Pulte Homes Reports Third Quarter 2009 Financial Results

http://www.businesswire.com/news/home/20091104005259/en

BLOOMFIELD HILLS, Mich.--(Business Wire)--
Pulte Homes (NYSE: PHM):

* Q3 Revenues Total $1.1 Billion
* Q3 2009 Net Loss of $361 Million ($1.15Per Share) Includes $134 Million of
Merger and Debt Retirement Costs and $164 Million of Impairments and Related
Charges
* Q3 Homebuilding Gross Margin of 13.1%, Before the Impact of Interest, Merger
Costs, Impairments and Land-related Charges, Increases 370 Basis Points from Q2
2009
* Company Ends Quarter With $1.6 Billion in Cash After Retiring $1.7 Billion of
Debt in the Period; Expects to Finish 2009 with $2.0 Billion in Cash
* Company Raises Merger Synergy and Savings Target by 25% to $440 Million
* Quarter-end Backlog of 8,383 Homes, Valued at $2.2 Billion

Pulte Homes (NYSE: PHM) announced today financial results for its third quarter
ended September 30, 2009. For the quarter, the Company reported a net loss of
$361.4 million, or $1.15 per share, inclusive of approximately $86.7 million of
charges and transaction costs associated with its merger with Centex Corporation
and $163.8 million in inventory impairments and other land-related charges. The
Company also recorded a $47.4 million loss related to the debt retired in the
quarter. For the comparable period in 2008, the Company reported a net loss of
$280.4 million, or $1.11 per share, including impairments and land-related
charges of $266.6 million.

Consolidated revenue for the quarter was $1.1 billion, compared with prior year
revenue of $1.6 billion.

On August 18, 2009, Pulte Homes completed its previously announced merger with
Centex Corporation. The Company`s 2009 third quarter and nine month financials
are inclusive of Centex`s operations for the period from August 19, 2009 through
September 30, 2009. Prior year results have not been adjusted for the merger.

"We are continuing to make progress in the performance of our business as
Pulte`s third quarter gross margin before interest, merger costs, impairments
and land-related charges expanded to 13.1%, an increase of 370 basis points from
the second quarter 2009," said Richard J. Dugas, Jr., Chairman, President and
CEO of Pulte Homes. "Looking past the quarter, our merger with Centex offers
powerful near-term opportunities as reflected in our increased synergy and
savings target of $440 million on an annualized basis. In addition, our
post-merger analysis indicates the potential to realize annualized purchasing
synergies on the combined business in the range of $150 million to $200 million.

"Longer term, Centex`s strong brand and 27,000 finished lots, many in
communities serving the first-time homebuyer, enable Pulte to expand its
presence within this important customer segment with minimal future investment.
We are rapidly integrating the two companies and are pleased with the
opportunities we see to serve more customers, drive greater construction
efficiencies, and accelerate our return to profitability.

"Beyond the impact of the merger, Pulte`s Q3 results reflect a homebuilding
industry that continues its transition toward more stable market conditions as
lower prices and historically low mortgage rates are helping to support
homebuyer demand," said Mr. Dugas. "Challenges remain, however, as economic
weakness, foreclosures, rising unemployment and recent uncertainty over the
expiration of the federal tax credit continue to influence buyer behavior."

Third Quarter Results

Revenue from homebuilding settlements in the third quarter ended September 30,
2009, totaled $1.1 billion, compared with $1.5 billion in last year`s third
quarter. Lower revenue for the quarter reflects a 23% decrease in closings to
4,166 homes, combined with a 10% decrease in average selling price to $253,000.
Revenue and closings for the period benefitted from the inclusion of Centex`s
operations for the final six weeks of the quarter.

Homebuilding cost of sales for the third quarter totaled $1.1 billion, inclusive
of $10.5 million of merger-related charges and $132.6 million of impairments and
land-related charges. For the prior year quarter, homebuilding cost of sales was
$1.6 billion, inclusive of $249.9 million in impairments and land-related
charges.

Reported homebuilding selling, general & administrative (SG&A) expense for the
period was $209.1 million, inclusive of $51 million of one-time, merger-related
expenses. Excluding merger-related costs, SG&A for the quarter was 15.0% of
settlement revenue. SG&A expense for the third quarter 2008 was $192.0 million,
or 12.7% of settlement revenue.

Inclusive of all merger costs and impairment and land-related charges of $240.5
million, the Company`s reported third quarter homebuilding pre-tax loss was
$291.6 million. For the comparable prior year period, the Company reported a
$302.0 million pre-tax loss inclusive of $266.6 million of impairments and
land-related charges.

Third quarter 2009 net new home orders, inclusive of Centex operations for the
period of August 19, 2009 through September 30, 2009 increased 35% to 4,048
homes compared with prior year orders of 3,008 homes. The Company`s reported
quarter-end backlog as of September 30, 2009 was 8,383 homes, valued at $2.2
billion. Reported backlog reflects the inclusion of 4,585 homes which were in
Centex`s backlog at merger close and which were recorded directly to Pulte`s
backlog without impacting sign-ups for the period. At quarter end, Centex`s
backlog totaled 4,316 homes. Backlog for the third quarter 2008 was 5,885 homes,
valued at $1.7 billion.

The Company`s financial services operations reported a pre-tax loss of $8.6
million for the quarter, compared with pre-tax income of $10.1 million for the
prior year. Financial services results for the quarter are inclusive of Centex`s
mortgage and title operations for the period from August 19, 2009 through
September 30, 2009. The change in pre-tax income for the period was due to a 24%
decline in mortgage loans originated during the quarter compared with the prior
year, increased loan-loss reserves and merger-related costs. The mortgage
capture rate for the quarter was 86%, compared with 93% for the same period last
year.

Nine Month Results

For the nine months ended September 30, 2009, Pulte Homes` net loss was $1.1
billion, or $3.88 per share, compared with a net loss of $1.1 billion, or $4.48
per share, for the prior year period. Consolidated revenue for the period was
$2.4 billion, compared with $4.6 billion for the first nine months of last year.
Reported 2009 nine-month financial results reflect the Company`s merger with
Centex Corporation that closed on August 18, 2009. Reported results are
inclusive of Centex for the period from August 19, 2009 through September 30,
2009. Prior year results have not been adjusted for the merger.

Revenue from homebuilding settlements for the period was $2.3 billion, compared
with revenue of $4.5 billion in the prior year. Revenue for the period
benefitted from the inclusion of approximately six weeks of Centex results,
partially offset by a 10% decrease in average selling price to $258,000,
combined with a 43% decrease in the number of closings to 8,813 homes.

The Company`s reported homebuilding pre-tax loss for the period narrowed to $987
million, an improvement from a pre-tax loss of $1.2 billion for the prior year
period. Homebuilding SG&A expense for the period, inclusive of $56.6 million in
merger-related costs, totaled $442.6 million compared with $571.6 million in the
prior year. For the first nine months, the Company recorded $693.3 million of
impairments and land-related charges. For the prior year period, impairments and
land-related charges totaled $1.2 billion.

For the first nine months of 2009, Pulte`s financial services operations,
inclusive of approximately six weeks of Centex`s mortgage and title operations,
generated a pre-tax loss of $18.7 million, compared with pre-tax income of $35.9
million in the prior year. The pre-tax loss reported in 2009 was due to a 43%
decline in mortgage loans originated during the period compared with the prior
year period, increased loan-loss reserves and merger-related costs.

Credit Facility Update

As of September 30, 2009, Pulte Homes was not in compliance with the tangible
net worth covenant under its credit facility. The Company subsequently requested
and received a limited waiver from its banks until December 15, 2009, permitting
the Company to issue letters of credit under the credit facility during the term
of the waiver. The Company expects to negotiate a permanent amendment by
December 15, 2009, but there can be no assurance that any agreement regarding
the amendment can be reached. If the Company does not reach an agreement with
its banks prior to expiration of the waiver, the Company may seek an extension
of the waiver or alternatively terminate the credit facility. In the event the
Company terminates the credit facility, it believes it has sufficient liquidity
given its current and expected cash position.

Merger Update

Following completion of its merger with Centex on August 18, 2009, Pulte
immediately began integrating the corporate and field operations of the two
companies with the goal of achieving the merger`s strategic benefits related to
profitability, cost savings, operating efficiencies and branding. The Company
estimates that synergies realized through the fourth quarter 2009 are expected
to generate annualized cost savings of $260 million. Further, the Company
expects to reach its initial synergy target of $350 million annually early in
2010 and reach $440 million of savings on an annualized basis by year end 2010.
Incremental to these savings, the Company`s post-merger analysis indicates the
potential to realize purchasing synergies on the combined business in the range
of $150 million to $200 million.

As previously announced, on September 9, 2009, the Company successfully
completed its tender for $1.5 billion of outstanding Pulte Homes and Centex
senior notes. The Company retired a total of $1.7 billion of outstanding debt
during the quarter, and retired $1.9 billion of debt for the first nine months
of the year.

"In addition to improving our net-debt-to-total-capital ratio to 45%, Pulte`s
$1.9 billion in debt repayments will reduce the Company`s annual interest
payments by approximately $130 million, which is $30 million more than estimated
when we announced the Centex merger," said Roger A. Cregg, Executive Vice
President and Chief Financial Officer. "At quarter end, we had $1.6 billion of
cash on the balance sheet, which we expect will grow to $2.0 billion by year
end."

A conference call discussing Pulte Homes` third quarter results will be held
Wednesday, November 4, 2009, at 8:30 a.m. Eastern Time, and web cast live via
Pulteinc.com. Interested investors can access the call via the Company`s home
page at www.pulteinc.com, and are encouraged to download the available slides
that provide additional details on the Company`s third quarter results.

Forward-Looking Statements

This presentation includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are subject to a
number of risks, uncertainties and other factors that could cause our actual
results, performance, prospects or opportunities, as well as those of the
markets we serve or intend to serve, to differ materially from those expressed
in, or implied by, these statements. You can identify these statements by the
fact that they do not relate to matters of a strictly factual or historical
nature and generally discuss or relate to forecasts, estimates or other
expectations regarding future events. Generally, the words "believe," "expect,"
"intend," "estimate," "anticipate," "project," "may," "can," "could," "might,"
"will" and similar expressions identify forward-looking statements, including
statements related to expected operating and performing results, planned
transactions, planned objectives of management, future developments or
conditions in the industries in which we participate and other trends,
developments and uncertainties that may affect our business in the future.

Such risks, uncertainties and other factors include, among other things: the
possibility that the expected efficiencies and cost savings from the merger with
Centex will not be realized, or will not be realized within the expected time
period; the risk that the Pulte and Centex businesses will not be integrated
successfully; disruption from the merger making it more difficult to maintain
business and operational relationships; interest rate changes and the
availability of mortgage financing; continued volatility in, and potential
further deterioration of, the debt and equity markets; competition within the
industries in which Pulte operates; the availability and cost of land and other
raw materials used by Pulte in its homebuilding operations; the availability and
cost of insurance covering risks associated with Pulte`s businesses; shortages
and the cost of labor; weather related slowdowns; slow growth initiatives and/or
local building moratoria; governmental regulation, including the effects from
the Emergency Economic Stabilization Act, the American Recovery and Reinvestment
Act and the interpretation of tax, labor and environmental laws; changes in
consumer confidence and preferences; terrorist acts and other acts of war; and
other factors of national, regional and global scale, including those of a
political, economic, business and competitive nature. See Pulte`s Annual Reports
on Form 10-K and Annual Reports to Stockholders for the fiscal years ended
December 31, 2008, and other public filings with the Securities and Exchange
Commission (the "SEC") for a further discussion of these and other risks and
uncertainties applicable to our businesses.

Pulte Homes, Inc.
Condensed Consolidated Results of Operations
($000`s omitted, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
CONSOLIDATED RESULTS:

Revenues:
Homebuilding $ 1,056,791 $ 1,521,789 $ 2,280,016 $ 4,500,366
Financial Services 34,303 36,438 73,550 118,871
Total revenues $ 1,091,094 $ 1,558,227 $ 2,353,566 $ 4,619,237

Pre-tax income (loss):
Homebuilding $ (291,605 ) $ (301,966 ) $ (986,521 ) $(1,228,417 )
Financial Services (8,612 ) 10,092 (18,730 ) 35,938
Other non-operating (58,502 ) (2,717 ) (52,643 ) (10,395 )
Loss before income taxes (358,719 ) (294,591 ) (1,057,894 ) (1,202,874 )

Income taxes (benefit) 2,668 (14,204 ) 7,776 (67,926 )
Net loss $ (361,387 ) $ (280,387 ) $ (1,065,670 ) $(1,134,948 )

EARNINGS PER SHARE -
ASSUMING DILUTION:

Net loss $ (1.15 ) $ (1.11 ) $ (3.88 ) $ (4.48 )

Shares used in per share
calculations 312,996 253,582 274,327 253,401

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

September 30, December 31,
2009 2008
(Unaudited)
ASSETS

Cash and equivalents $ 1,516,623 $ 1,655,264
Restricted cash 34,495 -
Unfunded settlements 15,124 11,988
House and land inventory 5,630,816 4,201,289
Land held for sale 93,193 164,954
Land, not owned, under option agreements 203,525 171,101
Residential mortgage loans available-for-sale 225,798 297,755
Investments in unconsolidated entities 70,614 134,886
Goodwill 1,394,965 -
Intangible assets, net 193,823 102,554
Other assets 826,828 595,098
Income taxes receivable 39,082 373,569
Deferred income tax assets, net 37,587 -

$ 10,282,473 $ 7,708,458

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Accounts payable $ 333,467 $ 218,135
Customer deposits 93,596 40,950
Accrued and other liabilities 1,912,899 1,079,195
Collateralized short-term debt, recourse solely to applicable
non-guarantor subsidiary assets 63,590 237,560
Income tax liabilities 285,596 130,615
Senior notes 4,279,915 3,166,305

Total liabilities 6,969,063 4,872,760

Equity:
Equity attributable to Pulte Homes, Inc. 3,309,389 2,835,698
Noncontrolling interests 4,021 -

Total equity 3,313,410 2,835,698

$ 10,282,473 $ 7,708,458

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

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
HOMEBUILDING:
Home sales (settlements) $ 1,053,787 $ 1,508,825 $ 2,272,231 $ 4,460,393
Land sales 3,004 12,964 7,785 39,973
Homebuilding Revenue 1,056,791 1,521,789 2,280,016 4,500,366

Home cost of sales (1,080,256 ) (1,599,064 ) (2,703,085 ) (4,981,387 )
Land cost of sales (12,492 ) (27,910 ) (24,760 ) (160,979 )
Selling, general
& administrative expense (209,055 ) (191,997 ) (442,574 ) (571,577 )
Other income (expense), net (46,593 ) (4,784 ) (96,118 ) (14,840 )
Pre-tax loss $ (291,605 ) $ (301,966 ) $ (986,521 ) $(1,228,417 )

FINANCIAL SERVICES:
Pre-tax income (loss) $ (8,612 ) $ 10,092 $ (18,730 ) $ 35,938

OTHER NON-OPERATING:
Pre-tax income (loss):
Net interest income $ 1,383 $ 5,639 $ 6,644 $ 17,757
Other income (expense), net (59,885 ) (8,356 ) (59,287 ) (28,152 )
Total other non-operating $ (58,502 ) $ (2,717 ) $ (52,643 ) $ (10,395 )

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

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Homebuilding settlement
revenues $ 1,053,787 $ 1,508,825 $ 2,272,231 $ 4,460,393

Unit settlements:
Northeast 508 497 907 1,433
Southeast 629 776 1,265 2,405
Gulf Coast 1,268 1,353 2,635 4,075
Midwest 545 661 1,108 1,899
Southwest 685 1,571 1,821 4,191
West 526 519 1,072 1,545
Other Homebuilding 5 - 5 -
4,166 5,377 8,813 15,548
Average selling price $ 253 $ 281 $ 258 $ 287

Net new orders:*
Northeast 502 328 1,283 1,363
Southeast 753 493 1,648 2,063
Gulf Coast 1,213 741 2,835 3,542
Midwest 502 553 1,290 1,832
Southwest 634 629 2,246 3,516
West 420 264 1,111 1,227
Other Homebuilding 24 - 24 -
4,048 3,008 10,437 13,543
Net new orders - dollars** $ 1,081,000 $ 785,000 $ 2,730,000 $ 3,659,000

Unit backlog:
Northeast 1,382 721
Southeast 1,461 939
Gulf Coast 2,687 1,589
Midwest 851 761
Southwest 998 1,335
West 985 540
Other Homebuilding 19 -
8,383 5,885
Dollars in backlog $ 2,196,800 $ 1,708,700

*Net new order units exclude 4,585 units of acquired backlog from the merger
with Centex.

**Net new order dollars represents 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 Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
MORTGAGE ORIGINATIONS:
Origination volume 2,981 3,924 6,482 11,369
Origination principal $ 621,765 $ 875,100 $ 1,370,209 $ 2,555,800
Capture rate percentage 85.6% 93.4% 88.5% 91.9%

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

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Interest expense:
Homebuilding (included in
home cost of sales) $ 36,173 $ 52,526 $ 124,496 $ 149,650
Financial Services 219 1,468 834 4,893
Other non-operating 431 723 1,345 2,179
Total interest expense $ 36,823 $ 54,717 $ 126,675 $ 156,722

Depreciation & amortization $ 14,539 $ 18,713 $ 39,342 $ 57,541

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

Three Months Ended
September 30,
2009
Merger-related costs
Severance $ 31,788
Restructuring charges 12,578
Work in process adjustment to
Centex inventory 10,463
Transaction expenses & other
merger-related costs 31,872
Total merger-related costs $ 86,701

Company Contacts
Pulte Homes
Investors: Jim Zeumer
(248) 433-4502
email: jim.zeumer@pulte.com
or
Media: Caryn Klebba
(248) 433-4840
Email: caryn.klebba@pulte.com

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