MICHIGAN
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38-2766606
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer [X]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [ ]
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Page
No.
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PART I
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Item 1
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Item 2
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Item 3
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Item 4
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PART II
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Item 2
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Item 5
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Item 6
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June 30,
2016 |
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December 31,
2015 |
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(Unaudited)
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(Note)
|
||||
ASSETS
|
|
|
|
||||
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|
||||
Cash and equivalents
|
$
|
229,187
|
|
|
$
|
754,161
|
|
Restricted cash
|
26,484
|
|
|
21,274
|
|
||
House and land inventory
|
6,629,464
|
|
|
5,450,058
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||
Land held for sale
|
85,781
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|
81,492
|
|
||
Residential mortgage loans available-for-sale
|
364,004
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|
|
442,715
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||
Investments in unconsolidated entities
|
52,500
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|
41,267
|
|
||
Other assets
|
681,168
|
|
|
660,835
|
|
||
Intangible assets
|
161,372
|
|
|
110,215
|
|
||
Deferred tax assets, net
|
1,277,096
|
|
|
1,394,879
|
|
||
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$
|
9,507,056
|
|
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$
|
8,956,896
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|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
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|
||||
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||||
Liabilities:
|
|
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|
||||
Accounts payable
|
$
|
340,847
|
|
|
$
|
327,725
|
|
Customer deposits
|
252,259
|
|
|
186,141
|
|
||
Accrued and other liabilities
|
1,269,263
|
|
|
1,284,273
|
|
||
Income tax liabilities
|
33,980
|
|
|
57,050
|
|
||
Financial Services debt
|
189,557
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|
|
267,877
|
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||
Term loan
|
499,212
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|
|
498,423
|
|
||
Senior notes
|
2,103,821
|
|
|
1,576,082
|
|
||
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4,688,939
|
|
|
4,197,571
|
|
||
Shareholders' equity
|
4,818,117
|
|
|
4,759,325
|
|
||
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$
|
9,507,056
|
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$
|
8,956,896
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Three Months Ended
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Six Months Ended
|
||||||||||||
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June 30,
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June 30,
|
||||||||||||
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2016
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2015
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2016
|
|
2015
|
||||||||
Revenues:
|
|
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|
||||||||
Homebuilding
|
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Home sale revenues
|
$
|
1,751,882
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$
|
1,243,077
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$
|
3,146,125
|
|
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$
|
2,331,235
|
|
Land sale revenues
|
4,950
|
|
|
6,460
|
|
|
7,437
|
|
|
24,002
|
|
||||
|
1,756,832
|
|
|
1,249,537
|
|
|
3,153,562
|
|
|
2,355,237
|
|
||||
Financial Services
|
43,082
|
|
|
30,754
|
|
|
78,930
|
|
|
58,352
|
|
||||
Total revenues
|
1,799,914
|
|
|
1,280,291
|
|
|
3,232,492
|
|
|
2,413,589
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Homebuilding Cost of Revenues:
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Home sale cost of revenues
|
1,374,509
|
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|
953,280
|
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2,463,838
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1,794,425
|
|
||||
Land sale cost of revenues
|
4,403
|
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|
5,312
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|
6,430
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|
18,691
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|
||||
|
1,378,912
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958,592
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2,470,268
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1,813,116
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|
||||
Financial Services expenses
|
26,180
|
|
|
20,767
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52,298
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|
43,308
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|
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Selling, general, and administrative expenses
|
192,333
|
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130,119
|
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|
383,348
|
|
|
291,431
|
|
||||
Other expense (income), net
|
12,909
|
|
|
3,186
|
|
|
18,785
|
|
|
2,303
|
|
||||
Income before income taxes
|
189,580
|
|
|
167,627
|
|
|
307,793
|
|
|
263,431
|
|
||||
Income tax expense
|
71,820
|
|
|
64,303
|
|
|
106,733
|
|
|
105,136
|
|
||||
Net income
|
$
|
117,760
|
|
|
$
|
103,324
|
|
|
$
|
201,060
|
|
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$
|
158,295
|
|
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Per share:
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Basic earnings
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$
|
0.34
|
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$
|
0.28
|
|
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$
|
0.58
|
|
|
$
|
0.43
|
|
Diluted earnings
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.57
|
|
|
$
|
0.43
|
|
Cash dividends declared
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.18
|
|
|
$
|
0.16
|
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||||||||
Number of shares used in calculation:
|
|
|
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||||||||
Basic
|
345,240
|
|
|
361,009
|
|
|
346,528
|
|
|
363,863
|
|
||||
Effect of dilutive securities
|
2,759
|
|
|
3,232
|
|
|
2,710
|
|
|
3,297
|
|
||||
Diluted
|
347,999
|
|
|
364,241
|
|
|
349,238
|
|
|
367,160
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
117,760
|
|
|
$
|
103,324
|
|
|
$
|
201,060
|
|
|
$
|
158,295
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in value of derivatives
|
20
|
|
|
21
|
|
|
41
|
|
|
42
|
|
||||
Other comprehensive income
|
20
|
|
|
21
|
|
|
41
|
|
|
42
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
117,780
|
|
|
$
|
103,345
|
|
|
$
|
201,101
|
|
|
$
|
158,337
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
Retained
Earnings
|
|
Total
|
|||||||||||||
Shares
|
|
$
|
|
|||||||||||||||||||
Shareholders' Equity, January 1, 2016
|
349,149
|
|
|
$
|
3,491
|
|
|
$
|
3,093,802
|
|
|
$
|
(609
|
)
|
|
$
|
1,662,641
|
|
|
$
|
4,759,325
|
|
Stock option exercises
|
67
|
|
|
—
|
|
|
742
|
|
|
—
|
|
|
—
|
|
|
742
|
|
|||||
Share issuances, net of cancellations
|
499
|
|
|
5
|
|
|
8,851
|
|
|
—
|
|
|
—
|
|
|
8,856
|
|
|||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,747
|
)
|
|
(62,747
|
)
|
|||||
Share repurchases
|
(5,819
|
)
|
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
(100,748
|
)
|
|
(100,806
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
12,209
|
|
|
—
|
|
|
—
|
|
|
12,209
|
|
|||||
Excess tax benefits (deficiencies) from share-based awards
|
—
|
|
|
—
|
|
|
(563
|
)
|
|
—
|
|
|
—
|
|
|
(563
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
201,060
|
|
|
201,060
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
41
|
|
|||||
Shareholders' Equity, June 30, 2016
|
343,896
|
|
|
$
|
3,438
|
|
|
$
|
3,115,041
|
|
|
$
|
(568
|
)
|
|
$
|
1,700,206
|
|
|
$
|
4,818,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shareholders' Equity, January 1, 2015
|
369,459
|
|
|
$
|
3,695
|
|
|
$
|
3,072,996
|
|
|
$
|
(690
|
)
|
|
$
|
1,728,953
|
|
|
$
|
4,804,954
|
|
Stock option exercises
|
620
|
|
|
6
|
|
|
7,216
|
|
|
—
|
|
|
—
|
|
|
7,222
|
|
|||||
Share issuances, net of cancellations
|
442
|
|
|
4
|
|
|
7,419
|
|
|
—
|
|
|
—
|
|
|
7,423
|
|
|||||
Dividends declared
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
(58,235
|
)
|
|
(58,227
|
)
|
|||||
Share repurchases
|
(15,702
|
)
|
|
(157
|
)
|
|
—
|
|
|
—
|
|
|
(321,909
|
)
|
|
(322,066
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
10,233
|
|
|
—
|
|
|
—
|
|
|
10,233
|
|
|||||
Excess tax benefits (deficiencies) from share-based awards
|
—
|
|
|
—
|
|
|
(1,617
|
)
|
|
—
|
|
|
—
|
|
|
(1,617
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158,295
|
|
|
158,295
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
|||||
Shareholders' Equity, June 30, 2015
|
354,819
|
|
|
$
|
3,548
|
|
|
$
|
3,096,255
|
|
|
$
|
(648
|
)
|
|
$
|
1,507,104
|
|
|
$
|
4,606,259
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
201,060
|
|
|
$
|
158,295
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Deferred income tax expense
|
117,783
|
|
|
103,059
|
|
||
Depreciation and amortization
|
26,705
|
|
|
21,853
|
|
||
Share-based compensation expense
|
16,906
|
|
|
14,654
|
|
||
Other, net
|
9,790
|
|
|
9,319
|
|
||
Increase (decrease) in cash due to:
|
|
|
|
||||
Restricted cash
|
(5,210
|
)
|
|
(4,526
|
)
|
||
Inventories
|
(810,417
|
)
|
|
(485,676
|
)
|
||
Residential mortgage loans available-for-sale
|
78,460
|
|
|
70,123
|
|
||
Other assets
|
(15,506
|
)
|
|
(57,054
|
)
|
||
Accounts payable, accrued and other liabilities
|
55,113
|
|
|
(21,150
|
)
|
||
Net cash provided by (used in) operating activities
|
(325,316
|
)
|
|
(191,103
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(21,044
|
)
|
|
(23,115
|
)
|
||
Cash used for business acquisition
|
(430,025
|
)
|
|
—
|
|
||
Other investing activities, net
|
(8,296
|
)
|
|
14,650
|
|
||
Net cash used in investing activities
|
(459,365
|
)
|
|
(8,465
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from debt issuance
|
986,084
|
|
|
—
|
|
||
Repayments of debt
|
(484,974
|
)
|
|
(237,994
|
)
|
||
Borrowings under revolving credit facility
|
358,000
|
|
|
—
|
|
||
Repayments under revolving credit facility
|
(358,000
|
)
|
|
—
|
|
||
Financial Services borrowings (repayments)
|
(78,320
|
)
|
|
(20,970
|
)
|
||
Stock option exercises
|
742
|
|
|
7,222
|
|
||
Share repurchases
|
(100,806
|
)
|
|
(322,066
|
)
|
||
Dividends paid
|
(63,019
|
)
|
|
(59,125
|
)
|
||
Net cash provided by (used in) financing activities
|
259,707
|
|
|
(632,933
|
)
|
||
Net increase (decrease) in cash and equivalents
|
(524,974
|
)
|
|
(832,501
|
)
|
||
Cash and equivalents at beginning of period
|
754,161
|
|
|
1,292,862
|
|
||
Cash and equivalents at end of period
|
$
|
229,187
|
|
|
$
|
460,361
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
||||
Interest paid (capitalized), net
|
$
|
(14,671
|
)
|
|
$
|
(1,911
|
)
|
Income taxes paid (refunded), net
|
$
|
(5,457
|
)
|
|
$
|
(1,685
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
June 30,
|
|
June 30,
|
|||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Write-off of deposits and pre-acquisition costs
|
$
|
7,414
|
|
|
$
|
1,241
|
|
|
$
|
10,454
|
|
|
$
|
3,110
|
|
Lease exit and related costs
|
7,311
|
|
|
336
|
|
|
5,946
|
|
|
222
|
|
||||
Amortization of intangible assets
|
3,450
|
|
|
3,225
|
|
|
6,900
|
|
|
6,450
|
|
||||
Interest income
|
(849
|
)
|
|
(856
|
)
|
|
(1,772
|
)
|
|
(1,955
|
)
|
||||
Interest expense
|
186
|
|
|
208
|
|
|
360
|
|
|
395
|
|
||||
Equity in earnings of unconsolidated entities
|
(3,829
|
)
|
|
(1,164
|
)
|
|
(4,004
|
)
|
|
(2,271
|
)
|
||||
Miscellaneous, net
|
(774
|
)
|
|
196
|
|
|
901
|
|
|
(3,648
|
)
|
||||
|
$
|
12,909
|
|
|
$
|
3,186
|
|
|
$
|
18,785
|
|
|
$
|
2,303
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
June 30,
|
|
June 30,
|
|||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
117,760
|
|
|
$
|
103,324
|
|
|
$
|
201,060
|
|
|
$
|
158,295
|
|
Less: earnings distributed to participating securities
|
(283
|
)
|
|
(185
|
)
|
|
(568
|
)
|
|
(373
|
)
|
||||
Less: undistributed earnings allocated to participating securities
|
(791
|
)
|
|
(475
|
)
|
|
(1,064
|
)
|
|
(647
|
)
|
||||
Numerator for basic earnings per share
|
$
|
116,686
|
|
|
$
|
102,664
|
|
|
$
|
199,428
|
|
|
$
|
157,275
|
|
Add back: undistributed earnings allocated to participating securities
|
791
|
|
|
475
|
|
|
1,064
|
|
|
647
|
|
||||
Less: undistributed earnings reallocated to participating securities
|
(785
|
)
|
|
(471
|
)
|
|
(1,055
|
)
|
|
(641
|
)
|
||||
Numerator for diluted earnings per share
|
$
|
116,692
|
|
|
$
|
102,668
|
|
|
$
|
199,437
|
|
|
$
|
157,281
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic shares outstanding
|
345,240
|
|
|
361,009
|
|
|
346,528
|
|
|
363,863
|
|
||||
Effect of dilutive securities
|
2,759
|
|
|
3,232
|
|
|
2,710
|
|
|
3,297
|
|
||||
Diluted shares outstanding
|
347,999
|
|
|
364,241
|
|
|
349,238
|
|
|
367,160
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.58
|
|
|
$
|
0.43
|
|
Diluted
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.57
|
|
|
$
|
0.43
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
Other Assets
|
|
Accrued and Other Liabilities
|
|
Other Assets
|
|
Accrued and Other Liabilities
|
||||||||
Interest rate lock commitments
|
$
|
11,591
|
|
|
$
|
111
|
|
|
$
|
5,854
|
|
|
$
|
280
|
|
Forward contracts
|
401
|
|
|
6,735
|
|
|
1,178
|
|
|
840
|
|
||||
Whole loan commitments
|
111
|
|
|
414
|
|
|
358
|
|
|
345
|
|
||||
|
$
|
12,103
|
|
|
$
|
7,260
|
|
|
$
|
7,390
|
|
|
$
|
1,465
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Homes under construction
|
$
|
2,058,479
|
|
|
$
|
1,408,260
|
|
Land under development
|
3,704,857
|
|
|
3,259,066
|
|
||
Raw land
|
866,128
|
|
|
782,732
|
|
||
|
$
|
6,629,464
|
|
|
$
|
5,450,058
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest in inventory, beginning of period
|
$
|
158,653
|
|
|
$
|
166,887
|
|
|
$
|
149,498
|
|
|
$
|
167,638
|
|
Interest capitalized
|
38,231
|
|
|
31,296
|
|
|
73,515
|
|
|
62,099
|
|
||||
Interest expensed
|
(29,396
|
)
|
|
(33,799
|
)
|
|
(55,525
|
)
|
|
(65,353
|
)
|
||||
Interest in inventory, end of period
|
$
|
167,488
|
|
|
$
|
164,384
|
|
|
$
|
167,488
|
|
|
$
|
164,384
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
Deposits and
Pre-acquisition Costs |
|
Remaining Purchase
Price |
|
Deposits and
Pre-acquisition Costs |
|
Remaining Purchase
Price |
||||||||
Land options with VIEs
|
$
|
80,063
|
|
|
$
|
928,327
|
|
|
$
|
77,641
|
|
|
$
|
1,064,506
|
|
Other land options
|
98,744
|
|
|
1,165,813
|
|
|
84,478
|
|
|
981,687
|
|
||||
|
$
|
178,807
|
|
|
$
|
2,094,140
|
|
|
$
|
162,119
|
|
|
$
|
2,046,193
|
|
Northeast:
|
|
Connecticut, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Virginia
|
Southeast:
|
|
Georgia, North Carolina, South Carolina, Tennessee
|
Florida:
|
|
Florida
|
Midwest:
|
|
Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, Ohio
|
Texas:
|
|
Texas
|
West:
|
|
Arizona, California, Nevada, New Mexico, Washington
|
|
Operating Data by Segment
($000’s omitted)
|
||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Northeast
|
$
|
152,517
|
|
|
$
|
137,181
|
|
|
$
|
271,171
|
|
|
$
|
248,334
|
|
Southeast
(a)
|
387,675
|
|
|
245,250
|
|
|
682,101
|
|
|
431,038
|
|
||||
Florida
|
283,440
|
|
|
208,740
|
|
|
553,281
|
|
|
411,802
|
|
||||
Midwest
|
286,649
|
|
|
227,489
|
|
|
476,541
|
|
|
406,141
|
|
||||
Texas
|
255,471
|
|
|
185,489
|
|
|
468,763
|
|
|
362,988
|
|
||||
West
|
391,080
|
|
|
245,388
|
|
|
701,705
|
|
|
494,934
|
|
||||
|
1,756,832
|
|
|
1,249,537
|
|
|
3,153,562
|
|
|
2,355,237
|
|
||||
Financial Services
|
43,082
|
|
|
30,754
|
|
|
78,930
|
|
|
58,352
|
|
||||
Consolidated revenues
|
$
|
1,799,914
|
|
|
$
|
1,280,291
|
|
|
$
|
3,232,492
|
|
|
$
|
2,413,589
|
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes:
|
|
|
|
|
|
|
|
||||||||
Northeast
|
$
|
19,238
|
|
|
$
|
15,330
|
|
|
$
|
28,828
|
|
|
$
|
24,857
|
|
Southeast
(a)
|
40,758
|
|
|
39,871
|
|
|
60,528
|
|
|
64,495
|
|
||||
Florida
|
44,353
|
|
|
39,315
|
|
|
84,655
|
|
|
72,539
|
|
||||
Midwest
|
26,253
|
|
|
14,630
|
|
|
31,873
|
|
|
15,810
|
|
||||
Texas
|
36,223
|
|
|
24,488
|
|
|
64,740
|
|
|
47,278
|
|
||||
West
|
41,829
|
|
|
32,441
|
|
|
75,336
|
|
|
63,521
|
|
||||
Other homebuilding
(b)
|
(36,108
|
)
|
|
(8,435
|
)
|
|
(64,981
|
)
|
|
(40,113
|
)
|
||||
|
172,546
|
|
|
157,640
|
|
|
280,979
|
|
|
248,387
|
|
||||
Financial Services
|
17,034
|
|
|
9,987
|
|
|
26,814
|
|
|
15,044
|
|
||||
Consolidated income before income taxes
|
$
|
189,580
|
|
|
$
|
167,627
|
|
|
$
|
307,793
|
|
|
$
|
263,431
|
|
(a)
|
Southeast includes the acquisition in January 2016 of substantially all of the assets of Wieland (see
Note 1
).
|
(b)
|
Other homebuilding includes the amortization of intangible assets, amortization of capitalized interest, and other items not allocated to the operating segments. For the
three and six months ended
June 30, 2015
, Other homebuilding also includes a reserve reversal of
$26.9 million
resulting from a favorable legal settlement.
|
|
Operating Data by Segment
|
||||||||||||||||||
|
($000's omitted)
|
||||||||||||||||||
|
June 30, 2016
|
||||||||||||||||||
|
Homes Under
Construction |
|
Land Under
Development |
|
Raw Land
|
|
Total
Inventory |
|
Total
Assets |
||||||||||
Northeast
|
$
|
215,519
|
|
|
$
|
307,440
|
|
|
$
|
122,107
|
|
|
$
|
645,066
|
|
|
$
|
783,163
|
|
Southeast
(a)
|
376,012
|
|
|
554,662
|
|
|
230,502
|
|
|
1,161,176
|
|
|
1,263,995
|
|
|||||
Florida
|
288,038
|
|
|
641,869
|
|
|
164,140
|
|
|
1,094,047
|
|
|
1,238,973
|
|
|||||
Midwest
|
303,569
|
|
|
435,719
|
|
|
62,252
|
|
|
801,540
|
|
|
859,922
|
|
|||||
Texas
|
234,589
|
|
|
367,399
|
|
|
85,593
|
|
|
687,581
|
|
|
782,448
|
|
|||||
West
|
614,600
|
|
|
1,186,901
|
|
|
175,141
|
|
|
1,976,642
|
|
|
2,185,570
|
|
|||||
Other homebuilding
(b)
|
26,152
|
|
|
210,867
|
|
|
26,393
|
|
|
263,412
|
|
|
1,957,860
|
|
|||||
|
2,058,479
|
|
|
3,704,857
|
|
|
866,128
|
|
|
6,629,464
|
|
|
9,071,931
|
|
|||||
Financial Services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
435,125
|
|
|||||
|
$
|
2,058,479
|
|
|
$
|
3,704,857
|
|
|
$
|
866,128
|
|
|
$
|
6,629,464
|
|
|
$
|
9,507,056
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31, 2015
|
||||||||||||||||||
|
Homes Under
Construction |
|
Land Under
Development |
|
Raw Land
|
|
Total
Inventory |
|
Total
Assets |
||||||||||
Northeast
|
$
|
163,173
|
|
|
$
|
292,631
|
|
|
$
|
121,522
|
|
|
$
|
577,326
|
|
|
$
|
688,610
|
|
Southeast
|
196,456
|
|
|
367,577
|
|
|
139,246
|
|
|
703,279
|
|
|
765,933
|
|
|||||
Florida
|
227,910
|
|
|
574,092
|
|
|
97,185
|
|
|
899,187
|
|
|
1,013,543
|
|
|||||
Midwest
|
197,738
|
|
|
414,386
|
|
|
68,918
|
|
|
681,042
|
|
|
734,834
|
|
|||||
Texas
|
191,424
|
|
|
317,702
|
|
|
107,737
|
|
|
616,863
|
|
|
691,342
|
|
|||||
West
|
413,208
|
|
|
1,094,112
|
|
|
222,920
|
|
|
1,730,240
|
|
|
1,924,958
|
|
|||||
Other homebuilding
(b)
|
18,351
|
|
|
198,566
|
|
|
25,204
|
|
|
242,121
|
|
|
2,628,687
|
|
|||||
|
1,408,260
|
|
|
3,259,066
|
|
|
782,732
|
|
|
5,450,058
|
|
|
8,447,907
|
|
|||||
Financial Services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
508,989
|
|
|||||
|
$
|
1,408,260
|
|
|
$
|
3,259,066
|
|
|
$
|
782,732
|
|
|
$
|
5,450,058
|
|
|
$
|
8,956,896
|
|
(a)
|
Southeast includes the acquisition in January 2016 of substantially all of the assets of Wieland (see
Note 1
).
|
(b)
|
Other homebuilding primarily includes cash and equivalents, capitalized interest, intangibles, deferred tax assets, and other corporate items that are not allocated to the operating segments.
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
6.500% unsecured senior notes due May 2016
(a)
|
—
|
|
|
465,245
|
|
||
7.625% unsecured senior notes due October 2017
(b)
|
123,000
|
|
|
123,000
|
|
||
4.250% unsecured senior notes due March 2021
(a)
|
300,000
|
|
|
—
|
|
||
5.500% unsecured senior notes due March 2026
(a)
|
700,000
|
|
|
—
|
|
||
7.875% unsecured senior notes due June 2032
(a)
|
300,000
|
|
|
300,000
|
|
||
6.375% unsecured senior notes due May 2033
(a)
|
400,000
|
|
|
400,000
|
|
||
6.000% unsecured senior notes due February 2035
(a)
|
300,000
|
|
|
300,000
|
|
||
Net premiums, discounts, and issuance costs
(c)
|
(19,179
|
)
|
|
(12,163
|
)
|
||
Total senior notes
|
$
|
2,103,821
|
|
|
$
|
1,576,082
|
|
Estimated fair value
|
$
|
2,204,630
|
|
|
$
|
1,643,651
|
|
(a)
|
Redeemable prior to maturity; guaranteed on a senior basis by certain wholly-owned subsidiaries.
|
(b)
|
Not redeemable prior to maturity; guaranteed on a senior basis by certain wholly-owned subsidiaries.
|
(c)
|
The carrying value of senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest cost over the respective terms of the senior notes. As discussed in
Note 1
, we adopted ASU 2015-03 in January 2016. We applied the new guidance retrospectively to all prior periods presented in the financial statements to conform to the 2016 presentation. As a result,
$10.3 million
of debt issuance costs at
December 31, 2015
, were reclassified from other assets to a reduction in senior notes.
|
Level 1
|
|
Fair value determined based on quoted prices in active markets for identical assets or liabilities.
|
|
|
|
Level 2
|
|
Fair value determined using significant observable inputs, generally either quoted prices in active markets for similar assets or liabilities or quoted prices in markets that are not active.
|
|
|
|
Level 3
|
|
Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.
|
Financial Instrument
|
|
Fair Value
Hierarchy |
|
Fair Value
|
||||||
June 30,
2016 |
|
December 31,
2015 |
||||||||
|
|
|
|
|
|
|
||||
Measured at fair value on a recurring basis:
|
|
|
|
|
|
|
||||
Residential mortgage loans available-for-sale
|
|
Level 2
|
|
$
|
364,004
|
|
|
$
|
442,715
|
|
Interest rate lock commitments
|
|
Level 2
|
|
11,480
|
|
|
5,574
|
|
||
Forward contracts
|
|
Level 2
|
|
(6,334
|
)
|
|
338
|
|
||
Whole loan commitments
|
|
Level 2
|
|
(303
|
)
|
|
13
|
|
||
|
|
|
|
|
|
|
||||
Measured at fair value on a non-recurring basis:
|
|
|
|
|
|
|
||||
House and land inventory
|
|
Level 3
|
|
$
|
—
|
|
|
$
|
11,052
|
|
|
|
|
|
|
|
|
||||
Disclosed at fair value:
|
|
|
|
|
|
|
||||
Cash and equivalents (including restricted cash)
|
|
Level 1
|
|
$
|
255,671
|
|
|
$
|
775,435
|
|
Financial Services debt
|
|
Level 2
|
|
189,557
|
|
|
267,877
|
|
||
Term loan
|
|
Level 2
|
|
500,000
|
|
|
500,000
|
|
||
Senior notes
|
|
Level 2
|
|
2,204,630
|
|
|
1,643,651
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Liabilities, beginning of period
|
$
|
47,093
|
|
|
$
|
58,226
|
|
|
$
|
46,381
|
|
|
$
|
58,222
|
|
Reserves provided (released), net
|
(99
|
)
|
|
81
|
|
|
767
|
|
|
139
|
|
||||
Payments
|
(11,049
|
)
|
|
(69
|
)
|
|
(11,203
|
)
|
|
(123
|
)
|
||||
Liabilities, end of period
|
$
|
35,945
|
|
|
$
|
58,238
|
|
|
$
|
35,945
|
|
|
$
|
58,238
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Warranty liabilities, beginning of period
|
$
|
60,936
|
|
|
$
|
57,401
|
|
|
$
|
61,360
|
|
|
$
|
65,389
|
|
Reserves provided
|
14,204
|
|
|
11,170
|
|
|
26,523
|
|
|
20,011
|
|
||||
Payments
|
(13,101
|
)
|
|
(14,648
|
)
|
|
(25,844
|
)
|
|
(31,477
|
)
|
||||
Other adjustments
|
(200
|
)
|
|
579
|
|
|
(200
|
)
|
|
579
|
|
||||
Warranty liabilities, end of period
|
$
|
61,839
|
|
|
$
|
54,502
|
|
|
$
|
61,839
|
|
|
$
|
54,502
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance, beginning of period
|
$
|
692,980
|
|
|
$
|
720,767
|
|
|
$
|
692,053
|
|
|
$
|
710,245
|
|
Reserves provided, net
|
25,317
|
|
|
(9,386
|
)
|
|
45,068
|
|
|
6,446
|
|
||||
Payments
|
(10,991
|
)
|
|
(11,248
|
)
|
|
(29,815
|
)
|
|
(16,558
|
)
|
||||
Balance, end of period
|
$
|
707,306
|
|
|
$
|
700,133
|
|
|
$
|
707,306
|
|
|
$
|
700,133
|
|
|
Unconsolidated
|
|
Eliminating
Entries |
|
Consolidated
PulteGroup, Inc. |
||||||||||||||
|
PulteGroup,
Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
|||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
|
$
|
—
|
|
|
$
|
166,389
|
|
|
$
|
62,798
|
|
|
$
|
—
|
|
|
$
|
229,187
|
|
Restricted cash
|
—
|
|
|
25,001
|
|
|
1,483
|
|
|
—
|
|
|
26,484
|
|
|||||
House and land inventory
|
—
|
|
|
6,583,222
|
|
|
46,242
|
|
|
—
|
|
|
6,629,464
|
|
|||||
Land held for sale
|
—
|
|
|
85,271
|
|
|
510
|
|
|
—
|
|
|
85,781
|
|
|||||
Residential mortgage loans available-
for-sale |
—
|
|
|
—
|
|
|
364,004
|
|
|
—
|
|
|
364,004
|
|
|||||
Investments in unconsolidated entities
|
99
|
|
|
47,569
|
|
|
4,832
|
|
|
—
|
|
|
52,500
|
|
|||||
Other assets
|
22,145
|
|
|
533,458
|
|
|
125,565
|
|
|
—
|
|
|
681,168
|
|
|||||
Intangible assets
|
—
|
|
|
161,372
|
|
|
—
|
|
|
—
|
|
|
161,372
|
|
|||||
Deferred tax assets, net
|
1,274,468
|
|
|
—
|
|
|
2,628
|
|
|
—
|
|
|
1,277,096
|
|
|||||
Investments in subsidiaries and
intercompany accounts, net |
6,237,109
|
|
|
(264,227
|
)
|
|
6,614,233
|
|
|
(12,587,115
|
)
|
|
—
|
|
|||||
|
$
|
7,533,821
|
|
|
$
|
7,338,055
|
|
|
$
|
7,222,295
|
|
|
$
|
(12,587,115
|
)
|
|
$
|
9,507,056
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, customer deposits,
accrued and other liabilities |
$
|
78,691
|
|
|
$
|
1,609,312
|
|
|
$
|
174,366
|
|
|
$
|
—
|
|
|
$
|
1,862,369
|
|
Income tax liabilities
|
33,980
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,980
|
|
|||||
Financial Services debt
|
—
|
|
|
—
|
|
|
189,557
|
|
|
—
|
|
|
189,557
|
|
|||||
Term loan
|
499,212
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
499,212
|
|
|||||
Senior notes
|
2,103,821
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,103,821
|
|
|||||
Total liabilities
|
2,715,704
|
|
|
1,609,312
|
|
|
363,923
|
|
|
—
|
|
|
4,688,939
|
|
|||||
Total shareholders’ equity
|
4,818,117
|
|
|
5,728,743
|
|
|
6,858,372
|
|
|
(12,587,115
|
)
|
|
4,818,117
|
|
|||||
|
$
|
7,533,821
|
|
|
$
|
7,338,055
|
|
|
$
|
7,222,295
|
|
|
$
|
(12,587,115
|
)
|
|
$
|
9,507,056
|
|
|
Unconsolidated
|
|
Eliminating
Entries |
|
Consolidated
PulteGroup, Inc. |
||||||||||||||
|
PulteGroup,
Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
|||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
|
$
|
—
|
|
|
$
|
638,602
|
|
|
$
|
115,559
|
|
|
$
|
—
|
|
|
$
|
754,161
|
|
Restricted cash
|
—
|
|
|
20,274
|
|
|
1,000
|
|
|
—
|
|
|
21,274
|
|
|||||
House and land inventory
|
—
|
|
|
5,450,058
|
|
|
—
|
|
|
—
|
|
|
5,450,058
|
|
|||||
Land held for sale
|
—
|
|
|
80,458
|
|
|
1,034
|
|
|
—
|
|
|
81,492
|
|
|||||
Residential mortgage loans available-
for-sale |
—
|
|
|
—
|
|
|
442,715
|
|
|
—
|
|
|
442,715
|
|
|||||
Investments in unconsolidated entities
|
93
|
|
|
36,499
|
|
|
4,675
|
|
|
—
|
|
|
41,267
|
|
|||||
Other assets
|
38,991
|
|
|
531,120
|
|
|
90,724
|
|
|
—
|
|
|
660,835
|
|
|||||
Intangible assets
|
—
|
|
|
110,215
|
|
|
—
|
|
|
—
|
|
|
110,215
|
|
|||||
Deferred tax assets, net
|
1,392,251
|
|
|
11
|
|
|
2,617
|
|
|
—
|
|
|
1,394,879
|
|
|||||
Investments in subsidiaries and
intercompany accounts, net |
5,529,606
|
|
|
465,644
|
|
|
6,293,018
|
|
|
(12,288,268
|
)
|
|
—
|
|
|||||
|
$
|
6,960,941
|
|
|
$
|
7,332,881
|
|
|
$
|
6,951,342
|
|
|
$
|
(12,288,268
|
)
|
|
$
|
8,956,896
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, customer deposits,
accrued and other liabilities |
$
|
70,061
|
|
|
$
|
1,558,885
|
|
|
$
|
169,193
|
|
|
$
|
—
|
|
|
$
|
1,798,139
|
|
Income tax liabilities
|
57,050
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,050
|
|
|||||
Financial Services debt
|
—
|
|
|
—
|
|
|
267,877
|
|
|
—
|
|
|
267,877
|
|
|||||
Term loan
|
498,423
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
498,423
|
|
|||||
Senior notes
|
1,576,082
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,576,082
|
|
|||||
Total liabilities
|
2,201,616
|
|
|
1,558,885
|
|
|
437,070
|
|
|
—
|
|
|
4,197,571
|
|
|||||
Total shareholders’ equity
|
4,759,325
|
|
|
5,773,996
|
|
|
6,514,272
|
|
|
(12,288,268
|
)
|
|
4,759,325
|
|
|||||
|
$
|
6,960,941
|
|
|
$
|
7,332,881
|
|
|
$
|
6,951,342
|
|
|
$
|
(12,288,268
|
)
|
|
$
|
8,956,896
|
|
|
Unconsolidated
|
|
|
|
Consolidated
PulteGroup, Inc. |
||||||||||||||
|
PulteGroup,
Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sale revenues
|
$
|
—
|
|
|
$
|
1,746,484
|
|
|
$
|
5,398
|
|
|
$
|
—
|
|
|
$
|
1,751,882
|
|
Land sale revenues
|
—
|
|
|
3,893
|
|
|
1,057
|
|
|
—
|
|
|
4,950
|
|
|||||
|
—
|
|
|
1,750,377
|
|
|
6,455
|
|
|
—
|
|
|
1,756,832
|
|
|||||
Financial Services
|
—
|
|
|
—
|
|
|
43,082
|
|
|
—
|
|
|
43,082
|
|
|||||
|
—
|
|
|
1,750,377
|
|
|
49,537
|
|
|
—
|
|
|
1,799,914
|
|
|||||
Homebuilding Cost of Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sale cost of revenues
|
—
|
|
|
1,369,003
|
|
|
5,506
|
|
|
—
|
|
|
1,374,509
|
|
|||||
Land sale cost of revenues
|
—
|
|
|
3,505
|
|
|
898
|
|
|
—
|
|
|
4,403
|
|
|||||
|
—
|
|
|
1,372,508
|
|
|
6,404
|
|
|
—
|
|
|
1,378,912
|
|
|||||
Financial Services expenses
|
—
|
|
|
137
|
|
|
26,043
|
|
|
—
|
|
|
26,180
|
|
|||||
Selling, general, and administrative
expenses |
—
|
|
|
184,515
|
|
|
7,818
|
|
|
—
|
|
|
192,333
|
|
|||||
Other expense (income), net
|
170
|
|
|
20,759
|
|
|
(8,020
|
)
|
|
—
|
|
|
12,909
|
|
|||||
Intercompany interest
|
490
|
|
|
2,035
|
|
|
(2,525
|
)
|
|
—
|
|
|
—
|
|
|||||
Income (loss) before income taxes and
equity in income (loss) of subsidiaries |
(660
|
)
|
|
170,423
|
|
|
19,817
|
|
|
—
|
|
|
189,580
|
|
|||||
Income tax expense (benefit)
|
(246
|
)
|
|
64,415
|
|
|
7,651
|
|
|
—
|
|
|
71,820
|
|
|||||
Income (loss) before equity in income
(loss) of subsidiaries |
(414
|
)
|
|
106,008
|
|
|
12,166
|
|
|
—
|
|
|
117,760
|
|
|||||
Equity in income (loss) of subsidiaries
|
118,174
|
|
|
2,869
|
|
|
73,975
|
|
|
(195,018
|
)
|
|
—
|
|
|||||
Net income (loss)
|
117,760
|
|
|
108,877
|
|
|
86,141
|
|
|
(195,018
|
)
|
|
117,760
|
|
|||||
Other comprehensive income
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||
Comprehensive income (loss)
|
$
|
117,780
|
|
|
$
|
108,877
|
|
|
$
|
86,141
|
|
|
$
|
(195,018
|
)
|
|
$
|
117,780
|
|
|
Unconsolidated
|
|
|
|
Consolidated
PulteGroup, Inc. |
||||||||||||||
|
PulteGroup,
Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sale revenues
|
$
|
—
|
|
|
$
|
1,243,077
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,243,077
|
|
Land sale revenues
|
—
|
|
|
6,460
|
|
|
—
|
|
|
—
|
|
|
6,460
|
|
|||||
|
—
|
|
|
1,249,537
|
|
|
—
|
|
|
—
|
|
|
1,249,537
|
|
|||||
Financial Services
|
—
|
|
|
—
|
|
|
30,754
|
|
|
—
|
|
|
30,754
|
|
|||||
|
—
|
|
|
1,249,537
|
|
|
30,754
|
|
|
—
|
|
|
1,280,291
|
|
|||||
Homebuilding Cost of Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sale cost of revenues
|
—
|
|
|
953,280
|
|
|
—
|
|
|
—
|
|
|
953,280
|
|
|||||
Land sale cost of revenues
|
—
|
|
|
5,312
|
|
|
—
|
|
|
—
|
|
|
5,312
|
|
|||||
|
—
|
|
|
958,592
|
|
|
—
|
|
|
—
|
|
|
958,592
|
|
|||||
Financial Services expenses
|
101
|
|
|
(92
|
)
|
|
20,758
|
|
|
—
|
|
|
20,767
|
|
|||||
Selling, general, and administrative
expenses |
—
|
|
|
129,457
|
|
|
662
|
|
|
—
|
|
|
130,119
|
|
|||||
Other expense (income), net
|
198
|
|
|
3,139
|
|
|
(151
|
)
|
|
—
|
|
|
3,186
|
|
|||||
Intercompany interest
|
(6,781
|
)
|
|
9,269
|
|
|
(2,488
|
)
|
|
—
|
|
|
—
|
|
|||||
Income (loss) before income taxes and
equity in income (loss) of subsidiaries |
6,482
|
|
|
149,172
|
|
|
11,973
|
|
|
—
|
|
|
167,627
|
|
|||||
Income tax expense (benefit)
|
2,462
|
|
|
57,270
|
|
|
4,571
|
|
|
—
|
|
|
64,303
|
|
|||||
Income (loss) before equity in income
(loss) of subsidiaries |
4,020
|
|
|
91,902
|
|
|
7,402
|
|
|
—
|
|
|
103,324
|
|
|||||
Equity in income (loss) of subsidiaries
|
99,304
|
|
|
7,332
|
|
|
92,596
|
|
|
(199,232
|
)
|
|
—
|
|
|||||
Net income (loss)
|
103,324
|
|
|
99,234
|
|
|
99,998
|
|
|
(199,232
|
)
|
|
103,324
|
|
|||||
Other comprehensive income
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||
Comprehensive income (loss)
|
$
|
103,345
|
|
|
$
|
99,234
|
|
|
$
|
99,998
|
|
|
$
|
(199,232
|
)
|
|
$
|
103,345
|
|
|
Unconsolidated
|
|
|
|
Consolidated
PulteGroup, Inc. |
||||||||||||||
|
PulteGroup,
Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sale revenues
|
$
|
—
|
|
|
$
|
3,139,743
|
|
|
$
|
6,382
|
|
|
$
|
—
|
|
|
$
|
3,146,125
|
|
Land sale revenues
|
—
|
|
|
5,903
|
|
|
1,534
|
|
|
—
|
|
|
7,437
|
|
|||||
|
—
|
|
|
3,145,646
|
|
|
7,916
|
|
|
—
|
|
|
3,153,562
|
|
|||||
Financial Services
|
—
|
|
|
—
|
|
|
78,930
|
|
|
—
|
|
|
78,930
|
|
|||||
|
—
|
|
|
3,145,646
|
|
|
86,846
|
|
|
—
|
|
|
3,232,492
|
|
|||||
Homebuilding Cost of Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sale cost of revenues
|
—
|
|
|
2,456,168
|
|
|
7,670
|
|
|
—
|
|
|
2,463,838
|
|
|||||
Land sale cost of revenues
|
—
|
|
|
5,148
|
|
|
1,282
|
|
|
—
|
|
|
6,430
|
|
|||||
|
—
|
|
|
2,461,316
|
|
|
8,952
|
|
|
—
|
|
|
2,470,268
|
|
|||||
Financial Services expenses
|
—
|
|
|
260
|
|
|
52,038
|
|
|
—
|
|
|
52,298
|
|
|||||
Selling, general, and administrative
expenses |
—
|
|
|
372,097
|
|
|
11,251
|
|
|
—
|
|
|
383,348
|
|
|||||
Other expense (income), net
|
340
|
|
|
30,434
|
|
|
(11,989
|
)
|
|
—
|
|
|
18,785
|
|
|||||
Intercompany interest
|
1,000
|
|
|
4,219
|
|
|
(5,219
|
)
|
|
—
|
|
|
—
|
|
|||||
Income (loss) before income taxes and
equity in income (loss) of subsidiaries |
(1,340
|
)
|
|
277,320
|
|
|
31,813
|
|
|
—
|
|
|
307,793
|
|
|||||
Income tax expense (benefit)
|
(509
|
)
|
|
94,983
|
|
|
12,259
|
|
|
—
|
|
|
106,733
|
|
|||||
Income (loss) before equity in income
(loss) of subsidiaries |
(831
|
)
|
|
182,337
|
|
|
19,554
|
|
|
—
|
|
|
201,060
|
|
|||||
Equity in income (loss) of subsidiaries
|
201,891
|
|
|
9,879
|
|
|
185,893
|
|
|
(397,663
|
)
|
|
—
|
|
|||||
Net income (loss)
|
201,060
|
|
|
192,216
|
|
|
205,447
|
|
|
(397,663
|
)
|
|
201,060
|
|
|||||
Other comprehensive income
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||
Comprehensive income (loss)
|
$
|
201,101
|
|
|
$
|
192,216
|
|
|
$
|
205,447
|
|
|
$
|
(397,663
|
)
|
|
$
|
201,101
|
|
|
Unconsolidated
|
|
|
|
Consolidated
PulteGroup, Inc. |
||||||||||||||
|
PulteGroup,
Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sale revenues
|
$
|
—
|
|
|
$
|
2,331,235
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,331,235
|
|
Land sale revenues
|
—
|
|
|
24,002
|
|
|
—
|
|
|
—
|
|
|
24,002
|
|
|||||
|
—
|
|
|
2,355,237
|
|
|
—
|
|
|
—
|
|
|
2,355,237
|
|
|||||
Financial Services
|
—
|
|
|
—
|
|
|
58,352
|
|
|
—
|
|
|
58,352
|
|
|||||
|
—
|
|
|
2,355,237
|
|
|
58,352
|
|
|
—
|
|
|
2,413,589
|
|
|||||
Homebuilding Cost of Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sale cost of revenues
|
—
|
|
|
1,794,425
|
|
|
—
|
|
|
—
|
|
|
1,794,425
|
|
|||||
Land sale cost of revenues
|
—
|
|
|
18,691
|
|
|
—
|
|
|
—
|
|
|
18,691
|
|
|||||
|
—
|
|
|
1,813,116
|
|
|
—
|
|
|
—
|
|
|
1,813,116
|
|
|||||
Financial Services expenses
|
288
|
|
|
(261
|
)
|
|
43,281
|
|
|
—
|
|
|
43,308
|
|
|||||
Selling, general, and administrative
expenses |
—
|
|
|
290,285
|
|
|
1,146
|
|
|
—
|
|
|
291,431
|
|
|||||
Other expense (income), net
|
373
|
|
|
2,431
|
|
|
(501
|
)
|
|
—
|
|
|
2,303
|
|
|||||
Intercompany interest
|
943
|
|
|
3,847
|
|
|
(4,790
|
)
|
|
—
|
|
|
—
|
|
|||||
Income (loss) before income taxes and
equity in income (loss) of subsidiaries |
(1,604
|
)
|
|
245,819
|
|
|
19,216
|
|
|
—
|
|
|
263,431
|
|
|||||
Income tax expense (benefit)
|
(609
|
)
|
|
98,365
|
|
|
7,380
|
|
|
—
|
|
|
105,136
|
|
|||||
Income (loss) before equity in income
(loss) of subsidiaries |
(995
|
)
|
|
147,454
|
|
|
11,836
|
|
|
—
|
|
|
158,295
|
|
|||||
Equity in income (loss) of subsidiaries
|
159,290
|
|
|
11,669
|
|
|
144,659
|
|
|
(315,618
|
)
|
|
—
|
|
|||||
Net income (loss)
|
158,295
|
|
|
159,123
|
|
|
156,495
|
|
|
(315,618
|
)
|
|
158,295
|
|
|||||
Other comprehensive income
|
42
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|||||
Comprehensive income (loss)
|
$
|
158,337
|
|
|
$
|
159,123
|
|
|
$
|
156,495
|
|
|
$
|
(315,618
|
)
|
|
$
|
158,337
|
|
|
Unconsolidated
|
|
|
|
Consolidated
PulteGroup, Inc. |
||||||||||||||
|
PulteGroup,
Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
|||||||||||
Net cash provided by (used in)
operating activities |
$
|
143,228
|
|
|
$
|
(548,580
|
)
|
|
$
|
80,036
|
|
|
$
|
—
|
|
|
$
|
(325,316
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
—
|
|
|
(19,736
|
)
|
|
(1,308
|
)
|
|
—
|
|
|
(21,044
|
)
|
|||||
Cash used for business acquisitions
|
—
|
|
|
(430,025
|
)
|
|
—
|
|
|
—
|
|
|
(430,025
|
)
|
|||||
Other investing activities, net
|
(6
|
)
|
|
(10,346
|
)
|
|
2,056
|
|
|
—
|
|
|
(8,296
|
)
|
|||||
Net cash provided by (used in)
investing activities |
(6
|
)
|
|
(460,107
|
)
|
|
748
|
|
|
—
|
|
|
(459,365
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from debt issuance
|
986,084
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
986,084
|
|
|||||
Repayments of debt
|
(465,245
|
)
|
|
(19,729
|
)
|
|
—
|
|
|
—
|
|
|
(484,974
|
)
|
|||||
Borrowings under revolving credit facility
|
358,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
358,000
|
|
|||||
Repayments under revolving credit facility
|
(358,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(358,000
|
)
|
|||||
Financial Services borrowings (repayments)
|
—
|
|
|
—
|
|
|
(78,320
|
)
|
|
—
|
|
|
(78,320
|
)
|
|||||
Stock option exercises
|
742
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
742
|
|
|||||
Share repurchases
|
(100,806
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100,806
|
)
|
|||||
Dividends paid
|
(63,019
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63,019
|
)
|
|||||
Intercompany activities, net
|
(500,978
|
)
|
|
556,203
|
|
|
(55,225
|
)
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in)
financing activities |
(143,222
|
)
|
|
536,474
|
|
|
(133,545
|
)
|
|
—
|
|
|
259,707
|
|
|||||
Net increase (decrease) in cash and
equivalents |
—
|
|
|
(472,213
|
)
|
|
(52,761
|
)
|
|
—
|
|
|
(524,974
|
)
|
|||||
Cash and equivalents at beginning of
period |
—
|
|
|
638,602
|
|
|
115,559
|
|
|
—
|
|
|
754,161
|
|
|||||
Cash and equivalents at end of period
|
$
|
—
|
|
|
$
|
166,389
|
|
|
$
|
62,798
|
|
|
$
|
—
|
|
|
$
|
229,187
|
|
|
Unconsolidated
|
|
|
|
Consolidated
PulteGroup, Inc. |
||||||||||||||
|
PulteGroup,
Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
|||||||||||
Net cash provided by (used in)
operating activities |
$
|
65,947
|
|
|
$
|
(325,154
|
)
|
|
$
|
68,104
|
|
|
$
|
—
|
|
|
$
|
(191,103
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
—
|
|
|
(20,871
|
)
|
|
(2,244
|
)
|
|
—
|
|
|
(23,115
|
)
|
|||||
Other investing activities, net
|
3,710
|
|
|
1,031
|
|
|
9,909
|
|
|
—
|
|
|
14,650
|
|
|||||
Net cash provided by (used in) investing
activities |
3,710
|
|
|
(19,840
|
)
|
|
7,665
|
|
|
—
|
|
|
(8,465
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments of debt
|
(237,994
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(237,994
|
)
|
|||||
Financial Services borrowings (repayments)
|
—
|
|
|
—
|
|
|
(20,970
|
)
|
|
—
|
|
|
(20,970
|
)
|
|||||
Stock option exercises
|
7,222
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,222
|
|
|||||
Share repurchases
|
(322,066
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(322,066
|
)
|
|||||
Dividends paid
|
(59,125
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,125
|
)
|
|||||
Intercompany activities, net
|
534,852
|
|
|
(408,588
|
)
|
|
(126,264
|
)
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in)
financing activities |
(77,111
|
)
|
|
(408,588
|
)
|
|
(147,234
|
)
|
|
—
|
|
|
(632,933
|
)
|
|||||
Net increase (decrease) in cash and
equivalents |
(7,454
|
)
|
|
(753,582
|
)
|
|
(71,465
|
)
|
|
—
|
|
|
(832,501
|
)
|
|||||
Cash and equivalents at beginning of
period |
7,454
|
|
|
1,157,307
|
|
|
128,101
|
|
|
—
|
|
|
1,292,862
|
|
|||||
Cash and equivalents at end of period
|
$
|
—
|
|
|
$
|
403,725
|
|
|
$
|
56,636
|
|
|
$
|
—
|
|
|
$
|
460,361
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Income before income taxes:
|
|
|
|
|
|
|
|
||||||||
Homebuilding
|
$
|
172,546
|
|
|
$
|
157,640
|
|
|
$
|
280,979
|
|
|
$
|
248,387
|
|
Financial Services
|
17,034
|
|
|
9,987
|
|
|
26,814
|
|
|
15,044
|
|
||||
Income before income taxes
|
189,580
|
|
|
167,627
|
|
|
307,793
|
|
|
263,431
|
|
||||
Income tax expense
|
71,820
|
|
|
64,303
|
|
|
106,733
|
|
|
105,136
|
|
||||
Net income
|
$
|
117,760
|
|
|
$
|
103,324
|
|
|
$
|
201,060
|
|
|
$
|
158,295
|
|
Per share data - assuming dilution:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.57
|
|
|
$
|
0.43
|
|
•
|
Homebuilding income before income taxes for the
three and six months ended
June 30, 2016
increased compared with the prior year period as the result of higher revenues stemming from increased volume and a higher average selling price. The revenue increase was partially offset by lower gross margins and higher overhead costs, both of which were partially attributable to the assets acquired from Wieland in January 2016 (see
Note 1
). Additionally, the three and six months ended June 30, 2015, include a reserve reversal of
$26.9 million
resulting from a favorable legal settlement (see
Note 8
).
|
•
|
Financial Services income before income taxes for the
three and six months ended
June 30, 2016
increased compared with the prior year periods due to an increase in origination volume resulting from higher volumes in the Homebuilding segment combined with higher revenues per loan, which were attributable to a higher average loan size combined with a favorable interest rate environment.
|
•
|
Our effective tax rate for the
three and six months ended
June 30, 2016
was
37.9%
and
34.7%
, respectively, which includes the favorable resolution of certain state income tax matters, compared to
38.4%
and
39.9%
, respectively, for the same periods in 2015, which reflected adjustments to deferred taxes due to changes in state laws and business operations.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||||||||
|
2016
|
|
2016 vs. 2015
|
|
2015
|
|
2016
|
|
2016 vs. 2015
|
|
2015
|
||||||||||
Home sale revenues
|
$
|
1,751,882
|
|
|
41
|
%
|
|
$
|
1,243,077
|
|
|
$
|
3,146,125
|
|
|
35
|
%
|
|
$
|
2,331,235
|
|
Land sale revenues
|
4,950
|
|
|
(23
|
)%
|
|
6,460
|
|
|
7,437
|
|
|
(69
|
)%
|
|
24,002
|
|
||||
Total Homebuilding revenues
|
1,756,832
|
|
|
41
|
%
|
|
1,249,537
|
|
|
3,153,562
|
|
|
34
|
%
|
|
2,355,237
|
|
||||
Home sale cost of revenues
(a)
|
1,374,509
|
|
|
44
|
%
|
|
953,280
|
|
|
2,463,838
|
|
|
37
|
%
|
|
1,794,425
|
|
||||
Land sale cost of revenues
|
4,403
|
|
|
(17
|
)%
|
|
5,312
|
|
|
6,430
|
|
|
(66
|
)%
|
|
18,691
|
|
||||
Selling, general, and administrative
expenses ("SG&A") (b) |
192,333
|
|
|
48
|
%
|
|
130,119
|
|
|
383,348
|
|
|
32
|
%
|
|
291,431
|
|
||||
Other expense (income), net
|
13,041
|
|
|
309
|
%
|
|
3,186
|
|
|
18,967
|
|
|
724
|
%
|
|
2,303
|
|
||||
Income before income taxes
|
$
|
172,546
|
|
|
9
|
%
|
|
$
|
157,640
|
|
|
$
|
280,979
|
|
|
13
|
%
|
|
$
|
248,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Supplemental data
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross margin from home sales
|
21.5
|
%
|
|
(180 bps)
|
|
|
23.3
|
%
|
|
21.7
|
%
|
|
(130 bps)
|
|
|
23.0
|
%
|
||||
SG&A as a percentage of home
sale revenues |
11.0
|
%
|
|
50 bps
|
|
|
10.5
|
%
|
|
12.2
|
%
|
|
(30 bps)
|
|
|
12.5
|
%
|
||||
Closings (units)
|
4,772
|
|
|
27
|
%
|
|
3,744
|
|
|
8,717
|
|
|
23
|
%
|
|
7,109
|
|
||||
Average selling price
|
$
|
367
|
|
|
11
|
%
|
|
$
|
332
|
|
|
$
|
361
|
|
|
10
|
%
|
|
$
|
328
|
|
Net new orders
(c)
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Units
|
5,697
|
|
|
11
|
%
|
|
5,118
|
|
|
11,349
|
|
|
11
|
%
|
|
10,257
|
|
||||
Dollars
|
$
|
2,142,024
|
|
|
21
|
%
|
|
$
|
1,766,848
|
|
|
$
|
4,255,995
|
|
|
22
|
%
|
|
$
|
3,475,238
|
|
Cancellation rate
|
14
|
%
|
|
|
|
13
|
%
|
|
14
|
%
|
|
|
|
12
|
%
|
||||||
Active communities at June 30
|
|
|
|
|
|
|
700
|
|
|
11
|
%
|
|
630
|
|
|||||||
Backlog at June 30:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Units
|
|
|
|
|
|
|
9,679
|
|
|
8
|
%
|
|
8,998
|
|
|||||||
Dollars
|
|
|
|
|
|
|
$
|
3,749,299
|
|
|
21
|
%
|
|
$
|
3,087,862
|
|
(a)
|
Includes the amortization of capitalized interest.
|
(b)
|
Includes a reserve reversal of
$26.9 million
for the three and six months ended June 30, 2015, resulting from a favorable legal settlement (see
Note 8
).
|
(c)
|
Net new orders excludes backlog acquired from Wieland in January 2016 (see
Note 1
). Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
June 30,
|
|
June 30,
|
|||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Write-off of deposits and pre-acquisition costs
|
$
|
7,414
|
|
|
$
|
1,241
|
|
|
$
|
10,454
|
|
|
$
|
3,110
|
|
Lease exit and related costs
|
7,311
|
|
|
336
|
|
|
5,946
|
|
|
222
|
|
||||
Amortization of intangible assets
|
3,450
|
|
|
3,225
|
|
|
6,900
|
|
|
6,450
|
|
||||
Interest income
|
(849
|
)
|
|
(856
|
)
|
|
(1,772
|
)
|
|
(1,955
|
)
|
||||
Interest expense
|
186
|
|
|
208
|
|
|
360
|
|
|
395
|
|
||||
Equity in earnings of unconsolidated entities
|
(3,829
|
)
|
|
(1,164
|
)
|
|
(4,004
|
)
|
|
(2,271
|
)
|
||||
Miscellaneous, net
|
(642
|
)
|
|
196
|
|
|
1,083
|
|
|
(3,648
|
)
|
||||
|
$
|
13,041
|
|
|
$
|
3,186
|
|
|
$
|
18,967
|
|
|
$
|
2,303
|
|
|
June 30,
2016 |
|
June 30,
2015 |
||
Sold
|
6,673
|
|
|
5,635
|
|
Unsold
|
|
|
|
||
Under construction
|
1,459
|
|
|
830
|
|
Completed
|
555
|
|
|
314
|
|
|
2,014
|
|
|
1,144
|
|
Models
|
1,084
|
|
|
988
|
|
Total
|
9,771
|
|
|
7,767
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||
|
Owned
|
|
Optioned
|
|
Controlled
|
|
Owned
|
|
Optioned
|
|
Controlled
|
||||||
Northeast
|
6,376
|
|
|
4,518
|
|
|
10,894
|
|
|
6,361
|
|
|
4,114
|
|
|
10,475
|
|
Southeast
(a)
|
16,916
|
|
|
7,790
|
|
|
24,706
|
|
|
11,161
|
|
|
7,933
|
|
|
19,094
|
|
Florida
|
22,035
|
|
|
8,044
|
|
|
30,079
|
|
|
21,230
|
|
|
9,636
|
|
|
30,866
|
|
Midwest
|
12,834
|
|
|
7,449
|
|
|
20,283
|
|
|
13,093
|
|
|
6,985
|
|
|
20,078
|
|
Texas
|
13,455
|
|
|
8,398
|
|
|
21,853
|
|
|
13,308
|
|
|
7,052
|
|
|
20,360
|
|
West
|
30,795
|
|
|
4,643
|
|
|
35,438
|
|
|
30,766
|
|
|
6,440
|
|
|
37,206
|
|
Total
|
102,411
|
|
|
40,842
|
|
|
143,253
|
|
|
95,919
|
|
|
42,160
|
|
|
138,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Developed (%)
|
28
|
%
|
|
17
|
%
|
|
25
|
%
|
|
28
|
%
|
|
12
|
%
|
|
23
|
%
|
(a)
|
Southeast includes the acquisition of substantially all of the assets of Wieland in January 2016 (see
Note 1
).
|
Northeast:
|
|
Connecticut, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Virginia
|
Southeast:
|
|
Georgia, North Carolina, South Carolina, Tennessee
|
Florida:
|
|
Florida
|
Midwest:
|
|
Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, Ohio
|
Texas:
|
|
Texas
|
West:
|
|
Arizona, California, Nevada, New Mexico, Washington
|
|
Operating Data by Segment ($000's omitted)
|
||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||||||||
|
2016
|
|
2016 vs. 2015
|
|
2015
|
|
2016
|
|
2016 vs. 2015
|
|
2015
|
||||||||||
Home sale revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
$
|
152,482
|
|
|
11
|
%
|
|
$
|
136,931
|
|
|
$
|
271,136
|
|
|
10
|
%
|
|
$
|
246,694
|
|
Southeast
(a)
|
386,626
|
|
|
58
|
%
|
|
245,251
|
|
|
680,050
|
|
|
58
|
%
|
|
431,039
|
|
||||
Florida
|
280,678
|
|
|
35
|
%
|
|
207,856
|
|
|
550,379
|
|
|
34
|
%
|
|
410,396
|
|
||||
Midwest
|
286,231
|
|
|
28
|
%
|
|
223,636
|
|
|
475,378
|
|
|
18
|
%
|
|
401,510
|
|
||||
Texas
|
254,785
|
|
|
37
|
%
|
|
185,489
|
|
|
467,477
|
|
|
29
|
%
|
|
361,935
|
|
||||
West
|
391,080
|
|
|
60
|
%
|
|
243,914
|
|
|
701,705
|
|
|
46
|
%
|
|
479,661
|
|
||||
|
$
|
1,751,882
|
|
|
41
|
%
|
|
$
|
1,243,077
|
|
|
$
|
3,146,125
|
|
|
35
|
%
|
|
$
|
2,331,235
|
|
Income (loss) before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
$
|
19,238
|
|
|
25
|
%
|
|
$
|
15,330
|
|
|
$
|
28,828
|
|
|
16
|
%
|
|
$
|
24,857
|
|
Southeast
(a)
|
40,758
|
|
|
2
|
%
|
|
39,871
|
|
|
60,528
|
|
|
(6
|
)%
|
|
64,495
|
|
||||
Florida
|
44,353
|
|
|
13
|
%
|
|
39,315
|
|
|
84,655
|
|
|
17
|
%
|
|
72,539
|
|
||||
Midwest
|
26,253
|
|
|
79
|
%
|
|
14,630
|
|
|
31,873
|
|
|
102
|
%
|
|
15,810
|
|
||||
Texas
|
36,223
|
|
|
48
|
%
|
|
24,488
|
|
|
64,740
|
|
|
37
|
%
|
|
47,278
|
|
||||
West
|
41,829
|
|
|
29
|
%
|
|
32,441
|
|
|
75,336
|
|
|
19
|
%
|
|
63,521
|
|
||||
Other homebuilding
(b)
|
(36,108
|
)
|
|
(328
|
)%
|
|
(8,435
|
)
|
|
(64,981
|
)
|
|
(62
|
)%
|
|
(40,113
|
)
|
||||
|
$
|
172,546
|
|
|
9
|
%
|
|
$
|
157,640
|
|
|
$
|
280,979
|
|
|
13
|
%
|
|
$
|
248,387
|
|
Closings (units):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
310
|
|
|
(2
|
)%
|
|
316
|
|
|
572
|
|
|
1
|
%
|
|
564
|
|
||||
Southeast
(a)
|
1,025
|
|
|
33
|
%
|
|
772
|
|
|
1,851
|
|
|
34
|
%
|
|
1,384
|
|
||||
Florida
|
767
|
|
|
28
|
%
|
|
597
|
|
|
1,512
|
|
|
26
|
%
|
|
1,198
|
|
||||
Midwest
|
786
|
|
|
19
|
%
|
|
659
|
|
|
1,338
|
|
|
9
|
%
|
|
1,228
|
|
||||
Texas
|
923
|
|
|
22
|
%
|
|
754
|
|
|
1,698
|
|
|
13
|
%
|
|
1,500
|
|
||||
West
|
961
|
|
|
49
|
%
|
|
646
|
|
|
1,746
|
|
|
41
|
%
|
|
1,235
|
|
||||
|
4,772
|
|
|
27
|
%
|
|
3,744
|
|
|
8,717
|
|
|
23
|
%
|
|
7,109
|
|
||||
Average selling price:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
$
|
492
|
|
|
14
|
%
|
|
$
|
433
|
|
|
$
|
474
|
|
|
8
|
%
|
|
$
|
437
|
|
Southeast
(a)
|
377
|
|
|
19
|
%
|
|
318
|
|
|
367
|
|
|
18
|
%
|
|
311
|
|
||||
Florida
|
366
|
|
|
5
|
%
|
|
348
|
|
|
364
|
|
|
6
|
%
|
|
343
|
|
||||
Midwest
|
364
|
|
|
7
|
%
|
|
339
|
|
|
355
|
|
|
9
|
%
|
|
327
|
|
||||
Texas
|
276
|
|
|
12
|
%
|
|
246
|
|
|
275
|
|
|
14
|
%
|
|
241
|
|
||||
West
|
407
|
|
|
8
|
%
|
|
378
|
|
|
402
|
|
|
3
|
%
|
|
388
|
|
||||
|
$
|
367
|
|
|
11
|
%
|
|
$
|
332
|
|
|
$
|
361
|
|
|
10
|
%
|
|
$
|
328
|
|
(a)
|
Southeast includes the acquisition of substantially all of the assets of Wieland in January 2016 (see
Note 1
).
|
(b)
|
Other homebuilding includes the amortization of intangible assets, amortization of capitalized interest, and other items not allocated to the operating segments. Other homebuilding for the
three and six months ended
June 30, 2015
, also includes a reserve reversal of
$26.9 million
resulting from a favorable legal settlement (see
Note 8
).
|
|
Operating Data by Segment ($000's omitted)
|
||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||||||||
|
2016
|
|
2016 vs. 2015
|
|
2015
|
|
2016
|
|
2016 vs. 2015
|
|
2015
|
||||||||||
Net new orders - units:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
352
|
|
|
(21
|
)%
|
|
443
|
|
|
730
|
|
|
(17
|
)%
|
|
880
|
|
||||
Southeast
(a)
|
1,016
|
|
|
(2
|
)%
|
|
1,041
|
|
|
2,068
|
|
|
4
|
%
|
|
1,979
|
|
||||
Florida
|
1,011
|
|
|
26
|
%
|
|
805
|
|
|
1,934
|
|
|
13
|
%
|
|
1,716
|
|
||||
Midwest
|
1,059
|
|
|
28
|
%
|
|
830
|
|
|
2,053
|
|
|
29
|
%
|
|
1,593
|
|
||||
Texas
|
1,036
|
|
|
4
|
%
|
|
993
|
|
|
2,157
|
|
|
2
|
%
|
|
2,110
|
|
||||
West
|
1,223
|
|
|
22
|
%
|
|
1,006
|
|
|
2,407
|
|
|
22
|
%
|
|
1,979
|
|
||||
|
5,697
|
|
|
11
|
%
|
|
5,118
|
|
|
11,349
|
|
|
11
|
%
|
|
10,257
|
|
||||
Net new orders - dollars:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
$
|
175,454
|
|
|
(8
|
)%
|
|
$
|
191,046
|
|
|
$
|
362,730
|
|
|
(6
|
)%
|
|
$
|
387,302
|
|
Southeast
(a)
|
387,650
|
|
|
11
|
%
|
|
347,934
|
|
|
783,978
|
|
|
22
|
%
|
|
643,040
|
|
||||
Florida
|
380,573
|
|
|
32
|
%
|
|
287,358
|
|
|
719,258
|
|
|
16
|
%
|
|
617,613
|
|
||||
Midwest
|
381,611
|
|
|
28
|
%
|
|
299,162
|
|
|
743,752
|
|
|
30
|
%
|
|
573,717
|
|
||||
Texas
|
287,055
|
|
|
7
|
%
|
|
269,089
|
|
|
593,633
|
|
|
10
|
%
|
|
541,082
|
|
||||
West
|
529,681
|
|
|
42
|
%
|
|
372,259
|
|
|
1,052,644
|
|
|
48
|
%
|
|
712,484
|
|
||||
|
$
|
2,142,024
|
|
|
21
|
%
|
|
$
|
1,766,848
|
|
|
$
|
4,255,995
|
|
|
22
|
%
|
|
$
|
3,475,238
|
|
Cancellation rates:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
11
|
%
|
|
|
|
10
|
%
|
|
10
|
%
|
|
|
|
10
|
%
|
||||||
Southeast
(a)
|
14
|
%
|
|
|
|
8
|
%
|
|
13
|
%
|
|
|
|
8
|
%
|
||||||
Florida
|
11
|
%
|
|
|
|
11
|
%
|
|
11
|
%
|
|
|
|
10
|
%
|
||||||
Midwest
|
11
|
%
|
|
|
|
12
|
%
|
|
11
|
%
|
|
|
|
12
|
%
|
||||||
Texas
|
17
|
%
|
|
|
|
17
|
%
|
|
16
|
%
|
|
|
|
15
|
%
|
||||||
West
|
19
|
%
|
|
|
|
17
|
%
|
|
16
|
%
|
|
|
|
15
|
%
|
||||||
|
14
|
%
|
|
|
|
13
|
%
|
|
14
|
%
|
|
|
|
12
|
%
|
||||||
Unit backlog:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
|
|
|
|
|
|
602
|
|
|
(23
|
)%
|
|
777
|
|
|||||||
Southeast
(a)
|
|
|
|
|
|
|
1,679
|
|
|
7
|
%
|
|
1,563
|
|
|||||||
Florida
|
|
|
|
|
|
|
1,696
|
|
|
12
|
%
|
|
1,520
|
|
|||||||
Midwest
|
|
|
|
|
|
|
1,804
|
|
|
16
|
%
|
|
1,553
|
|
|||||||
Texas
|
|
|
|
|
|
|
1,804
|
|
|
(4
|
)%
|
|
1,883
|
|
|||||||
West
|
|
|
|
|
|
|
2,094
|
|
|
23
|
%
|
|
1,702
|
|
|||||||
|
|
|
|
|
|
|
9,679
|
|
|
8
|
%
|
|
8,998
|
|
|||||||
Backlog dollars:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Northeast
|
|
|
|
|
|
|
$
|
303,127
|
|
|
(15
|
)%
|
|
$
|
356,584
|
|
|||||
Southeast
(a)
|
|
|
|
|
|
|
690,357
|
|
|
35
|
%
|
|
513,034
|
|
|||||||
Florida
|
|
|
|
|
|
|
659,161
|
|
|
18
|
%
|
|
557,185
|
|
|||||||
Midwest
|
|
|
|
|
|
|
650,735
|
|
|
20
|
%
|
|
542,244
|
|
|||||||
Texas
|
|
|
|
|
|
|
501,816
|
|
|
2
|
%
|
|
490,571
|
|
|||||||
West
|
|
|
|
|
|
|
944,103
|
|
|
50
|
%
|
|
628,244
|
|
|||||||
|
|
|
|
|
|
|
$
|
3,749,299
|
|
|
21
|
%
|
|
$
|
3,087,862
|
|
(a)
|
Southeast includes the acquisition of substantially all of the assets of Wieland in January 2016 (see
Note 1
).
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||||||||
|
2016
|
|
2016 vs. 2015
|
|
2015
|
|
2016
|
|
2016 vs. 2015
|
|
2015
|
||||||||||
Mortgage operations revenues
|
$
|
33,526
|
|
|
38
|
%
|
|
$
|
24,279
|
|
|
$
|
61,842
|
|
|
33
|
%
|
|
$
|
46,392
|
|
Title services revenues
|
9,556
|
|
|
48
|
%
|
|
6,475
|
|
|
17,088
|
|
|
43
|
%
|
|
11,960
|
|
||||
Total Financial Services revenues
|
43,082
|
|
|
40
|
%
|
|
30,754
|
|
|
78,930
|
|
|
35
|
%
|
|
58,352
|
|
||||
Expenses
|
26,180
|
|
|
26
|
%
|
|
20,767
|
|
|
52,298
|
|
|
21
|
%
|
|
43,308
|
|
||||
Other expense (income), net
|
(132
|
)
|
|
100
|
%
|
|
—
|
|
|
(183
|
)
|
|
100
|
%
|
|
—
|
|
||||
Income before income taxes
|
$
|
17,034
|
|
|
71
|
%
|
|
$
|
9,987
|
|
|
$
|
26,814
|
|
|
78
|
%
|
|
$
|
15,044
|
|
Total originations
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans
|
3,158
|
|
|
26
|
%
|
|
2,507
|
|
|
5,706
|
|
|
23
|
%
|
|
4,623
|
|
||||
Principal
|
$
|
868,671
|
|
|
37
|
%
|
|
$
|
635,153
|
|
|
$
|
1,535,317
|
|
|
34
|
%
|
|
$
|
1,149,941
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Supplemental data:
|
|
|
|
||||
Capture rate
|
80.8
|
%
|
|
82.5
|
%
|
||
Average FICO score
|
750
|
|
|
750
|
|
||
Loan application backlog
|
$
|
1,986,093
|
|
|
$
|
1,732,702
|
|
Funded origination breakdown:
|
|
|
|
||||
FHA
|
10
|
%
|
|
11
|
%
|
||
VA
|
12
|
%
|
|
13
|
%
|
||
USDA
|
1
|
%
|
|
1
|
%
|
||
Other agency
|
70
|
%
|
|
70
|
%
|
||
Total agency
|
93
|
%
|
|
95
|
%
|
||
Non-agency
|
7
|
%
|
|
5
|
%
|
||
Total funded originations
|
100
|
%
|
|
100
|
%
|
|
As of June 30, 2016 for the
Years ending December 31, |
||||||||||||||||||||||||||||||
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
|
Fair
Value |
||||||||||||||||
Rate-sensitive liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed rate debt
|
$
|
1,767
|
|
|
$
|
130,660
|
|
|
$
|
—
|
|
|
$
|
3,900
|
|
|
$
|
3,900
|
|
|
$
|
2,000,000
|
|
|
$
|
2,140,227
|
|
|
$
|
2,221,857
|
|
Average interest rate
|
—
|
%
|
|
7.33
|
%
|
|
—
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.92
|
%
|
|
6.00
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Variable rate debt (a)
|
$
|
189,557
|
|
|
$
|
500,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
689,557
|
|
|
$
|
689,557
|
|
Average interest rate
|
2.81
|
%
|
|
1.51
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.87
|
%
|
|
|
|
Total number
of shares
purchased (1)
|
|
Average
price paid
per share (1)
|
|
Total number of
shares purchased
as part of publicly
announced plans
or programs
|
|
Approximate dollar
value of shares
that may yet be
purchased under
the plans or
programs
($000’s omitted)
|
|||||||
April 1, 2016 to April 30, 2016
|
770,567
|
|
|
$
|
18.29
|
|
|
768,783
|
|
|
$
|
540,703
|
|
(2)
|
May 1, 2016 to May 31, 2016
|
916,023
|
|
|
$
|
18.32
|
|
|
895,638
|
|
|
$
|
524,297
|
|
(2)
|
June 1, 2016 to June 30, 2016
|
907,443
|
|
|
$
|
18.94
|
|
|
907,443
|
|
|
$
|
507,109
|
|
(2)
|
Total
|
2,594,033
|
|
|
$
|
18.53
|
|
|
2,571,864
|
|
|
|
|
(1)
|
During the
second
quarter of
2016
, a total of
22,169
shares were surrendered by employees for payment of minimum tax obligations upon the vesting or exercise of previously granted share-based compensation awards. Such shares were not repurchased as part of our publicly-announced share repurchase programs.
|
(2)
|
The Board of Directors approved share repurchase authorizations totaling $750.0 million and $300.0 million in October 2014 and December 2015, respectively. During the
six months ended
June 30, 2016
, we repurchased
5.6 million
shares for a total of
$97.7 million
. The share repurchase authorization has
$507.1 million
remaining as of
June 30, 2016
. There is no expiration date for this program.
|
3
|
|
(a)
|
|
Restated Articles of Incorporation, of PulteGroup, Inc. (Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K, filed with the SEC on August 18, 2009)
|
|
|
|
|
|
|
|
(b)
|
|
Certificate of Amendment to the Articles of Incorporation, dated March 18, 2010 (Incorporated by reference to Exhibit 3(b) of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010)
|
|
|
|
|
|
|
|
(c)
|
|
Certificate of Amendment to the Articles of Incorporation, dated May 21, 2010 (Incorporated by reference to Exhibit 3(c) of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010)
|
|
|
|
|
|
|
|
(d)
|
|
By-laws, as amended, of PulteGroup, Inc. (Incorporated by reference to Exhibit 3.2 of our Current Report on Form 8-K, filed with the SEC on May 6, 2016)
|
|
|
|
|
|
|
|
(e)
|
|
Certificate of Designation of Series A Junior Participating Preferred Shares, dated August 6, 2009 (Incorporated by reference to Exhibit 3(b) of our Registration Statement on Form 8-A, filed with the SEC on August 18, 2009)
|
|
|
|
|
|
4
|
|
(a)
|
|
Any instrument with respect to long-term debt, where the securities authorized thereunder do not exceed 10% of the total assets of PulteGroup, Inc. and its subsidiaries, has not been filed. The Company agrees to furnish a copy of such instruments to the SEC upon request.
|
|
|
|
|
|
|
|
(b)
|
|
Amended and Restated Section 382 Rights Agreement, dated as of March 18, 2010, between PulteGroup, Inc. and Computershare Trust Company, N.A., as rights agent, which includes the Form of Rights Certificate as Exhibit B thereto (Incorporated by reference to Exhibit 4 of PulteGroup, Inc.’s Registration Statement on Form 8-A/A, filed with the SEC on March 23, 2010)
|
|
|
|
|
|
|
|
(c)
|
|
First Amendment, dated as of March 14, 2013, to the Amended and Restated Section 382 Rights Agreement, dated as of March 18, 2010, between the Company and Computershare Trust Company, N.A., as rights agent (Incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K, filed with the SEC on March 15, 2013)
|
|
|
|
|
|
|
|
(d)
|
|
Second Amendment to Amended and Restated Section 382 Rights Agreement, dated as of March 10, 2016, between PulteGroup, Inc. and Computershare Trust Company, N.A., as rights agent (Incorporated by reference to Exhibit 4.1 of PulteGroup, Inc.’s Current Report on Form 8-K, filed with the SEC on March 10, 2016)
|
|
|
|
|
|
10
|
|
(a)
|
|
Second Amendment to Amended and Restated Master Repurchase Agreement dated June 24, 2016 (Incorporated by reference to Exhibit 10.1 of PulteGroup, Inc.'s Current Report on Form 8-K, filed with the SEC on June 29, 2016)
|
|
|
|
|
|
|
|
(b)
|
|
Amended and Restated Credit Agreement dated as of June 30, 2016 among PulteGroup, Inc., as Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and the other Lenders party thereto (Incorporated by reference to Exhibit 10.1 of PulteGroup, Inc.'s Current Report on Form 8-K, filed with the SEC on July 1, 2016)
|
|
|
|
|
|
|
|
(c)
|
|
First Amendment to the Term Loan Agreement dated as of June 30, 2016 among PulteGroup, Inc., as Borrower, Bank of America, N.A., as Administrative Agent, and the other Lenders party thereto (Incorporated by reference to Exhibit 10.2 of PulteGroup, Inc.'s Current Report on Form 8-K, filed with the SEC on July 1, 2016)
|
|
|
|
|
|
|
|
(d)
|
|
Letter Agreement, dated July 20, 2016, by and between Elliott Associates, L.P., Elliott International, L.P. and PulteGroup, Inc.
|
|
|
|
|
|
31
|
|
(a)
|
|
Rule 13a-14(a) Certification by Richard J. Dugas, Jr., Chairman and Chief Executive Officer (Filed herewith)
|
|
|
|
|
|
|
|
(b)
|
|
Rule 13a-14(a) Certification by Robert T. O'Shaughnessy, Executive Vice President and Chief Financial Officer (Filed herewith)
|
|
|
|
|
|
32
|
|
|
|
Certification Pursuant to 18 United States Code § 1350 and Rule 13a-14(b) of the Securities Exchange Act of 1934 (Filed herewith)
|
|
|
|
|
|
101.INS
|
|
|
|
XBRL Instance Document
|
|
|
|
|
|
101.SCH
|
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
101.CAL
|
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
101.DEF
|
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
101.LAB
|
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
101.PRE
|
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
PULTEGROUP, INC.
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Robert T. O'Shaughnessy
|
|
|
Robert T. O'Shaughnessy
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer and duly authorized officer)
|
|
|
Date:
|
July 21, 2016
|
|
1.
|
Director Appointments
. Effective as of the date hereof, the size of the Board of Directors of the Company (the “
Board
”) shall increase to thirteen (13) directors and each of John Peshkin (“
Mr. Peshkin
”), Josh Gotbaum (“
Mr. Gotbaum
” or the “
Selected Nominee
”) and Scott Powers (such individual, the “
Additional Nominee
” and, together with Mr. Peshkin and Mr. Gotbaum, the “
Nominees
”, and each referred to herein as a “
Nominee
”) shall be appointed to fill the three (3) director vacancies so created, with each Nominee serving as a director until the next election of directors and until his successor is duly elected and qualified or until his earlier resignation or removal, subject to the terms of this Agreement. Subject to Paragraph 5, unless the Board determines in good faith that doing so would violate the Board’s fiduciary duties under applicable law (it being acknowledged that to the extent the Board makes such a determination regarding the Selected Nominee, the Company shall promptly inform the Elliott Parties of such determination, and the Elliott Parties shall be entitled to select a replacement candidate for the Selected Nominee in accordance with Paragraph 2), and subject to the Company having received a certification from the Elliott Parties that at such time the Elliott Parties beneficially own 3.0% or more of the Company common shares, (a) the Company shall include the Selected Nominee and the Additional Nominee on its slate of nominees for the election of directors at its 2017 Annual Meeting of Shareholders in the proxy statement for such Meeting of Shareholders and (b) with respect to the 2017 Annual Meeting of Shareholders, (i) the Board shall recommend (and shall not change such recommendation in a manner adverse to the Selected Nominee or the Additional Nominee) that the Company’s shareholders vote in favor of the Board’s entire slate (including the Selected Nominee and the Additional Nominee) and (ii) the Company shall solicit proxies for the Board’s entire slate (including the Selected Nominee and the Additional Nominee) and otherwise support the Selected Nominee and the Additional Nominee for election in a manner no less rigorous and favorable than the manner in which the Company supports its other director nominees. The Board shall not increase the size of the Board to more than thirteen (13) directors at any
|
2.
|
Replacement of Selected Nominee
. In the event that the Selected Nominee (or his replacement appointed pursuant to this Paragraph 2) is unable or unwilling to serve as a director of the Company (other than on account of failure to be elected or reelected) prior to the Expiration Date, subject to the last sentence of this Paragraph 2 and subject to the Company having received a certification from the Elliott Parties that at the time of such selection the Elliott Parties beneficially own 3.0% or more of the Company common shares, the Company agrees that Elliott may select a replacement candidate (a) who qualifies as “independent” under the applicable rules and regulations of the Securities and Exchange Commission (the “
SEC
”) and the New York Stock Exchange (the “
NYSE
”) and the applicable terms of the Company’s Corporate Governance Guidelines, and whose service as a director of the Company complies with applicable requirements of the Clayton Antitrust Act of 1914, as amended, and other applicable competition laws and regulations, and (b) who is reasonably acceptable to the Nominating and Governance Committee of the Board as a replacement candidate. Any such replacement candidate (i) shall not be a principal, director, general partner, managing member, manager, officer, employee, agent or representative of any Elliott Party or any Affiliate of any Elliott Party, (ii) shall not be an investor in any Elliot Party or any Affiliate of any Elliott Party and (iii) shall not serve, and shall not have served, on the board of directors or comparable governing body of any other company at the direction or pursuant to the designation of any Elliott Party or any Affiliate of any Elliott Party. Subject to Paragraph 5 and such replacement candidate’s completion of customary director onboarding documentation and the last sentence of this Paragraph 2, the Company shall appoint any such replacement candidate who meets the foregoing criteria to the Board to replace Mr. Gotbaum, with such replacement candidate to serve as a director and as a member of those Board committees on which Mr. Gotbaum served, in each case, during the unexpired term, if any, of Mr. Gotbaum and such replacement candidate shall be considered the Selected Nominee for all purposes of this Agreement. Elliott’s right to select a qualified replacement candidate, and the Company’s obligation to appoint such candidate to the Board, shall terminate prior to the Expiration Date at such time as the Elliott Parties’ aggregate beneficial ownership decreases to less than 3.0% of the Company common shares as a result of dispositions by the Elliott Parties.
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3.
|
Nominee and Director Agreements, Arrangements and Understandings
. Each of the Elliott Parties agrees that neither such Elliott Party nor any of its Affiliates (a) will pay any compensation to any Nominee (including replacement candidates of the Selected Nominee contemplated by Paragraph 2) in connection with such Person’s service on the Board or any committee thereof or (b) will have any agreement, arrangement or understanding, written or oral, with any Nominee (including replacement candidates of the Selected Nominee contemplated by Paragraph 2) regarding such Person’s service on the Board or
|
4.
|
Committees
. The Board shall, promptly upon execution of this Agreement, appoint (a) the Selected Nominee (including any replacement contemplated by Paragraph 2) to serve on the Board’s Finance Committee, CEO Search Committee and the Audit Committee; and (b) Mr. Peshkin to serve on the Board’s CEO Search Committee and such other committees of the Board as the Board shall determine. Notwithstanding anything herein to the contrary, the Board shall not (i) increase the size of the Board’s CEO Search Committee to more than five (5) directors at any time prior to the Expiration Date without the prior written consent of the Elliott Parties; or (ii) increase the size of the Board’s Finance Committee to more than seven (7) directors at any time prior to the Expiration Date without the prior written consent of the Elliott Parties. The Company’s and Board’s obligation to take (or refrain from taking) the actions specified in this Paragraph 4 shall terminate prior to the Expiration Date at such time as the Elliott Parties’ aggregate beneficial ownership decreases to less than 3.0% of the Company common shares as a result of dispositions by the Elliott Parties.
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5.
|
Nominee Information
. As a condition to the Company’s obligation to nominate the Selected Nominee (including any replacement candidate contemplated by Paragraph 2) for election at the 2017 Annual Meeting of Shareholders, the Selected Nominee shall have provided any and all information required to be disclosed in a proxy statement or other filing under applicable law or that is otherwise consistent with the information that is required to be disclosed by all other Persons standing for election as a director of the Board, stock exchange rules or listing standards, along with any additional information reasonably requested by the Company in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal obligations, and to consent to appropriate background checks.
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6.
|
Company Policies
. The Parties acknowledge that each of the Nominees, upon appointment or election to the Board, will be subject to the same protections and obligations regarding confidentiality, conflicts of interest, fiduciary duties, trading and disclosure and other governance guidelines and policies (collectively, “
Company Policies
”), and shall, subject to Paragraph 11 below, be required to preserve the confidentiality of the Company’s business and information, including discussions or matters considered in or for meetings of the Board or committees of the Board or related thereto, and shall have the same rights and benefits, including with respect to insurance, indemnification, exculpation, compensation and fees, as are applicable to the independent directors of the Company. The Company agrees that: (i) as of the date hereof, all Company Policies currently in effect are publicly available on the Company’s website or described in its proxy statement filed with the SEC on April 4, 2016 or have otherwise been provided to the Elliott Parties, and such Company Policies will not be amended prior to the appointment of the Nominees and (ii) during the Restricted Period, any changes to the Company Policies, or new Company Policies, will be adopted in good faith and not for the purpose of undermining or conflicting with the arrangements contemplated hereby.
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7.
|
Buyback
. Promptly following the execution of this Agreement, the Company will authorize (to the extent not previously authorized), and in good faith, subject to market conditions, applicable legal requirements and other relevant factors, take all reasonably
|
8.
|
SG&A Reduction Program
. Promptly following the execution of this Agreement, the Company will authorize, and in good faith, subject to market conditions, applicable legal requirements and other relevant factors, take all reasonably necessary actions designed to implement, a selling, general and administrative expense (“
SG&A
”) reduction program targeting SG&A spend of 9% or better of home sale revenues in 2017 as described in the Press Release.
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9.
|
Voting of Elliott Shares
. With respect to each of the Company’s annual and special meetings of shareholders (and any adjournments or postponements thereof) held during the Restricted Period and any actions by written consent taken or proposed to be taken by the shareholders of the Company during the Restricted Period, the Elliott Parties shall (a) in the case of any such meeting, cause to be present for quorum purposes all the Company common shares beneficially owned by them or their controlling or controlled Affiliates and which they or such controlling or controlled Affiliates are entitled to vote at such annual or special meeting of shareholders and (b) vote or cause to be voted (or in the case of any proposed action by written consent, provide a written consent for) all such Company common shares (i) in favor of the election of the Selected Nominee as the director nominee nominated by the Board; (ii) against (or withhold votes in favor of) the election of any director nominees that are not nominated by the Board; and (iii) in accordance with the Board’s recommendation on all other proposals and business that comes before such annual or special meeting of shareholders (or is proposed as an action by written consent), other than with respect to (A) an Extraordinary Transaction, (B) any proposed issuance of Company common shares or any securities convertible into, or exercisable or exchangeable for, Company common shares, (C) approval of any compensatory plan or arrangement relating to the compensation of Company employees or the members of the Board that is submitted for shareholder approval (but, for the avoidance of doubt, excluding the Company’s “say on pay” proposal, with respect to which the Elliott Parties shall vote or cause to be voted all such Company common shares in accordance with the Board’s recommendation) or (D) any proposal by the Company to implement any takeover defense measures or any other proposal by the Company that would diminish or otherwise impair in any material respect the rights of Company shareholders.
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10.
|
Standstill
. From the date of this Agreement until the Expiration Date or until such earlier time as the restrictions in this Paragraph 10 terminate as provided herein (such period, the “
Restricted Period
”), the Elliott Parties shall not, and shall cause their respective Affiliates and their respective principals, directors, general partners, managing members, managers, officers, employees, agents and representatives acting on their behalf (collectively, the “
Restricted Persons
”) not to, directly or indirectly, absent prior express written invitation or authorization by the Board:
|
(a)
|
engage in any “solicitation” (as such term is defined pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), and used in the rules and regulations of the SEC, but without regard to the exclusions set forth in Rules 14a-l(l)(2)(iv) and 14a-2 under the Exchange Act) of proxies or consents with respect to the election or removal of directors of the Company or any other matter or proposal involving the Company or become a “participant” (as such term is defined pursuant to the Exchange Act and used in the rules and regulations of the SEC) in any such solicitation of proxies or consents;
|
(b)
|
knowingly encourage or advise any Person or knowingly assist any other Person in so encouraging or advising any Person with respect to the giving or withholding of any proxy, consent or other authority to vote Company common shares or in conducting any type of referendum or the voting of Company common shares (other than such encouragement or advice that is consistent with the Board’s recommendation in connection with such matter);
|
(c)
|
form, join or participate in any way in any “group” with respect to any Company common shares or the beneficial ownership thereof, other than solely with other Elliott Parties or their Affiliates with respect to the Company common shares now or hereafter beneficially owned by them;
|
(d)
|
acquire, or offer, seek or agree to acquire, by purchase or otherwise, or direct any Third Party in the potential acquisition of, by purchase, agreement, Extraordinary Transaction or otherwise, any Company common shares or beneficial ownership thereof or assets of the Company or any direct or indirect subsidiary thereof, or rights or options to acquire any Company common shares or beneficial ownership thereof or assets of the Company or any direct or indirect subsidiary thereof or engage in any swap or hedging transactions or other derivative agreements of any nature with respect to Company common shares, in each case if such acquisition or transaction or agreement (i) would result in Basic Beneficial Ownership in excess of 4.8% of the total number of outstanding Company common shares or (ii) would result in beneficial ownership in excess of 9.9% of the total number of outstanding Company common shares (it being acknowledged and agreed that the Elliott Parties shall not make any such acquisition or engage in any transaction or enter into any agreement that would result in either of the Elliott Parties becoming an “Acquiring Person” under, and as defined in, the Amended and Restated Section 382 Rights Agreement, dated as of March 18, 2010, between the Company and the Rights Agent thereunder, as amended by that certain First Amendment to Amended and Restated Section 382 Rights Agreement, dated March 14, 2013 and that certain Second Amendment to Amended and Restated 382 Rights Agreement, dated as of March 10, 2016);
|
(e)
|
sell, or offer, seek or agree to sell, all or substantially all, directly or indirectly, through swap or hedging transactions or otherwise, voting rights decoupled from the underlying Company common shares held by the Elliott Parties;
|
(f)
|
initiate, make or in any way participate, directly or indirectly, in any Extraordinary Transaction (it being understood that the foregoing shall not restrict the Elliott Parties from tendering shares, receiving payment for shares or otherwise participating in any such transaction on the same basis as other shareholders of the Company or from participating in any such transaction that has been approved by the Board, subject to the other terms of this Agreement) or make, directly or indirectly, any proposal, either alone or in concert with others, to the Company or the Board that would reasonably be expected to require a public announcement or disclosure regarding any such matter;
|
(g)
|
enter into a voting trust, arrangement or agreement or subject any Company common shares or beneficial ownership thereof to any voting trust, arrangement or agreement, in each case other than solely with other Elliott Parties or their Affiliates;
|
(h)
|
(i) propose or seek, alone or in concert with others, election or appointment to, or representation on, the Board or nominate or propose the nomination of, or recommend the nomination of, any candidate to the Board, except as specifically
|
(i)
|
(A) initiate, make or be the proponent of any proposal (pursuant to Rule 14a-8 under the Exchange Act or otherwise) for consideration by the Company’s shareholders or (B) conduct any referendum for consideration by the Company’s shareholders;
|
(j)
|
initiate or seek the convening of (or assist any other Person in the convening of) any meeting of the Company’s shareholders;
|
(k)
|
make any request for stock ledger or shareholder list materials or other books and records of the Company under any statutory or regulatory provisions providing for shareholder access to materials, books and records of the Company;
|
(l)
|
(i) make any public or private proposal with respect to or (ii) in a manner adverse to the Company, make any public statement or otherwise seek to encourage or advise or assist any Person in so encouraging or advising with respect to: (A) any change in the identity, number or term of directors serving on the Board or the filling of any vacancies on the Board, (B) any change in the capitalization or dividend policy of the Company, (C) any other change in the Company’s management, governance, corporate structure, affairs or policies, (D) any Extraordinary Transaction, (E) causing a class of securities of the Company to be delisted from, or to cease to be authorized to be quoted on, any securities exchange or (F) causing a class of equity securities of the Company to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act;
|
(m)
|
institute, solicit, assist or join any litigation, arbitration or other proceeding against or involving the Company or any of its direct or indirect subsidiaries or any of their respective current or former directors or officers (including derivative actions) in order to effect, cause or take any of the actions expressly prohibited by this Paragraph 10;
provided
,
however
, that for the avoidance of doubt the foregoing shall not prevent any Restricted Person from (i) bringing litigation to enforce the provisions of this Agreement, (ii) making counterclaims with respect to any proceeding initiated by, or on behalf of, the Company against a Restricted Person, (iii) bringing bona fide commercial disputes that do not relate to the subject matter of this Agreement or the topics covered in the correspondence between the Company and the Restricted Persons prior to the date hereof or (iv) exercising statutory appraisal rights;
provided
,
further
, that the foregoing shall also not prevent the Restricted Persons from responding to or complying with a validly issued legal process;
|
(n)
|
make any request or submit any proposal to amend, waive or grant consent with respect to the terms of this Agreement, or refer to any desire or intention to do so; or
|
(o)
|
enter into any discussions, negotiations, agreements or understandings with any Third Party or assist, advise, act in concert with or participate with or encourage any Third Party, to take any action that the Elliott Parties are prohibited from taking pursuant to this Paragraph 10;
|
11.
|
Private Communications; Confidentiality
. Notwithstanding anything to the contrary contained in Paragraph 10, during the Restricted Period, the Elliott Parties and their respective Affiliates may communicate privately with (a) any Third Party so long as such communications do not violate the terms of this Agreement and (b) the Company’s (i) directors, (ii) chief executive officer, chief financial officer, chief legal officer and head of investor relations and (iii) advisors at Evercore Partners and Sidley Austin LLP (collectively, the “
Contact Personnel
”), but in each case only so long as such private communications do not require any public disclosure thereof. The Elliott Parties hereby agree that (i) any confidential or proprietary information of the Company that they or their Affiliates obtain in discussions with the Contact Personnel shall be kept confidential, shall be used solely for the purpose of monitoring and evaluating their investments in the Company and shall not be used to make Disparaging Statements and (ii) they and their Affiliates shall not, and shall cause their respective principals, directors, general partners, managing members, managers, officers and employees not to, make any request of any director of the Company to engage in, or consider engaging in, conduct that is inconsistent with the policies, duties and requirements contemplated by Paragraph 6 (but without being
|
12.
|
Non-Disparagement
. During the Restricted Period, each of the Company and the Elliott Parties shall not make or cause to be made, and shall cause their respective Affiliates and its and their respective principals, directors, general partners, members, managers, officers and employees not to make or cause to be made, any expression, statement or announcement (including in any document or report filed with or furnished to the SEC or any stock exchange or through the press, media, analysts, investors or other Persons), either in writing or orally, that constitutes an ad hominem attack on, or otherwise disparages, defames, slanders, or impugns or is reasonably likely to damage the reputation of: (a) in the case of statements or announcements by any of the Elliott Parties: (i) the Company or any of its Affiliates, direct or indirect subsidiaries or advisors or any of its or their respective current or former shareholders, principals, directors, general partners, members, managers, officers, employees, agents or representatives; and (ii) the Company’s and its direct and indirect subsidiaries’ strategies, operations, products, performance or services; and (b) in the case of statements or announcements by the Company, the Elliott Parties, their respective Affiliates, directors, officers, principals, partners, members, managers, current or former shareholders, agents, representatives, and employees, or any Person who has served as an employee of the Elliott Parties (any such statement, a “
Disparaging Statement
”). The foregoing shall not restrict the ability of any Person to comply with any subpoena or other legal process or respond to a request for information from any governmental authority with jurisdiction over the party from whom information is sought.
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13.
|
Press Release
. Following the execution and delivery of this Agreement, the Company shall issue a press release in the form attached hereto as
Exhibit A
(the “
Press Release
”). No Party shall make any statement inconsistent with the Press Release in connection with the announcement of this Agreement;
provided
that the foregoing shall not prevent (a) the Company or the Elliott Parties from taking any action required by any governmental or regulatory authority or stock exchange that has jurisdiction over the Company or any of its direct or indirect subsidiaries or the Elliott Parties, respectively (except to the extent such requirement arose by discretionary acts by any of the Company or any of the Elliott Parties or any of their respective Affiliates, respectively), and (b) the Company or the Elliott Parties from making any factual statement that is required in any compelled testimony or production of information, either by legal process, by subpoena or as part of a response to a request for information from any governmental authority with jurisdiction over the Company or any of its direct or indirect subsidiaries or the Elliott Parties, respectively, by any applicable stock exchange rule or as otherwise legally required.
|
14.
|
SEC Disclosure
. Following the execution and delivery of this Agreement, the Company shall file a Current Report on Form 8-K or include such disclosure in Item 5 of the Company’s Form 10-Q for the quarterly period ended June 30, 2016 that will report its entry into this Agreement (the “
Filing
”). The relevant disclosure in the Filing shall be consistent with the Press Release and the terms of this Agreement, and shall each be in form and substance reasonably acceptable to the Company and the Elliott Parties.
|
15.
|
Representations and Warranties of the Company
. The Company represents and warrants to Elliott that: (a) the Company has the requisite corporate power and authority to execute this Agreement and any other documents or agreements to be entered into in connection with this Agreement and to bind it hereto and thereto; (b) this Agreement has been duly and
|
16.
|
Representations and Warranties of Elliott Parties
. Each of the Elliott Parties represents and warrants to the Company that: (a) each Elliott Party and the authorized signatory of such Elliott Party set forth on the signature page hereto has the requisite power and authority to execute this Agreement and any other documents or agreements to be entered into in connection with this Agreement and to bind it hereto and thereto; (b) this Agreement has been duly authorized, executed and delivered by such Elliott Party, constitutes a valid and binding obligation and agreement of such Elliott Party and is enforceable against such Elliott Party in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles; (c) the execution, delivery and performance of this Agreement by such Elliott Party does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to Elliott or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which such Elliott Party is a party or by which it is bound; (d) the Selected Nominee (i) is not a principal, director, general partner, managing member, manager, officer, employee, agent or representative of any Elliott Party or any Affiliate of any Elliott Party, (ii) is not an investor in any Elliott Party or any Affiliate of any Elliott Party and (iii) has not served on the board of directors or comparable governing body of any company at the direction or pursuant to the designation of any Elliott Party or any Affiliate of any Elliott Party; (e) neither such Elliott Party nor any of its Affiliates (i) has paid any compensation to any Nominee or other member of the Board in connection with such Person’s service on the Board or (ii) has had any agreement, arrangement or understanding, written or oral, with any Nominee or other member of the Board pursuant to which such Person has been or will be compensated for his or her service as a director on, or nominee for election to, the Board or any committee thereof; and (f) as of the date of this Agreement, (i) the Elliott Parties beneficially own in the aggregate 16,411,491 Company common shares, (ii) the Elliott Parties have no other equity interest in, or rights or securities to acquire through exercise, conversion or otherwise, any equity interest in the Company and (iii) except as disclosed in writing by the Elliott Parties to the Company immediately prior to the execution of this Agreement, is a party to any swap or hedging transactions or other derivative agreements of any nature with respect to any Company common shares.
|
17.
|
Certain Defined Terms
. As used in this Agreement: (a) “
Person
” shall be interpreted broadly to include, without limitation, any individual, general or limited partnership, corporation, limited liability or unlimited liability company, joint venture, estate, trust, group,
association
or other entity of any kind or structure; (b) “
Affiliate
” shall have the meaning set forth in Rule 12b-2 under the Exchange Act and shall include Persons who become Affiliates of any Person subsequent to the date of this Agreement; (c) “
beneficially own
,” “
beneficially owned
” and “
beneficial ownership
” shall each have the meaning set forth in Rules 13d-3 and 13d-5(b)(1) under the Exchange Act (the foregoing, "
Basic Beneficial Ownership
");
provided
that, with respect to Company common shares, a Person shall additionally be deemed to be the beneficial owner of (i) all Company common shares which such Person has the right to acquire (whether or not subject to the passage of time or other contingencies) pursuant to the exercise of any rights in connection with any securities or any agreement, arrangement or understanding, whether written or oral and (ii) any other economic exposure to the Company common shares, including through any swap or other derivative transaction that gives a Person the economic equivalent of ownership of Company common shares (including, without limitation, notional principal amount derivative agreements in the form of cash-settled swaps); (d) “
business day
” shall mean any day other than a Saturday, Sunday or a day on which the Federal Reserve Bank of New York is closed; (e) “
Expiration Date
” shall mean the one (1) year anniversary of the date of this Agreement; (f) “
Extraordinary Transaction
” shall mean any tender offer, exchange offer, merger, consolidation, acquisition, business combination, sale of a division, sale of substantially all assets, recapitalization, restructuring, liquidation, dissolution or other similar extraordinary transaction, in each case outside the ordinary course of business and involving the Company or any of its direct or indirect subsidiaries or its or their securities or assets; (g) “
group
” shall have the meaning set forth in Section 13(d) of the Exchange Act; and (h) “
Third Party
” means any Person other than a Party.
|
18.
|
Affiliates
. Each of the Elliott Parties agrees that it (a) shall cause its Affiliates to comply with the terms of this Agreement and (b) shall not cause or direct, or attempt to cause or direct, any Person, including any of its Affiliates and its and their respective principals, directors, general partners, managing members, managers, officers, employees, agents and representatives, to take any action that would be in breach or deemed breach of this Agreement if taken by such Elliott Party or any of its Affiliates. The Company agrees that it (a) shall cause its subsidiaries to comply with the terms of this Agreement and (b) shall not cause or direct, or attempt to cause or direct, any Person, including any of its Affiliates and its and their respective principals, directors, general partners, managing members, managers, officers, employees, agents and representatives, to take any action that would be in breach or deemed breach of this Agreement if taken by such the Company or any of its Affiliates.
|
19.
|
Specific Performance
. Each of Elliott, on the one hand, and the Company, on the other hand, acknowledges and agrees that irreparable injury to the other Party would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that such injury would not be adequately compensable by the remedies available at law (including the payment of money damages). It is accordingly agreed that Elliott, on the one hand, and the Company, on the other hand (as applicable, the “
Moving Party
”), shall each be entitled to specific enforcement of, and injunctive relief to prevent any violation of, the terms hereof, and the other Party shall not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in equity. This Paragraph 19 is not the exclusive remedy for any violation of this Agreement.
|
20.
|
Expenses
. Each Party shall be responsible for its own fees and expenses incurred in connection with the negotiation, execution, delivery and effectuation of this Agreement and the transactions contemplated hereby.
|
21.
|
Severability
. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the other provisions of this Agreement shall remain in full force and effect. The Parties further agree to use their best efforts to agree upon and replace such invalid, void or unenforceable provision with a valid and enforceable provision that will achieve, to the extent possible, the purposes of such invalid, void or unenforceable provision.
|
22.
|
Notices
. Any notices, consents, determinations, waivers or other communications required or permitted to be given under the terms of this Agreement shall be in writing and shall be deemed to have been delivered: (a) upon delivery, when delivered personally; (b) upon sending, when sent by facsimile or electronic mail (provided confirmation of transmission is mechanically or electronically generated and retained by the sending party); or (c) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the Party to receive the same as follows:
|
23.
|
Governing Law
. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, except with respect to matters related to the voting of Company common shares and corporate governance matters (including fiduciary determinations) for which Michigan law shall apply, in each case without reference to the conflict of laws principles thereof that would result in the application of the laws of another jurisdiction. Each of the Parties irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by any of the other Parties or its successors or assigns, shall be brought and determined exclusively in federal or state courts located in New York County, New York and any appellate court therefrom. Each of the Parties hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction and venue of the aforesaid courts and agrees that it will not bring any action relating to this Agreement in any court other than the aforesaid courts. Each of the Parties hereby irrevocably waives, and agrees not to assert in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the aforesaid courts for any reason, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by applicable legal requirements, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
|
24.
|
Counterparts; Headings
. This Agreement may be executed in two or more counterparts, each of which shall be considered one and the same agreement and shall become effective when counterparts have been executed by each of the Parties and delivered to the other Party (including by means of electronic delivery or facsimile). The paragraph headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.
|
25.
|
Entire Agreement; Amendment and Waiver; Cumulative Remedies; Successors and Assigns; Third Party Beneficiaries; Waiver of Jury Trial
. This Agreement is the only agreement and contains the entire understanding of the Parties with respect to its subject matter and supersedes any prior agreements (including any confidentiality agreements previously entered into by the Parties), understandings, negotiations and discussions,
|
26.
|
Interpretation
. Each of the Parties acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution and delivery of this Agreement and that it has executed this Agreement with the advice of such counsel. Each Party and its counsel cooperated and participated in the drafting and preparation of this Agreement, and any and all drafts relating thereto exchanged among the Parties shall be deemed the work product of all of the Parties and may not be construed against any Party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any Party that drafted or prepared it is of no application and is hereby expressly waived by each of the Parties, and any controversy over interpretations of this Agreement shall be decided without regard to events of drafting or preparation.
|
|
|
|
By:
|
Elliott Capital Advisors, L.P., as General Partner
|
By:
|
Braxton Associates, Inc., as General Partner
|
By:
|
Elliott International Capital Advisors Inc., as Attorney-in-Fact
|
|
|
|
Fiscal Period
|
Amount
|
3
rd
Quarter 2016
|
$250 million
|
4
th
Quarter 2016
|
$250 million
|
2017
|
$1.0 billion
|
FOR IMMEDIATE RELEASE
|
Company Contact
|
|
Investors: Jim Zeumer
|
|
(404) 978-6434
|
|
Email:
jim.zeumer@pultegroup.com
|
|
|
•
|
Reported Q2 Net Income of $0.34 Per Share Includes $0.03 Per Share of Land and Corporate Office Relocation Charges; Prior Year Net Income of $0.28 Per Share Included a Benefit of $0.05 Per Share Relating to a Legal Settlement
|
•
|
Home Sale Revenues Increased 41% to $1.8 Billion; Closings Increased 27% to 4,772 Homes
|
•
|
Value of Net New Orders Increased 21% to $2.1 Billion; Net New Orders Up 11% to 5,697 Homes
|
•
|
Backlog Value Increased 21% to $3.7 Billion; Unit Backlog Increased 8% to 9,679 Homes
|
•
|
Company Announces Next Phase of Value Creation with Plans to Drive Greater Overhead Leverage, Moderate the Growth of Future Land Investment and Increase Share Repurchase Activities Consistent with Stated Capital Allocation Priorities
|
•
|
Company Increases Share Repurchase Authorization by $1.0 Billion to $1.5 Billion and Intends to Repurchase $1.5 Billion of its Shares by End of 2017
|
•
|
Company Adds 3 New Independent Directors, Bringing Additional Industry and Financial Expertise to its Board
|
•
|
We plan to slow the rate of growth in our land spend going forward, and use expected strong cash flows from operations to help fund the repurchase of $1.5 billion of our shares over the next six quarters;
|
•
|
We are taking actions to lower our SG&A spend from an expected 10% of home sale revenues in 2016 to a targeted rate of 9% or less of 2017 home sale revenues;
|
•
|
Our Board of Directors has approved a $1.0 billion increase in the Company’s share repurchase authorization raising our total authorization to $1.5 billion. The Company plans to repurchase $250 million of its shares in each of the third and fourth quarters of 2016 and $1.0 billion of its shares in 2017;
|
•
|
And, as announced in a separate release, we have added three new directors: John Peshkin, who has over 30 years of direct homebuilding experience including having served as CEO of Taylor Woodrow Homes and on the Boards of Standard Pacific Homes and WCI Communities; Joshua Gotbaum, who has served in a number of senior private and public sector roles; and Scott Powers, who has over 30 years of experience in financial asset management and most recently served as president and CEO of State Street Global Advisors.”
|
PulteGroup, Inc.
Consolidated Results of Operations
($000's omitted, except per share data)
(Unaudited)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Homebuilding
|
|
|
|
|
|
|
|
||||||||
Home sale revenues
|
$
|
1,751,882
|
|
|
$
|
1,243,077
|
|
|
$
|
3,146,125
|
|
|
$
|
2,331,235
|
|
Land sale revenues
|
4,950
|
|
|
6,460
|
|
|
7,437
|
|
|
24,002
|
|
||||
|
1,756,832
|
|
|
1,249,537
|
|
|
3,153,562
|
|
|
2,355,237
|
|
||||
Financial Services
|
43,082
|
|
|
30,754
|
|
|
78,930
|
|
|
58,352
|
|
||||
Total revenues
|
1,799,914
|
|
|
1,280,291
|
|
|
3,232,492
|
|
|
2,413,589
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Homebuilding Cost of Revenues:
|
|
|
|
|
|
|
|
||||||||
Home sale cost of revenues
|
1,374,509
|
|
|
953,280
|
|
|
2,463,838
|
|
|
1,794,425
|
|
||||
Land sale cost of revenues
|
4,403
|
|
|
5,312
|
|
|
6,430
|
|
|
18,691
|
|
||||
|
1,378,912
|
|
|
958,592
|
|
|
2,470,268
|
|
|
1,813,116
|
|
||||
Financial Services expenses
|
26,180
|
|
|
20,767
|
|
|
52,298
|
|
|
43,308
|
|
||||
Selling, general, and administrative expenses
|
192,333
|
|
|
130,119
|
|
|
383,348
|
|
|
291,431
|
|
||||
Other expense (income), net
|
12,909
|
|
|
3,186
|
|
|
18,785
|
|
|
2,303
|
|
||||
Income before income taxes
|
189,580
|
|
|
167,627
|
|
|
307,793
|
|
|
263,431
|
|
||||
Income tax expense
|
71,820
|
|
|
64,303
|
|
|
106,733
|
|
|
105,136
|
|
||||
Net income
|
$
|
117,760
|
|
|
$
|
103,324
|
|
|
$
|
201,060
|
|
|
$
|
158,295
|
|
|
|
|
|
|
|
|
|
||||||||
Per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.58
|
|
|
$
|
0.43
|
|
Diluted earnings
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.57
|
|
|
$
|
0.43
|
|
Cash dividends declared
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
||||||||
Number of shares used in calculation:
|
|
|
|
|
|
|
|
||||||||
Basic
|
345,240
|
|
|
361,009
|
|
|
346,528
|
|
|
363,863
|
|
||||
Effect of dilutive securities
|
2,759
|
|
|
3,232
|
|
|
2,710
|
|
|
3,297
|
|
||||
Diluted
|
347,999
|
|
|
364,241
|
|
|
349,238
|
|
|
367,160
|
|
PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
|
|||||||
|
June 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
||||
ASSETS
|
|
|
|
||||
|
|
|
|
||||
Cash and equivalents
|
$
|
229,187
|
|
|
$
|
754,161
|
|
Restricted cash
|
26,484
|
|
|
21,274
|
|
||
House and land inventory
|
6,629,464
|
|
|
5,450,058
|
|
||
Land held for sale
|
85,781
|
|
|
81,492
|
|
||
Residential mortgage loans available-for-sale
|
364,004
|
|
|
442,715
|
|
||
Investments in unconsolidated entities
|
52,500
|
|
|
41,267
|
|
||
Other assets
|
681,168
|
|
|
660,835
|
|
||
Intangible assets
|
161,372
|
|
|
110,215
|
|
||
Deferred tax assets, net
|
1,277,096
|
|
|
1,394,879
|
|
||
|
$
|
9,507,056
|
|
|
$
|
8,956,896
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
340,847
|
|
|
$
|
327,725
|
|
Customer deposits
|
252,259
|
|
|
186,141
|
|
||
Accrued and other liabilities
|
1,269,263
|
|
|
1,284,273
|
|
||
Income tax liabilities
|
33,980
|
|
|
57,050
|
|
||
Financial Services debt
|
189,557
|
|
|
267,877
|
|
||
Term loan
|
499,212
|
|
|
498,423
|
|
||
Senior notes
|
2,103,821
|
|
|
1,576,082
|
|
||
|
4,688,939
|
|
|
4,197,571
|
|
||
Shareholders' equity
|
4,818,117
|
|
|
4,759,325
|
|
||
|
$
|
9,507,056
|
|
|
$
|
8,956,896
|
|
PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
|
|||||||
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
201,060
|
|
|
$
|
158,295
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Deferred income tax expense
|
117,783
|
|
|
103,059
|
|
||
Depreciation and amortization
|
26,705
|
|
|
21,853
|
|
||
Share-based compensation expense
|
16,906
|
|
|
14,654
|
|
||
Other, net
|
9,790
|
|
|
9,319
|
|
||
Increase (decrease) in cash due to:
|
|
|
|
||||
Restricted cash
|
(5,210
|
)
|
|
(4,526
|
)
|
||
Inventories
|
(810,417
|
)
|
|
(485,676
|
)
|
||
Residential mortgage loans available-for-sale
|
78,460
|
|
|
70,123
|
|
||
Other assets
|
(15,506
|
)
|
|
(57,054
|
)
|
||
Accounts payable, accrued and other liabilities
|
55,113
|
|
|
(21,150
|
)
|
||
Net cash provided by (used in) operating activities
|
(325,316
|
)
|
|
(191,103
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(21,044
|
)
|
|
(23,115
|
)
|
||
Cash used for business acquisition
|
(430,025
|
)
|
|
—
|
|
||
Other investing activities, net
|
(8,296
|
)
|
|
14,650
|
|
||
Net cash used in investing activities
|
(459,365
|
)
|
|
(8,465
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from debt issuance
|
986,084
|
|
|
—
|
|
||
Repayments of debt
|
(484,974
|
)
|
|
(237,994
|
)
|
||
Borrowings under revolving credit facility
|
358,000
|
|
|
—
|
|
||
Repayments under revolving credit facility
|
(358,000
|
)
|
|
—
|
|
||
Financial Services borrowings (repayments)
|
(78,320
|
)
|
|
(20,970
|
)
|
||
Stock option exercises
|
742
|
|
|
7,222
|
|
||
Share repurchases
|
(100,806
|
)
|
|
(322,066
|
)
|
||
Dividends paid
|
(63,019
|
)
|
|
(59,125
|
)
|
||
Net cash provided by (used in) financing activities
|
259,707
|
|
|
(632,933
|
)
|
||
Net increase (decrease) in cash and equivalents
|
(524,974
|
)
|
|
(832,501
|
)
|
||
Cash and equivalents at beginning of period
|
754,161
|
|
|
1,292,862
|
|
||
Cash and equivalents at end of period
|
$
|
229,187
|
|
|
$
|
460,361
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
||||
Interest paid (capitalized), net
|
$
|
(14,671
|
)
|
|
$
|
(1,911
|
)
|
Income taxes paid (refunded), net
|
$
|
(5,457
|
)
|
|
$
|
(1,685
|
)
|
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
HOMEBUILDING:
|
|
|
|
|
|
|
|
||||||||
Home sale revenues
|
$
|
1,751,882
|
|
|
$
|
1,243,077
|
|
|
$
|
3,146,125
|
|
|
$
|
2,331,235
|
|
Land sale revenues
|
4,950
|
|
|
6,460
|
|
|
7,437
|
|
|
24,002
|
|
||||
Total Homebuilding revenues
|
1,756,832
|
|
|
1,249,537
|
|
|
3,153,562
|
|
|
2,355,237
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Home sale cost of revenues
|
1,374,509
|
|
|
953,280
|
|
|
2,463,838
|
|
|
1,794,425
|
|
||||
Land sale cost of revenues
|
4,403
|
|
|
5,312
|
|
|
6,430
|
|
|
18,691
|
|
||||
Selling, general, and administrative expenses
|
192,333
|
|
|
130,119
|
|
|
383,348
|
|
|
291,431
|
|
||||
Other expense (income), net
|
13,041
|
|
|
3,186
|
|
|
18,967
|
|
|
2,303
|
|
||||
Income before income taxes
|
$
|
172,546
|
|
|
$
|
157,640
|
|
|
$
|
280,979
|
|
|
$
|
248,387
|
|
|
|
|
|
|
|
|
|
||||||||
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
$
|
17,034
|
|
|
$
|
9,987
|
|
|
$
|
26,814
|
|
|
$
|
15,044
|
|
|
|
|
|
|
|
|
|
||||||||
CONSOLIDATED:
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
$
|
189,580
|
|
|
$
|
167,627
|
|
|
$
|
307,793
|
|
|
$
|
263,431
|
|
(a)
|
Southeast includes the acquisition in January 2016 of substantially all of the assets of JW Homes ("Wieland").
|
(b)
|
Net new orders excludes backlog acquired from Wieland in January 2016. Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders.
|
Supplemental Data
($000's omitted)
(Unaudited)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Interest in inventory, beginning of period
|
$
|
158,653
|
|
|
$
|
166,887
|
|
|
$
|
149,498
|
|
|
$
|
167,638
|
|
Interest capitalized
|
38,231
|
|
|
31,296
|
|
|
73,515
|
|
|
62,099
|
|
||||
Interest expensed
|
(29,396
|
)
|
|
(33,799
|
)
|
|
(55,525
|
)
|
|
(65,353
|
)
|
||||
Interest in inventory, end of period
|
$
|
167,488
|
|
|
$
|
164,384
|
|
|
$
|
167,488
|
|
|
$
|
164,384
|
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of PulteGroup, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
July 21, 2016
|
/s/ Richard J. Dugas, Jr.
|
|
|
Richard J. Dugas, Jr.
|
|
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of PulteGroup, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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July 21, 2016
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/s/ Robert T. O'Shaughnessy
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|
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Robert T. O'Shaughnessy
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|
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Executive Vice President and
Chief Financial Officer
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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July 21, 2016
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/s/ Richard J. Dugas, Jr.
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Richard J. Dugas, Jr.
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Chairman and Chief Executive Officer
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/s/ Robert T. O'Shaughnessy
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Robert T. O'Shaughnessy
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Executive Vice President and
Chief Financial Officer
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