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Pultegroup Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 12, 1999
Period End
December 31, 1998
Security
PHM
In the record · 2016–202610-K1110-Q338-K109

PHM filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 109 current reports (8-K) between 2016 and 2026.

  1. Impairment8-K · May ’17May ’17
  2. Leadership change8-K · Mar ’19Mar ’19
  3. Material agreement8-K · Jul ’21Jul ’21
  4. Material agreement8-K · Aug ’25Aug ’25

01—Abstract

Summary

Summary of the 10-K filed March 12, 1999. Cited figures are marked; the original filing is the authoritative source.

Pulte Corporation, a Michigan holding company, reported net income of $102.2 milliona, or $2.33 per diluted share, for the fiscal year ended December 31, 1998, up from $52.8 million, or $1.20 per diluted share, in 1997.

Consolidated revenues rose to $2.87 billionb from $2.52 billion. Homebuilding is the core business: domestic settlements reached a record 15,897 units, net new orders hit a record 17,918 units, and year-end backlog grew to 5,414 units, or approximately $999 million. Pre-tax income from homebuilding increased to $173.3 million, and financial services pre-tax income rose to $15.2 million, driven by mortgage origination growth.

Results were partly offset by the International segment's losses and a corporate pre-tax loss of $22.7 millionc. The most significant risk disclosed is litigation with the FDIC over First Heights, the company's discontinued thrift subsidiary. On March 5, 1999, the U.S. District Court entered a Final Judgment requiring PDCI and First Heights to pay the FDIC approximately $221.3 million including interest.

The company estimates that, if upheld in full on appeal, after-tax charges against discontinued operations would be about $88 milliond plus post-judgment interest, and it plans to appeal. The company also acquired DiVosta & Company and Radnor Homes in 1998 and formed an Active Adult joint venture with Blackstone Real Estate Advisors. At year-end 1998 the company held $125.2 million of cash and equivalents and total indebtedness of $570.1 million, and shareholders' equity was $921.4 million, or $21.35 per share.

The company had no borrowings under its $210 million unsecured revolving credit facility at year-end. Management expects a 1999 effective tax rate of 39% to 40%.

02—Key points

Key Highlights

  1. Net income rose to $102.2 million ($2.33 per diluted share) in 1998 from $52.8 million ($1.20 per diluted share) in 1997.
  2. Record domestic settlements of 15,897 units and record net new orders of 17,918 units, with year-end backlog of 5,414 units, or approximately $999 million.
  3. Gross profit margin on domestic homebuilding increased to 16.1% in 1998 from 14.8% in 1997.
  4. Homebuilding pre-tax income increased to $173.3 million; financial services pre-tax income rose to $15.2 million, reflecting higher mortgage origination volume.
  5. On March 5, 1999, a Final Judgment ordered PDCI and First Heights to pay the FDIC about $221.3 million including interest; the company estimates an after-tax charge of about $88 million plus post-judgment interest if upheld on appeal and plans to appeal.
  6. Acquired DiVosta & Company (about $155 million purchase price) and Radnor Homes (about $58 million) in 1998, and formed a 50/50 Active Adult joint venture with Blackstone Real Estate Advisors.
  7. Year-end 1998 cash and equivalents of $125.2 million and total indebtedness of $570.1 million; shareholders' equity of $921.4 million.

03—Questions

Frequently Asked Questions

  1. How did Pulte perform financially in 1998?

    Revenues grew to $2.87 billion from $2.52 billion, and net income more than doubled to $102.2 million, or $2.33 per diluted share, from $52.8 million, or $1.20 per diluted share, in 1997. The 1997 figures included a $20.0 million pre-tax restructuring charge.

  2. What is the main legal risk disclosed in the filing?

    The company's First Heights thrift subsidiary is in litigation with the FDIC. A March 5, 1999 Final Judgment requires PDCI and First Heights to pay about $221.3 million including interest. The company says Pulte Corporation itself was found not liable for monetary damages, that it disagrees with the ruling and will appeal, and that after-tax charges against discontinued operations would be about $88 million plus post-judgment interest if the judgment is upheld in full.

  3. How strong was homebuilding demand in 1998?

    Net new orders reached an all-time company record of 17,918 units, up 21% from 1997. Unit settlements increased 8% to 15,897 units, and backlog at year-end was 5,414 units, up 60% from 3,393 units, with a dollar value of about $999 million.

  4. What acquisitions and ventures did Pulte pursue in 1998?

    Pulte acquired Radnor Homes in May 1998 for about $58 million and DiVosta & Company in July 1998 for about $155 million. It also formed an Active Adult joint venture with Blackstone Real Estate Advisors, in which each party holds a 50% interest, and a new Mexican joint venture, Desarrollos Residenciales Turisticos, to build social interest housing.

  5. What are the company's liquidity and capital resources?

    At December 31, 1998, the company had cash and equivalents of $125.2 million and no borrowings under its $210 million unsecured revolving credit facility. Total indebtedness was $570.1 million, and the company planned to redeem a $28.1 million mortgage-backed bond and repay a $22.4 million senior subordinated debenture during 1999.

04—Continue

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