News

02.03.09

Pulte Homes Reports Fourth Quarter 2008 Financial Results

- For the Fourth Quarter 2008, Generated 1,763 Net New Orders and Closed 5,474 Homes - Company Ended Q4 2008 With $1.655 Billion of Cash - Impairments and Land-Related Charges of $380 Million for the Fourth Quarter 2008 - Q4 2008 Net Loss of $1.33 Per Share, Inclusive of Impairments and Land-Related Charges - Company Expects Tax Refunds of Approximately $374 Million
BLOOMFIELD HILLS, Mich., Feb 04, 2009 /PRNewswire-FirstCall via COMTEX/ -- Pulte Homes (NYSE: PHM) announced today financial results for its fourth quarter ended December 31, 2008. For the quarter, the Company reported a net loss of $338.2 million, or $1.33 per share, compared with a $874.7 million net loss for the prior year fourth quarter, or $3.46 per share. The fourth quarter 2008 net loss included $380 million of pre-tax charges related to inventory impairments and other land-related charges. Impairments and land-related charges for the prior year quarter were $509 million. Consolidated revenues for the quarter were $1.7 billion, a decline of 43% from prior year quarter revenues of $2.9 billion.

"The homebuilding operating environment took yet another step down during the fourth quarter of 2008," said Richard J. Dugas, Jr., President and CEO of Pulte Homes. "During the quarter, consumers faced unprecedented levels of financial uncertainty that dramatically impacted purchases of all large-ticket items, especially homes. Sinking consumer confidence, excess foreclosure inventory and continued very tight mortgage availability put dramatic downward pressure on the homebuilding market. These factors, combined with an exceptionally weak economy and a surge in unemployment across all industries left many potential home purchasers on the sidelines to wait for a more certain view of the future.

"Despite this strong downward market momentum, Pulte achieved its stated cash goal as we generated significant positive cash flow during the quarter. We ended the year with nearly $1.7 billion in cash, no debt outstanding under our revolving credit facility and took further action to restructure our company overhead to better match anticipated reduced volume for 2009. Pulte's strong beginning cash position, anticipated tax refunds, and expected positive operating cash flow in 2009 leave us well positioned to capitalize on opportunities once stability in the housing sector begins to materialize."

Fourth Quarter Results

Revenues from homebuilding settlements in the fourth quarter decreased 45% to $1.5 billion, compared with $2.8 billion in last year's fourth quarter. The change in revenue for the quarter reflects a 37% decrease in closings to 5,474 homes, and a 13% decrease in average selling price to $278,000.

Fourth quarter homebuilding pre-tax loss was $466.3 million, compared with a $459.2 million pre-tax loss for the prior year quarter. Homebuilding SG&A expense totaled $205 million for the quarter, including $15 million of severance-related charges. During the fourth quarter of 2008, the Company recorded $380 million of impairments and land-related charges, including $205 million related to land impairments, $14 million associated with the write-off of land deposits and pre-acquisition costs, $146 million of impairments of land held for sale and $15 million related to the Company's investment in unconsolidated joint ventures. For the prior year quarter, impairments and land-related charges totaled $509 million. In addition, goodwill impairments of $5 million were recorded during the 2008 fourth quarter, compared with $34 million for the prior year quarter.

Net new home orders for the fourth quarter were 1,763 homes, a decline of 61% from the prior year fourth quarter. Pulte Homes' ending backlog as of December 31, 2008 was valued at $631 million (2,174 homes), compared with a value of $2.5 billion (7,890 homes) at the end of last year's fourth quarter. At the end of the fourth quarter 2008, the Company's debt-to-capitalization ratio was 52.8%, and on a net debt-to-capitalization basis was 34.8%.

The Company's financial services operations reported pre-tax loss of $7.9 million for the fourth quarter 2008, compared with $10.3 million of pre-tax income for the prior year's quarter. This fourth quarter 2008 pre-tax loss was primarily due to a 42% decline in mortgage loans originated during the quarter compared with the prior year quarter combined with an increase in loan loss reserves. The mortgage capture rate for the quarter was 92%, compared with 91% for the same quarter last year.

Full Year Results

For the year ended December 31, 2008, Pulte Homes' net loss was $1.5 billion, or $5.81 per share, compared with a $2.3 billion, or $8.94 per share, net loss for the prior year. Consolidated revenues for 2008 were $6.3 billion, down 32% from $9.3 billion for the prior year.

Revenues from homebuilding settlements for the period were approximately $6 billion, down 33% from the prior year. Lower revenues for the period resulted from a 12% decrease in average selling price to $284,000, combined with a 24% decrease in the number of homes closed to 21,022.

Homebuilding pre-tax loss for 2008 was $1.7 billion, compared with a $2.5 billion pre-tax loss for the prior year. Homebuilding SG&A expense decreased $284 million, or 27%, compared with last year. During 2008, the Company recorded $1.5 billion of impairments and land-related charges, including $1.2 billion related to land impairments, $33 million associated with the write-off of land deposits and pre-acquisition costs, $271 million of impairments of land held for sale, and $18 million related to the Company's investment in unconsolidated joint ventures. For 2007, these impairments and land-related charges totaled $2.2 billion. Homebuilding pre-tax loss for the year also includes goodwill impairments of $5 million compared with $370 million in the prior year.

Pulte's financial services operations reported pre-tax income of $28 million in 2008 compared with $43 million in the prior year. The 35% decrease in mortgage loans originated during the year was the primary cause for this decrease, partially offset by a positive shift in the mix of mortgage loans toward more profitable agency-backed products.

A conference call discussing Pulte Homes' fourth quarter results will be held Thursday, February 5 at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via the Company's corporate website at www.pulteinc.com.

Certain statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) adverse national and regional economic and business conditions, including further deterioration in the unemployment rate and the current downturn in the homebuilding industry; (2) interest rate changes and the availability of mortgage financing; (3) continued volatility and potential further deterioration in the debt and equity markets, which have adversely impacted the banking and mortgage finance industries, resulting in tightening of credit; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) the availability and cost of insurance covering risks associated with the Company's business; (7) shortages and the cost of labor; (8) weather-related slowdowns; (9) slow growth initiatives and/or local building moratoria; (10) governmental regulation and the interpretation of tax, labor and environmental laws; (11) changes in consumer confidence and preferences; (12) required accounting changes; (13) terrorist acts and other acts of war; (14) the potential loss of tax benefits if we have an "ownership change" under IRC Section 382; and (15) other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See the Company's Annual Report on Form 10-K and Annual Report to Shareholders for the year ended December 31, 2007 and other public filings with the Securities and Exchange Commission for a further discussion of these and other risks and uncertainties applicable to Pulte's business. Pulte undertakes no duty to update any forward-looking statement whether as a result of new information, future events or changes in Pulte's expectations.

About Pulte Homes

Pulte Homes, Inc., (NYSE: PHM), based in Bloomfield Hills, Mich., is one of America's largest home building companies with operations in 49 markets and 25 states. During its 59-year history, the company has delivered more than 500,000 new homes. In 2008, Pulte Homes operations ranked highest in customer satisfaction in 11 U.S. markets, the most of any homebuilder, in the annual J.D. Power and Associates(R) New-Home Builder Customer Satisfaction Study(sm). Under its Del Webb brand, Pulte is the nation's largest builder of active adult communities for people age 55 and older. Its DiVosta Homes brand is renowned in Florida for its distinctive master-planned communities. Pulte Mortgage LLC is a nationwide lender offering Pulte customers a wide variety of loan products and superior service.

    Websites: www.pulte.com; www.delwebb.com; www.divosta.com



                              Pulte Homes, Inc.
                        Condensed Consolidated Results
                                Of Operations
                    (000's omitted, except per share data)
                                 (Unaudited)

                           Three Months Ended             Year Ended
                               December 31,              December 31,
                               ----------------------           ----------------------
                            2008         2007         2008         2007
                            --------         ---------        --------        ---------

    CONSOLIDATED RESULTS:

    Revenues:
     Homebuilding       $1,611,672   $2,859,768   $6,112,038   $9,121,730
     Financial Services     32,145       35,083      151,016      134,769
     Other non-operating     6,468        3,766       26,404        6,595
                                                        ----------       ----------     ----------         ----------
    Total Revenues      $1,650,285   $2,898,617   $6,289,458   $9,263,094
                                            =========  =========  =========  ==========

    Pretax income (loss):
     Homebuilding        $(466,294)   $(459,236) $(1,694,711) $(2,509,492)
     Financial Services     (7,893)      10,321       28,045       42,980
     Other non-operating    (5,538)      (4,918)     (15,933)     (30,391)
                                                        ----------        ----------     ----------          ----------

    Loss from continuing
     operations before
     income taxes         (479,725)    (453,833)  (1,682,599)  (2,496,903)

    Income taxes
     (benefit)            (141,560)     439,490     (209,486)    (222,486)
                                    ----------            ----------         ----------           ----------

    Loss from continuing
     operations           (338,165)    (893,323)  (1,473,113)  (2,274,417)

    Income from
     discontinued
     operations                  0       18,662            0       18,662
                                       ----------   ----------      ----------   ----------

    Net loss             $(338,165)   $(874,661) $(1,473,113) $(2,255,755)
                                   ========   ========  ==========  =========

    EARNINGS (LOSS)
     PER SHARE -
     ASSUMING DILUTION:

    Loss from continuing
     operations             $(1.33)      $(3.54)      $(5.81)      $(9.02)
    Income from
     discontinued
     operations               0.00         0.07         0.00         0.07
                                            -------         -------         -------        -------

    Net loss                $(1.33)      $(3.46)      $(5.81)      $(8.94)
                                      ======   ======    ======     ======

    Shares used in per
     share calculations    253,841      252,485      253,512      252,192
                                                  ======       ======       ======       ======



                              Pulte Homes, Inc.
                    Condensed Consolidated Balance Sheets
                               ($000's omitted)

                                                 December 31,   December 31,
                                                     2008           2007
                                                 (Unaudited)    (Unaudited)
                                                    -----------                  -----------
    ASSETS
    Cash and equivalents                          $1,655,264     $1,060,311
    Unfunded settlements                              11,988         38,714
    House and land inventory                       4,201,289      6,835,945
    Land held for sale                               164,954        252,563
    Land, not owned, under option agreements         171,101        212,235
    Residential mortgage loans
     available-for-sale                              297,755        447,089
    Investments in unconsolidated entities           134,886        105,479
    Other assets                                     697,652        904,298
    Income taxes receivable                          373,569        263,163
    Deferred income tax assets                             -        105,906
                                                                                  ----------     ----------
                                                  $7,708,458    $10,225,703
                                                  ==========     ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Liabilities:
      Accounts payable, accrued and other
       liabilities                                $1,338,280    $1,859,911
      Collateralized short-term debt, recourse
       solely to applicable subsidiary assets        237,560        440,611
      Income tax liabilities                         130,615        126,758
      Senior notes                                 3,166,305      3,478,230
                                                                    ----------             ----------

        Total Liabilities                          4,872,760      5,905,510

    Shareholders' Equity                           2,835,698      4,320,193
                                                                              ----------              ----------
                                                  $7,708,458    $10,225,703
                                                  ==========     ==========



                              Pulte Homes, Inc.
                                 Segment Data
                               ($000's omitted)
                                 (Unaudited)

                               Three Months Ended            Year Ended
                                  December 31,              December 31,
                                  -------------------                 -------------------
                               2008         2007         2008         2007
                                ------            ------            ------            ------
    HOMEBUILDING:
       Home sales
        (settlements)      $1,519,896   $2,782,640   $5,980,289   $8,881,509
       Land sales              91,776       77,128      131,749      240,221
                                            ----------        ----------       ----------          ----------
         Homebuilding
          Revenue           1,611,672    2,859,768    6,112,038    9,121,730

       Home cost of sales  (1,603,790)  (2,779,490)  (6,585,177)  (9,329,354)
       Land cost of sales    (233,019)    (133,156)    (393,998)    (418,177)
       Selling, general
        & administrative
        expense              (205,096)    (247,342)    (776,673)  (1,060,818)
       Other income
        (expense), net        (36,061)    (159,016)     (50,901)    (822,873)
                                               ----------       ----------             ----------        ----------

       Pretax income (loss) $(466,294)   $(459,236) $(1,694,711) $(2,509,492)
                                                     ========   ========  =========  ===========

    FINANCIAL SERVICES:
       Pretax income (loss)   $(7,893)     $10,321      $28,045      $42,980

    OTHER NON-OPERATING:
       Pretax loss:
       Net interest income     $5,739       $2,597      $23,496       $2,731
       Other expense, net     (11,277)      (7,515)     (39,429)     (33,122)
                                                       ----------         ----------      ----------         ----------
       Total Other
        Non-operating         $(5,538)     $(4,918)    $(15,933)    $(30,391)
                                                   ======      ======      =======    =======



                              Pulte Homes, Inc.
                           Business Operating Data
                               ($000's omitted)
                                 (Unaudited)

                            Three Months Ended           Year Ended
                               December 31,              December 31,
                               -------------------                -------------------
                            2008         2007         2008         2007
                            ------            ------             ------            ------
    Homebuilding
     settlement
     revenues           $1,519,896   $2,782,640   $5,980,289   $8,881,509
                                     ========   =========   =========   =========

      Unit settlements:
        Atlantic Coast       1,578        2,132        5,416        6,563
        Gulf Coast           1,316        1,691        5,391        6,630
        Midwest                752        1,351        2,651        3,888
        Southwest            1,303        2,458        5,494        7,318
        California             525        1,082        2,070        3,141
                                           ---------   ----------       --------         ----------
                             5,474        8,714       21,022       27,540
                             =====     ======   ======    ======
      Average selling
       price                  $278         $319         $284         $322
                                    =====       =====      =====      =====

      Unit net new orders:
        Atlantic Coast         494        1,103        3,920        6,010
        Gulf Coast             416        1,180        3,958        6,418
        Midwest                262          530        2,094        3,319
        Southwest              362        1,302        3,878        6,609
        California             229          447        1,456        2,819
                                           ------          -------       ---------        --------
                             1,763        4,562       15,306       25,175
                             =====     =====      ======      ======
       Net new orders -
        dollars*          $442,000   $1,206,000   $4,101,000   $7,812,000
                                    ========  ========= =========  ==========

      Unit backlog:
        Atlantic Coast                                   576        2,072
        Gulf Coast                                       689        2,122
        Midwest                                          271          828
        Southwest                                        394        2,010
        California                                       244          858
                                                                     -------        -------
                                                       2,174        7,890
                                                       =====     =====
      Dollars in backlog                            $631,000   $2,510,000
                                                                          ========  =========

    * Net new order dollars represent a composite of new order dollars
      combined with other movement of the dollars in backlog related to
      cancellations and change orders.



                              Pulte Homes, Inc.
                      Business Operating Data, continued
                               ($000's omitted)
                                 (Unaudited)

                                  Three Months Ended            Year Ended
                                     December 31,              December 31,
                                     --------------------              -------------------
                                  2008         2007         2008         2007
                                 ------             ------            ------            ------
    MORTGAGE ORIGINATIONS:
      Origination volume         3,858        6,685       15,227       23,404
                                                          =====      =====      ======     ======
      Origination principal   $847,700   $1,592,600   $3,403,500   $5,336,400
                                                        ========  =========  =========  =========
      Capture rate percentage     92.2%        90.7%        92.0%        92.1%
                                                                 =====       =====       =====       =====



                              Pulte Homes, Inc.
                           Supplemental Information
                               ($000's omitted)
                                 (Unaudited)

                              Three Months Ended            Year Ended
                                 December 31,              December 31,
                                 -------------------                 -------------------
                              2008         2007         2008         2007
                              ------            ------            ------            ------
    Interest expense:
      Homebuilding
       (included in
       home cost of
       sales)              $61,059      $72,413     $210,709     $314,998
      Financial Services     1,225        4,019        6,118       16,483
      Other non-
       operating               729        1,169        2,908        3,864
                                            ------         -------          --------         ---------
          Total interest
           expense         $63,013      $77,601     $219,735     $335,345
                                       ======       ======      =======      =======
    Depreciation &
     amortization          $16,439      $19,743      $73,980      $83,852
                                             =======    =======   =======     =======


SOURCE Pulte Homes

http://www.pulte.com
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