new markets. The increased
net new order pace resulted in a record backlog at March 31, 1996 of 5,218
units ($876,000) compared with 3,483 units ($582,000) at March 31, 1995.
Settlements during the first quarter of 1996 also increased by 35% over
the same period in 1995, to a first quarter record 2,732 units. All operating
companies recorded positive comparisons over the prior year first quarter,
including PHN, despite significant construction delays as a result of the
adverse weather conditions along the east coast. The Company's strong first
quarter settlement activity was supported by the record year end backlog at
December 31, 1995.
The average selling price during the first quarter of 1996 was $151,
comparable to the first quarter of 1995, but lower than the average selling
price of $155 for the year ended December 31, 1995. The decrease in the
average selling price is due to changes in product mix, primarily resulting
from weather related delays in the Company's east coast markets. PHN closed
more lower priced townhouse and condominium products and PHS moved toward more
affordable product in the Carolina markets.
Gross profit margins were 14.6% for the first quarter of 1996, compared
with 14.5% in the first quarter of 1995 and 14.9% during the fourth quarter of
1995. Gross profit margins continued to be unfavorably impacted by competitive
market conditions, primarily in PHN and PHW.
Selling, general and administrative expenses increased $7,078 compared
to the first quarter of 1995. However, as a percent of sales revenue, selling,
general and administrative expenses improved to 12% versus 13.8% in the first
quarter of 1995. The improvement in selling, general and administrative
expense leverage reflects the positive contributions of our new markets as
they continue to mature and operate more efficiently.
Other expense, net includes gains on land sales, the pre-tax results of
Builders' Supply & Lumber Co., Inc. (BSL) and other homebuilding-related
expenses. Other expense, net was favorably impacted during the first quarter
of 1996, compared with the same period in 1995, due primarily to the
recognition of gains on the sale of excess land in PHS, combined with improved
results for BSL compared to a year ago.
21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS--(continued)
($000's omitted)
Homebuilding Operations--(continued)
Information related to interest in inventory is as follows:
For The Three Months Ended
March 31,
--------------------------
1996 1995
---- ----
Interest in inventory at beginning of period ........ $12,261 $ 8,053
Interest capitalized ................................ 3,995 3,981
Interest expensed ................................... (3,206) (1,993)
------- -------
Interest in inventory at end of period .............. $13,050 $10,041
======= =======
Financial Services Operations
The Company's financial services subsidiaries (mortgage banking and
financing operations) had operating income of $4,838 for the three month
period ended March 31, 1996, compared with $6,516 for the same period in 1995.
Mortgage Banking Operations
The Company's mortgage banking operations are conducted by ICM Mortgage
Corporation (ICM).
The following table presents selected financial data for ICM:
For The Three Months Ended
March 31,
--------------------------
1996 1995
---- ----
Production:
Total originations:
Loans ............................................. 2,331 2,160
Principal ......................................... $264,546 $233,560
Funded originations:
Loans ............................................. 2,160 1,744
Principal ......................................... $240,982 $181,266
Originations for Pulte customers:
Loans ........................................... 1,421 854
Principal ....................................... $167,085 $100,583
ICM had pre-tax income of $457 for the quarter ended March 31, 1996,
compared with $6,231 for the same period in 1995.
During the first quarter of 1995, ICM recorded pre-tax gains on sales of
its core mortgage servicing portfolio of $6,995. In addition, as part of its
normal operations, in the first quarter of 1995 ICM recorded gains on sale of
non-core mortgage servicing rights of $2,293. The sale of the core mortgage
servicing portfolio and the ongoing sale of servicing rights on a flow basis
are the result of repositioning ICM to concentrate on its primary business of
providing mortgage financing for Pulte's homebuyers. ICM expects to continue
to sell mortgage servicing rights as part of normal operations on a three to
five month lag from the time of origination.
During the first quarter of 1996, pricing and marketing gains increased
by $4,937 compared with the first quarter of 1995. Effective July 1, 1995, ICM
adopted Statement of Financial Accounting Standards (SFAS) No. 122, Accounting
for Mortgage Servicing Rights. Under SFAS No. 122, the costs associated with
originating mortgage servicing rights are recognized as an asset, shifting the
gains from sale of servicing rights to sale of mortgage loans.
22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS--(continued)
($000's omitted)
Mortgage Banking Operations--(continued)
Mortgage origination volume for the first quarter of 1996 increased 13%
to $264,546 compared with the first quarter of 1995, primarily due to
increased volume for Pulte customers as ICM continued its emphasis on
expanding in Pulte's existing and new markets. ICM continues to hedge its
mortgage pipeline in the normal course of its business and there has been no
change in the Company's strategy or use of derivative financial instruments in
this regard.
Net interest income decreased by $742 during the quarter ended March 31,
1996, compared with the first quarter of 1995, primarily due to dividends paid
by ICM to its parent, Pulte, during the first quarters of 1996 and 1995. The
result of the dividends is an increased leverage position, incurring higher
interest expense and reducing net interest income.
At March 31, 1996, loan application backlog was $468,000 compared with
$334,000 at December 31, 1995 and $349,000 at March 31, 1995.
Financing Activities
The Company's secured financing operations are conducted by Pulte
Financial Companies, Inc. (PFCI) through its subsidiary corporations. Prior to
1989, the PFCI subsidiaries 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.
Since 1989, the PFCI subsidiaries have been liquidating their collateral
portfolios and related bonds outstanding. At March 31, 1996, four bond series
with an aggregate principal amount of $164,757 remained outstanding. These
bonds are expected to be redeemed, and the related collateral sold, by late
1996. PFCI's pre-tax operating income was $4,381 for the quarter ended March
31, 1996, compared with $285 for the same period in 1995. The increase in
pre-tax income for the quarter ended March 31, 1996 is due to net gains on
sale of collateral of $4,495. There were no such gains in the same period of
1995. 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; it is the Company's
internal source of financing and also includes the following items:
o Income from investments, including the Company's share of Mexican joint
venture operations.
o Interest expense on the Company's long-term debt.
o Administrative expenses.
Corporate assets include equity investments in subsidiaries, and the
Company's working capital funds invested in short term cash investments and
affiliate advances. Its liabilities include senior and subordinated debt and
income taxes.
Corporate had pre-tax losses of $3,529 in the quarter ended March 31,
1996, compared with pre-tax losses of $4,155 in the same period of 1995.
23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS--(continued)
($000's omitted)
Corporate--(continued)
The decreased loss for the first quarter of 1996 is primarily due to
favorable variances in the Company's Mexico operations, partially offset by
increased interest expense as a result of the issuance of $125,000 of 7.3%
unsecured Senior Notes in the fourth quarter of 1995.
Mexico operations continue to develop and expand. In January 1996, the
Company's Monterrey joint venture partner assigned its interest in the joint
venture to the Company. The Company's net investment in the Monterrey venture
is carried at approximately $5,400 as of March 31, 1996. The Company intends
to liquidate the Monterrey assets in the normal course of business. During the
first quarter of 1996, the Company's Juarez joint venture recorded its first
unit closings. The Company's net investment in the Juarez joint venture is
carried at approximately $2,000 as of March 31, 1996. During the first quarter
of 1995, the Company recorded a loss of $1,824 related to its Mexico
operations, primarily related to the Company's share of joint venture foreign
currency losses. During the first quarter of 1996, Mexico operations were at
break-even and there were no significant foreign currency gains or losses, as
the Mexican currency has stabilized since the fourth quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Continuing Operations
The Company believes it has adequate financial resources and sufficient
credit facilities to meet its current working capital needs. Sources of the
Company's working capital include its cash, its $250,000 committed unsecured
revolving credit facility, the remaining outstanding balance of $22,405 of
Pulte's previously issued unsecured Senior Subordinated Debentures, due 1999,
the Company's $100,000, 7% unsecured Senior Notes, due 2003, the Company's
$115,000, 8.375% unsecured Senior Notes, due 2004 and the Company's $125,000,
7.3% unsecured Senior Notes, due 2005. In addition, the Company has other
committed and uncommitted credit lines, which at March 31, 1996 consisted of
$10,000 and $250,000 related to Pulte and ICM operations, respectively. During
1996, management anticipates that homebuilding and corporate working capital
requirements will be funded with internally generated funds and the previously
mentioned debt.
In addition, the Company has on file with the Securities and Exchange
Commission a universal shelf registration which provides for up to an
additional $125,000 of debt or equity securities.
During the first three months of 1996, the Company repurchased 334,432
shares of its common stock for an aggregate amount of $9,261. This completed
the repurchase of 1,000,000 shares authorized by the Board of Directors in
late 1994. During March 1996, the Board of Directors authorized the repurchase
by the Company of up to an additional 1,000,000 shares of common stock. In
April 1996, upon completion of the repurchase of the 1,000,000 shares
authorized in March 1996, the Board of Directors authorized the repurchase by
the Company of up to an additional 1,000,000 shares of common stock under the
stock repurchase program. Subsequent to March 31, 1996, the Company has
repurchased 1,390,100 shares of its common stock for an aggregate amount of
$35,897.
The Company finances its land acquisitions, development and construction
activities from internally generated funds and existing credit agreements. The
Company's mortgage banking subsidiary (ICM) provides mortgage financing for
many of its home sales. ICM uses its own funds and borrowings made available
pursuant to various committed bank credit arrangements which, at March 31,
1996 amounted to $250,000, an amount deemed adequate to cover foreseeable
needs. Such mortgage loans are subsequently sold, principally to outside
investors. The Company anticipates that there will be adequate mortgage
financing available for purchasers of its homes.
24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS--(continued)
($000's omitted)
Continuing Operations--(continued)
There were no borrowings under the $250,000 unsecured revolving credit
facility at March 31, 1996. The Company from time to time has borrowings under
this revolving credit arrangement; there were no borrowings during the first
quarter of 1996. There were approximately $96,073 of borrowings under the
$250,000 (ICM) arrangement at March 31, 1996.
Discontinued Operations:
The Company's income taxes have been significantly impacted by its
thrift operations, principally because payments received from FSLIC Resolution
Fund (FRF) are exempt from federal income taxes.
The Company's thrift assets are subject to regulatory restrictions and
are not available for general corporate purposes. The final liquidation and
wind-down of the Company's thrift operations is dependent on the final
resolution of outstanding matters with the Federal Deposit Insurance
Corporation (FDIC), manager of FRF. The Company is currently negotiating with
the FDIC and is involved in litigation with the FDIC. Although there is no
certainty as to the time of resolution, the Company believes that this matter
may be resolved within the next twelve months. At March 31, 1996, the Company
had a remaining investment in First Heights of approximately $29,800.
25
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 27
All other exhibits are omitted from this report because they are not
applicable.
Reports on Form 8-K
- -------------------
The Company did not file any reports on Form 8-K during the quarter
ended March 31, 1996.
26
PULTE CORPORATION
EXHIBIT 11 -- STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
(000's omitted, except per share data)
For The Three Months Ended
March 31
--------------------------
1996 1995
---- ----
Primary
Net income ........................................ $ 7,080 $ 3,467
======= =======
Weighted average common shares outstanding ........ 26,983 27,403
Common stock equivalents -- stock options ......... 267 251
------- -------
Total ......................................... 27,250 27,654
======= =======
Net income per share .............................. $ .26 $ .13
======= =======
Fully diluted
Net income ........................................ $ 7,080 $ 3,467
======= =======
Weighted average common shares outstanding ........ 26,983 27,403
Common stock equivalents -- stock options ......... 267 262
------- -------
Total ......................................... 27,250 27,665
======= =======
Net income per share .............................. $ .26 $ .13
======= =======
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PULTE CORPORATION
/s/ MICHAEL D. HOLLERBACH
--------------------------------------
Michael D. Hollerbach
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ VINCENT J. FREES
--------------------------------------
Vincent J. Frees
Vice President and Controller
(Principal Accounting Officer)
Date: May 14, 1996
28