How did Pulte's earnings change in 1997 compared with 1996?

Net income was $52,761 thousand, or $2.40 per diluted share, versus $179,643 thousand, or $7.14 per diluted share, in 1996. The 1996 figure included approximately $110,000 thousand of after-tax income from tax benefits tied to net operating losses in discontinued thrift operations. Income from continuing operations was $49,800 thousand ($2.27 per diluted share), compared with $63,211 thousand ($2.51 per diluted share) in 1996, and 1997 included a $20,000 thousand restructuring charge.

How did the homebuilding business perform in 1997?

Pulte settled 15,322 units, up from 14,613 in 1996, and recorded 15,488 net new orders, a Company record. Backlog rose to 3,614 units and $644,000 thousand in sales value. The average unit selling price increased to $162,000 from $159,000, and homebuilding revenues reached $2,479,171 thousand. Pre-tax homebuilding income before restructuring costs was $128,401 thousand, up from $114,061 thousand.

What is the status of the First Heights litigation with the FDIC?

In a March 5, 1998 opinion, the U.S. District Court resolved four interpretational issues by summary judgment, ruling for the FDIC on three and for the Company on one. The Company disagrees with the FDIC rulings and intends to appeal if they become part of a final judgment. If the Company loses on appeal and all other issues are resolved for the FDIC, it would take an after-tax charge against discontinued operations ranging from a nominal amount to as much as $40,000 thousand. The Company believes the separate Court of Federal Claims case is not affected by these rulings.

How did Pulte's debt and liquidity position change in 1997?

Total long-term indebtedness increased to $650,169 thousand from $541,505 thousand, mainly due to $150,000 thousand of 7.625% unsecured Senior Notes due 2017 issued in October 1997. The company repaid its unsecured revolving credit facility balance with part of the proceeds. Cash and equivalents were $245,156 thousand at year-end, and the company had a $240,000 thousand committed unsecured revolving credit facility with no balance outstanding at December 31, 1997. Net cash used in operating activities was $35,174 thousand.

What changes did the company announce to its operations or portfolio?

In an August 1997 reorganization, the company replaced its three geographic operating companies with a structure focused on customer segments and recorded a $20,000 thousand restructuring charge, with annual savings of approximately $10,000 thousand expected beginning in 1998. On February 13, 1998, the company agreed to sell Builders' Supply & Lumber Co., Inc., with no significant gain or loss expected. On February 17, 1998, Fleetwood agreed to acquire the company's 51% interest in Expression Homes and its Raleigh retail sales center, with a pre-tax gain expected in the range of approximately $4,000 to $6,000 thousand. Both sales were expected to close in the first quarter of 1998.

PHM 10-K FY1997 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 13, 1998. Cited figures are marked; the original filing is the authoritative source.

Pulte Corporation, the holding company for the Pulte Home Corporation group, reported 1997 net income of $52,761 thousand^a, or $2.40 per diluted share, down from $179,643 thousand ($7.14 per share) in 1996, which had included a $110,000 thousand tax benefit from discontinued thrift operations.

Revenues rose to $2,523,991 thousand^b from $2,384,283 thousand. Homebuilding is the core business: unit settlements increased 5% to 15,322 units, net new orders rose 8% to a company-record 15,488 units, and the average sales price reached $162,000. Gross margin improved to 14.9% from 14.8%.

Pre-tax income also absorbed a one-time restructuring charge of $20,000 thousand^c, or $.56 per diluted share, tied to an August 1997 reorganization. Financial services revenue fell to $34,038 thousand from $50,197 thousand, and pre-tax income from financial services dropped to $5,350 thousand. Corporate interest expense rose, and the company repurchased $74,673 thousand of stock during 1997.

Total long-term indebtedness increased to $650,169 thousand^d from $541,505 thousand, driven by a $150,000 thousand 7.625% Senior Notes issuance in October 1997, and cash and equivalents stood at $245,156 thousand at year-end. Shareholders' equity was $812,837 thousand, or $38.21 per share. The filing also discloses material pending litigation with the FDIC over First Heights' former thrift operations.

A March 5, 1998 court ruling went in the FDIC's favor on three of four issues. The company said it would appeal and that an unsuccessful appeal could produce an after-tax charge of as much as $40,000 thousand. The company also agreed to sell its building materials subsidiary, Builders' Supply & Lumber Co., and its 51% interest in Expression Homes, with closings expected in the first quarter of 1998.

02—Key points

Key Highlights

Net income fell to $52,761 thousand ($2.40 per diluted share) from $179,643 thousand ($7.14 per diluted share) in 1996, which included about $110,000 thousand of discontinued-operations tax benefits.
Homebuilding unit settlements rose 5% to 15,322 units, and net new orders reached a Company-record 15,488 units, up 8%.
Total revenues increased to $2,523,991 thousand from $2,384,283 thousand, and homebuilding gross profit margin improved to 14.9% from 14.8%.
A one-time restructuring charge of $20,000 thousand ($.56 per diluted share) was recorded in the fourth quarter of 1997.
Long-term indebtedness rose to $650,169 thousand from $541,505 thousand after the issuance of $150,000 thousand of 7.625% Senior Notes due 2017.
Ongoing First Heights litigation with the FDIC: a March 1998 ruling favored the FDIC on three issues, and an adverse appeal outcome could cost as much as $40,000 thousand after tax.
The company agreed to sell Builders' Supply & Lumber Co. and its 51% interest in Expression Homes, with closings expected in the first quarter of 1998.

03—Questions

Frequently Asked Questions

How did Pulte's earnings change in 1997 compared with 1996?
Net income was $52,761 thousand, or $2.40 per diluted share, versus $179,643 thousand, or $7.14 per diluted share, in 1996. The 1996 figure included approximately $110,000 thousand of after-tax income from tax benefits tied to net operating losses in discontinued thrift operations. Income from continuing operations was $49,800 thousand ($2.27 per diluted share), compared with $63,211 thousand ($2.51 per diluted share) in 1996, and 1997 included a $20,000 thousand restructuring charge.
How did the homebuilding business perform in 1997?
Pulte settled 15,322 units, up from 14,613 in 1996, and recorded 15,488 net new orders, a Company record. Backlog rose to 3,614 units and $644,000 thousand in sales value. The average unit selling price increased to $162,000 from $159,000, and homebuilding revenues reached $2,479,171 thousand. Pre-tax homebuilding income before restructuring costs was $128,401 thousand, up from $114,061 thousand.
What is the status of the First Heights litigation with the FDIC?
In a March 5, 1998 opinion, the U.S. District Court resolved four interpretational issues by summary judgment, ruling for the FDIC on three and for the Company on one. The Company disagrees with the FDIC rulings and intends to appeal if they become part of a final judgment. If the Company loses on appeal and all other issues are resolved for the FDIC, it would take an after-tax charge against discontinued operations ranging from a nominal amount to as much as $40,000 thousand. The Company believes the separate Court of Federal Claims case is not affected by these rulings.
How did Pulte's debt and liquidity position change in 1997?
Total long-term indebtedness increased to $650,169 thousand from $541,505 thousand, mainly due to $150,000 thousand of 7.625% unsecured Senior Notes due 2017 issued in October 1997. The company repaid its unsecured revolving credit facility balance with part of the proceeds. Cash and equivalents were $245,156 thousand at year-end, and the company had a $240,000 thousand committed unsecured revolving credit facility with no balance outstanding at December 31, 1997. Net cash used in operating activities was $35,174 thousand.
What changes did the company announce to its operations or portfolio?
In an August 1997 reorganization, the company replaced its three geographic operating companies with a structure focused on customer segments and recorded a $20,000 thousand restructuring charge, with annual savings of approximately $10,000 thousand expected beginning in 1998. On February 13, 1998, the company agreed to sell Builders' Supply & Lumber Co., Inc., with no significant gain or loss expected. On February 17, 1998, Fleetwood agreed to acquire the company's 51% interest in Expression Homes and its Raleigh retail sales center, with a pre-tax gain expected in the range of approximately $4,000 to $6,000 thousand. Both sales were expected to close in the first quarter of 1998.

04—Continue

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