Pulte Homes Reports Second Quarter 2008 Financial Results

BLOOMFIELD HILLS, Mich., July 23 /PRNewswire-FirstCall/ --

-- For the Second Quarter 2008, Generated 5,133 Net New Orders and Closed
5,438 Homes
-- Backlog at June 30, 2008 of 8,254 Homes, Valued at $2.4 Billion
-- Company Ended Q2 2008 With $1 Billion of Cash, After Pay-off of $313
Million of Debt Related to Recent Tender Offer
-- Impairments and Land-Related Charges of $220.1 Million for the Second
Quarter 2008
-- Q2 2008 Net Loss of $0.63 Per Share, Inclusive of Impairments,
Land-Related Charges and a Tax Benefit Related to the Company's
Deferred Income Tax Assets
-- Company Provides Third Quarter 2008 Guidance
-- Company Targets Year-End 2008 Cash Position of $1.7 Billion to $1.9
Billion, After $313 Million Debt Reduction in Q2 2008

Pulte Homes (NYSE: PHM) announced today financial results for its second
quarter ended June 30, 2008. For the quarter, the Company reported a net loss
of $158.4 million, or $0.63 per share, compared with a $507.6 million net loss
for the prior year second quarter, or $2.01 per share. The second quarter
2008 net loss included $220.1 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 $749.4 million. The second quarter
2008 also included a tax benefit of $56.8 million, primarily due to an
adjustment in the Company's deferred income tax assets. Consolidated revenues
for the quarter were $1.6 billion, a decline of 20% from prior year revenues
of $2 billion.
"The operating environment for homebuilding continued to deteriorate
during the second quarter of 2008," said Richard J. Dugas, Jr., President and
CEO of Pulte Homes. "The downward trend in home prices persisted, and the
softness in overall buyer demand remained a challenge for the industry,
leading to unsold inventory for both new and existing homes still well above
historical levels. Buyer confidence remains under pressure, both from the
weakness in housing as well as concerns about the overall economy.
"In the face of these challenges," Mr. Dugas continued, "Pulte continued
to make progress against its goals of generating cash from operations,
reducing its cost structure and lowering its inventory levels. During the
second quarter of 2008, Pulte generated significant positive cash flow, and
ended the quarter with a $1 billion cash balance. The Company also paid off
$313 million of its senior notes due 2009 during a recent tender offer, and
had no debt outstanding under its $1.6 billion revolving credit facility at
quarter end. We significantly reduced our overhead expense, and lowered both
our level of speculative inventory and number of controlled lots. Pulte
intends to be in a position to capitalize on opportunities once stability in
the housing sector begins to materialize."
Second Quarter Results
Revenues from homebuilding settlements in the second quarter decreased 18%
to $1.6 billion compared with $1.9 billion in last year's second quarter. The
change in revenue for the quarter reflects an 8% decrease in closings to 5,438
homes, and an 11% decrease in average selling price to $286,000.
Second quarter homebuilding pre-tax loss was $221.3 million, compared with
an $803.2 million pre-tax loss for the prior year quarter. The pre-tax loss
for the 2008 second quarter reflects a decline in gross margins primarily
related to the impact of impairments recorded in connection with our land
inventory. Homebuilding SG&A expense decreased $118 million, or 40%, compared
with the prior year quarter. During the second quarter of 2008, the Company
recorded $220.1 million of impairments and land-related charges, including
$153.6 million related to land impairments, $20.1 million associated with the
write-off of land deposits and pre-acquisition costs, $44.7 million of
impairments of land held for sale and $1.7 million related to the Company's
investment in unconsolidated joint ventures. For the prior year quarter,
these impairments and land-related charges totaled $749.4 million.
Net new home orders for the second quarter were 5,133 homes, valued at
$1.4 billion, which represent declines of 32% and 42%, respectively, from
prior year second quarter results. Pulte Homes' ending backlog as of June 30,
2008 was valued at $2.4 billion (8,254 homes), compared with a value of $5.2
billion (14,928 homes) at the end of last year's second quarter. At the end
of the second quarter 2008, the Company's debt-to-capitalization ratio was
48%, and on a net debt-to-capitalization basis was 39%.
The Company's financial services operations reported pre-tax income of
$10.8 million for the second quarter 2008, compared with $6.6 million of
pre-tax income for the prior year's quarter. The increase in second quarter
2008 pre-tax income was partially due to a shift in the mix of mortgage loans
closed toward more profitable agency-backed products. This was partially
offset by a 26% decline in mortgage loans originated during the quarter
compared with the prior year quarter. The mortgage capture rate for the
quarter was 92%, compared with 93% for the same quarter last year.
The Company recorded an income tax benefit of $56.8 million for the second
quarter 2008, primarily due to an adjustment in the Company's deferred income
tax assets. During the quarter, the deferred income tax assets were increased
from $106 million to $170 million to reflect the current estimate of the
amount realizable from the carryback of the current year's net operating loss
to the 2006 tax year.
Six Month Results
For the six months ended June 30, 2008, Pulte Homes' net loss was $854.6
million, or $3.37 per share, compared with a $593.2 million, or $2.35 per
share, net loss for the prior year period. Consolidated revenues for the
period were $3.1 billion, down 21% from $3.9 billion for the first six months
of last year.
Revenues from homebuilding settlements for the period were $3 billion,
down 20% from the prior year. Lower revenues for the period resulted from an
11% decrease in average selling price to $290,000, combined with a 10%
decrease in the number of homes closed to 10,171.
Homebuilding pre-tax loss for the period was $926.5 million, compared with
a $951.6 million pre-tax loss for the prior year period. The pre-tax loss for
the period reflects a decline in gross margins primarily related to the impact
of impairments recorded in connection with our land inventory. Homebuilding
SG&A expense decreased $197.3 million, or 34%, compared with the prior year
period. During the first six months of 2008, the Company recorded $883.7
million of impairments and land-related charges, including $752.3 million
related to land impairments, $20.4 million associated with the write-off of
land deposits and pre-acquisition costs, $109.3 million of impairments of land
held for sale, and $1.7 million related to the Company's investment in
unconsolidated joint ventures. For the prior year period, these impairments
and land-related charges totaled $881.5 million.
For the first six months of 2008, the pre-tax income for Pulte's financial
services operations was $25.8 million compared with $19.8 million in the prior
year. The positive shift in the mix of mortgage loans toward more profitable
agency-backed products was a significant reason for this increase in income.
Third Quarter 2008 Guidance
"For the third quarter of 2008 we are providing guidance in the range from
a net loss of $0.15 per share to breakeven from continuing operations,
exclusive of a tax benefit and any additional impairments or land-related
charges," said Dugas. "As part of its ongoing balance sheet focus, after
reducing its outstanding senior debt by $313 million in the current quarter,
Pulte targets a cash position by the end of 2008 of $1.7 billion to $1.9
billion."
A conference call discussing Pulte Homes' second quarter results will be
held Thursday, July 24, 2008 at 8:30 a.m. Eastern Time, and web cast live via
Pulte.com. Interested investors can access the call via the Company's home
page at www.pulte.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) general economic and business
conditions; (2) interest rate changes and the availability of mortgage
financing; (3) the relative stability of debt and equity markets; (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, including 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; and (14) other factors
over which the Company has little or no control. 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 50 markets and
26 states. During its 58-year history, the company has delivered more than
500,000 new homes. Since 2000, Pulte Homes operations have earned more
top-three finishes than any other 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 Built Solid(TM) building system and 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 Six Months Ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
------ ------ ------ ------
CONSOLIDATED RESULTS:

Revenues:
Homebuilding $1,580,468 $1,993,498 $2,978,577 $3,823,406
Financial Services 38,945 27,362 82,433 66,943
Other non-operating 6,352 386 13,574 2,330
---------- ---------- ---------- ----------
Total Revenues $1,625,765 $2,021,246 $3,074,584 $3,892,679
========== ========== ========== ==========

Pre-tax income
(loss):
Homebuilding $(221,321) $(803,191) $(926,451) $(951,577)
Financial Services 10,802 6,568 25,846 19,763
Other non-operating (4,708) (9,986) (7,678) (17,343)
---------- ---------- ---------- ----------

Loss before income
taxes (215,227) (806,609) (908,283) (949,157)

Income taxes
(benefit) (56,810) (299,058) (53,722) (355,934)
---------- ---------- ---------- ----------

Net loss $(158,417) $(507,551) $ (854,561) $(593,223)
========== ========== ========== ==========

EARNINGS PER SHARE -
ASSUMING DILUTION:

Net loss $(0.63) $(2.01) $(3.37) $(2.35)
========== ========== ========== ==========

Shares used in per
share calculations 253,454 252,093 253,310 252,006
========== ========== ========== ==========

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

June 30, December 31,
2008 2007
(Unaudited) (Unaudited)
----------- -----------
ASSETS
Cash and equivalents $988,345 $1,060,311
Unfunded settlements 31,749 38,714
House and land inventory 5,726,498 7,027,511
Land held for sale 316,360 252,563
Land, not owned, under option agreements 17,560 20,838
Residential mortgage loans available-for-sale 296,736 447,089
Investments in unconsolidated entities 140,983 105,479
Goodwill 5,654 5,654
Intangible assets, net 106,629 110,704
Other assets 779,084 1,050,934
Deferred income tax assets 169,566 105,906
---------- -----------
$8,579,164 $10,225,703
========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable, accrued and other
liabilities $1,569,950 $1,859,911
Collateralized short-term debt, recourse
solely to applicable subsidiary assets 261,505 440,611
Income taxes 112,399 126,758
Senior notes 3,165,691 3,478,230
---------- -----------

Total Liabilities 5,109,545 5,905,510

Shareholders' Equity 3,469,619 4,320,193
---------- -----------
$8,579,164 $10,225,703
========== ===========

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

Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
2008 2007 2008 2007
------ ------ ------ ------
HOMEBUILDING:
Home sales
(settlements) $1,555,137 $1,901,825 $2,951,568 $3,691,107
Land sales 25,331 91,673 27,009 132,299
---------- ---------- ---------- ----------
Homebuilding
Revenues $1,580,468 $1,993,498 $2,978,577 $3,823,406

Home cost of
sales (1,537,269) (2,254,881) (3,382,323) (3,849,352)
Land cost of sales (68,121) (118,618) (133,069) (174,980)
Selling, general
& administrative
expense (177,643) (295,213) (379,580) (576,866)
Other income
(expense), net (18,756) (127,977) (10,056) (173,785)
---------- ---------- ---------- ----------

Pre-tax income
(loss) $(221,321) $(803,191) $(926,451) $(951,577)
========== ========== ========== ==========

FINANCIAL SERVICES:
Pre-tax income $10,802 $6,568 $25,846 $19,763
========== ========== ========== ==========

OTHER NON-OPERATING:
Pre-tax loss:
Net interest income
(expense) $5,644 $(552) $12,118 $402
Other expense, net (10,352) (9,434) (19,796) (17,745)
---------- ---------- ---------- ----------
Total other non-
operating $(4,708) $(9,986) $(7,678) $(17,343)
========== ========== ========== ==========

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

Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2008 2007 2008 2007
-------- -------- -------- --------
Homebuilding
settlement
revenues $1,555,137 $1,901,825 $2,951,568 $3,691,107
========= ========= ========= =========

Unit settlements:
Northeast 543 533 936 904
Southeast 881 1,024 1,629 1,779
Florida 828 859 1,569 1,886
Midwest 615 762 1,238 1,405
Central 602 597 1,153 1,296
Southwest 1,423 1,502 2,620 2,835
California 546 661 1,026 1,253
--------- --------- --------- ---------
5,438 5,938 10,171 11,358
========= ========= ========= =========
Average selling
price $286 $320 $290 $325
========= ========= ========= =========

Unit net new orders:
Northeast 533 856 1,035 1,560
Southeast 746 1,018 1,570 2,024
Florida 866 1,074 1,859 2,596
Midwest 700 1,138 1,279 2,158
Central 412 731 942 1,355
Southwest 1,420 1,940 2,887 4,407
California 456 775 963 1,931
--------- --------- --------- ---------
5,133 7,532 10,535 16,031
========= ========= ========= =========
Net new orders - -
dollars* $1,413,000 $2,427,000 $2,874,000 $5,339,000
========= ========= ========= =========

Unit backlog:
Northeast 890 1,573
Southeast 1,222 1,953
Florida 1,542 1,922
Midwest 869 2,150
Central 659 1,181
Southwest 2,277 4,291
California 795 1,858
--------- ---------
8,254 14,928
========= =========
Dollars in backlog $2,432,000 $5,227,000
========= =========

*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 Six Months Ended
June 30, June 30,
-------------------- -------------------
2008 2007 2008 2007
------ ------ ------ ------
MORTGAGE ORIGINATIONS:

Origination volume 3,931 5,300 7,445 10,458
======== ========== =========== ==========
Origination principal $877,300 $1,176,700 $1,680,700 $2,319,700
======== ========== =========== ==========
Capture rate percentage 92.3% 92.6% 91.2% 92.8%
======== ========== =========== ==========

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

Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
2008 2007 2008 2007
------ ------ ------ ------
Interest expense:
Homebuilding (included
in home cost of sales) $38,632 $96,422 $97,124 $144,380
Financial Services 1,555 3,616 3,425 8,234
Other non-operating 708 938 1,456 1,928
-------- ---------- --------- ----------
Total interest
expense $40,895 $100,976 $102,005 $154,542
======== ========== ========== ==========
Depreciation &
amortization $19,113 $21,613 $38,828 $43,273
======== ========== ========== ==========

SOURCE Pulte Homes

Investors: Calvin Boyd, +1-248-433-4527, calvin.boyd@pulte.com, or Media: Mark
Marymee, +1-248-433-4648, mark.marymee@pulte.com, both of Pulte Homes