filings.toolsPulteGroup (PHM) 10-K risk factor changes: FY2014 vs FY2013
The 2014-12-31 10-K against the 2013-12-31 one, compared heading by heading and sentence by sentence. One of these filings carries no fiscal year tag, so its year is the calendar year of the period end.
Item 1A15 rewritten2 added7 removed141 unchanged
All filing items913 rewritten370 added417 removed1,933 unchanged
Summary
counted, not written
- Item 1A headings could not be compared: only 0 carried over between the two years, which usually means one filing was read wrongly, so none is reported as new or removed.
- Sentence by sentence, 370 added, 417 removed, 913 rewritten and 1,933 unchanged across 16 items that differ.
Sentences by item
21 items, with every count and a link to each item that changed
Underlined words on a shaded ground are new in FY2014; struck-through words were in FY2013. Sentences that are wholly new or wholly gone are labelled rather than marked.
Item 1A. RISK FACTORS
15 rewritten, 2 added, 7 removed, 141 unchanged
The homebuilding industry experienced a significant downturn [removed: in recent years.][added: from 2006 through 2011.]
Although industry conditions improved [removed: during 2012 and 2013,] [added: beginning in 2012,] the overall U.S. economy, while improving, remains challenged and consumer demand in the industry remains volatile.
[removed: During 2012 and 2013,] [added: Since 2011,] overall industry new home sales [added: have] increased, and we returned to profitability.
Increases in interest rates or decreases in the availability of mortgage [removed: financing, however,] [added: financing] could adversely affect the market for new homes.
[removed: Significant costs of homeownership include mortgage] [added: Mortgage] interest expense and real estate [removed: taxes,] [added: taxes represent significant costs of homeownership,] both of which are generally deductible for an individual’s federal and, in some cases, state income taxes.
The capital and credit markets [removed: have experienced] [added: can experience] significant [removed: volatility in recent years.][added: volatility.]
At December 31, [removed: 2013,] [added: 2014,] we had cash and equivalents of [removed: $1.6] [added: $1.3] billion as well as restricted cash totaling [removed: $72.7] [added: $16.4] million.
At December 31, [removed: 2013,] [added: 2014,] we had outstanding letters of credit and surety bonds totaling [removed: $183.1] [added: $212.1] million and [removed: $958.3 million,] [added: $1.0 billion,] respectively.
Of these amounts outstanding, [removed: $58.7] [added: $3.7] million of the letters of credit were subject to cash-collateralized agreements while the remaining letters of credit and surety bonds were unsecured.
As of December 31, [removed: 2013,] [added: 2014,] we had deferred income tax assets, net of deferred tax liabilities, of [removed: $2.2] [added: $1.8] billion, against which we provided a valuation allowance of [removed: $157.3] [added: $82.3] million.
As a result of [removed: the] [added: our] merger with Centex in August 2009, our ability to use certain of Centex’s pre-ownership change NOLs, BILs, and deductions is limited under Section 382 of the Internal Revenue Code.
The applicable Section 382 limitation is approximately $67.4 million per year for NOLs, losses realized on built-in loss assets that [removed: are] [added: were] sold within 60 months of the ownership [removed: change (i.e. before August 2014),] [added: change,] and certain deductions.
There can be no assurance that coverage will not be further restricted [removed: and] [added: or] become more costly.
Additionally, we are exposed to counterparty default risk related to our [removed: subcontractors and] [added: subcontractors,] our [added: insurance carriers,] and our subcontractors’ insurance carriers.
Our computer systems, including our back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches (through [removed: cyber-attacks] [added: cyberattacks] from computer hackers and sophisticated organizations), catastrophic events such as fires, tornadoes and hurricanes, and usage errors by our associates.
The majority of these letters of credit are issued via our unsecured revolving credit facility, which contains certain financial covenants and other limitations.
To provide for potential tax exposures, we consider a variety of factors, including changes in facts or circumstances, changes in law, correspondence with taxing authorities, and effective settlement of audit issues.
In 2006 and 2007, we originated $39.5 billion of loans, excluding loans originated by Centex's former subprime loan business sold by Centex in 2006.
The FHA has and may continue to impose stricter loan qualification standards, raise minimum down payment requirements, impose higher mortgage insurance premiums and other costs, and/or limit the number of mortgages it insures.
In many cases, the markets have exerted downward pressure on the availability of liquidity and credit capacity for issuers.
To provide for potential tax exposures, we maintain tax reserves based on reasonable estimates of potential audit results.
Future terrorist attacks against the U.S. or increased domestic and international instability could have an adverse effect on our operations.
A future terrorist attack against the U.S. could cause a sharp decrease in the number of new contracts signed for homes and an increase in the cancellation of existing contracts.
Accordingly, adverse developments in the war on terrorism, future terrorist attacks against the U.S., or increased domestic and international instability could adversely affect our business.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
264 rewritten, 117 added, 161 removed, 345 unchanged
Our improved financial position provided additional flexibility to retire debt early and increase our [removed: planned future] investments in [removed: new] [added: future] communities, while also [removed: paying a dividend] [added: returning funds to shareholders through dividends] and [removed: selectively repurchasing our common shares.][added: expanded share repurchases.]
Specifically, we accomplished the following during [removed: 2013:][added: 2014:]
[removed: | • |] [added: -] Proactively reduced our outstanding debt by [removed: $461.4] [added: $245.7] million; [removed: |]
| • | Increased our existing share repurchase authorization by [removed: $250.0] [added: $750.0] million and retired [removed: $127.7] [added: $245.8] million of shares; |
| • | Increased our land investment spending [added: by almost 40%] to support future growth; [removed: and] |
| | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |
| Income [removed: (loss)] before income taxes: | | | | | | | | | | | |
| Homebuilding | $ | [removed: 479,113] [added: 635,177] | | | $ | [removed: 157,991] [added: 479,113] | | | $ | [removed: (275,830] [added: 157,991] | [removed: )] |
| Financial Services | [removed: 48,709] [added: 54,581] | | | | [removed: 25,563] [added: 48,709] | | | | [removed: (34,470] [added: 25,563] | | [removed: )] |
| Income [removed: (loss) from continuing operations] before income taxes | [removed: 527,822] [added: 689,758] | | | | [removed: 183,554] [added: 527,822] | | | | [removed: (310,300] [added: 183,554] | | [removed: )] |
| Income tax expense (benefit) | [removed: (2,092,294] [added: 215,420] | | [removed: )] | | [removed: (22,591] [added: (2,092,294] | | ) | | [removed: (99,912] [added: (22,591] | | ) |
| Net income [removed: (loss)] | $ | [removed: 2,620,116] [added: 474,338] | | | $ | [removed: 206,145] [added: 2,620,116] | | | $ | [removed: (210,388] [added: 206,145] | [removed: )] |
| Net income [removed: (loss)] | $ | [removed: 6.72] [added: 1.26] | | | $ | [removed: 0.54] [added: 6.72] | | | $ | [removed: (0.55] [added: 0.54] | [removed: )] |
[removed: | • |] The [removed: Homebuilding] [added: following is a summary of] income [removed: (loss)] before income taxes [removed: included charges related to the following items ($000's] [added: for our Homebuilding operations ($000’s] omitted): [removed: |]
| Land-related charges (see [Note [removed: 4](#s587DA6FC02EF53D3460F018ECD6F6902))] [added: 3](#sCB05022D30EBBFAE7A49673AF3B41535))] | $ | [removed: 9,672] [added: 11,168] | | | $ | [removed: 17,195] [added: 9,672] | | | $ | [removed: 35,786] [added: 17,195] | |
| Loss on debt retirements (see [Note [removed: 7](#s20F325B67BD5C67DA790018ECD65A843))] [added: 6](#s7EA88E6C6FA6E8FE219B673AF38C36DC))] | [removed: 26,930] [added: 8,584] | | | | [removed: 32,071] [added: 26,930] | | | | [removed: 5,638] [added: 32,071] | | |
| Settlement of contractual dispute at a closed-out community (see [Note [removed: 13](#sDEFAF56912CB443C3D44018ECD0BD0C1))] [added: 12](#s57794A3354316563858A673AF3C8D06A))] | [removed: 41,170] [added: —] | | | | [removed: —] [added: 41,170] | | | | — | | |
| • | The increase in Financial Services income in [removed: 2013] [added: 2014] compared with [removed: 2012] [added: 2013] and [removed: 2011] [added: 2012] was primarily due to lower [added: provisions for] loan [added: losses. We reduced] loss [removed: reserves. There] [added: reserves by $18.6 million in 2014 while there] were no [removed: such] [added: adjustments to the reserve in 2013. In 2012,] loss reserves [removed: in 2013 compared with] [added: increased by] $49.0 [removed: million in 2012 and $59.3 million in 2011 (see] [added: million. See] [Note [removed: 13](#sDEFAF56912CB443C3D44018ECD0BD0C1)] [added: 12](#s57794A3354316563858A673AF3C8D06A)] to the Consolidated Financial [removed: Statements). Additionally, loan origination volume increased in 2013 compared with] [added: Statements. Excluding these loss reserve adjustments, Financial Services income has been declining since] 2012 [removed: and 2011, primarily as the result of increased Homebuilding closings. These favorable factors were partially offset in 2013 by] [added: due to] margin compression caused by heightened competition in the mortgage [removed: industry compared with 2012.] [added: industry.] |
[removed: | • |] The income tax benefit [removed: in] [added: for] 2013 [removed: includes $2.1 billion related to] [added: resulted from] the reversal of substantially all of the valuation allowance [removed: previously recorded against] [added: related to] our [added: federal] deferred tax [removed: assets. See [Note 10](#s501857543F769585A149018ECD79FB87) to] [added: assets and certain of our state deferred tax assets, while] the [removed: Condensed Consolidated Financial Statements for additional information. The] income tax [removed: benefits in] [added: benefit for] 2012 [removed: and 2011 were attributable] [added: resulted] primarily [removed: to] [added: from] the favorable resolution of certain federal and state income tax matters. [removed: |]
| | [removed: 2013] [added: 2014] | | | | FY [removed: 2013] [added: 2014] vs. FY [removed: 2012] [added: 2013] | | | [removed: 2012] [added: 2013] | | | | FY [removed: 2012] [added: 2013] vs. FY [removed: 2011] [added: 2012] | | | [removed: 2011] [added: 2012] | | |
| Home sale revenues | $ | [removed: 5,424,309] [added: 5,662,171] | | | [removed: 19] [added: 4] | % | | $ | [removed: 4,552,412] [added: 5,424,309] | | | [removed: 15] [added: 19] | % | | $ | [removed: 3,950,743] [added: 4,552,412] | |
| Land sale revenues | [removed: 114,335] [added: 34,554] | | | | [removed: 7] [added: (70] | [removed: %] [added: )%] | | [removed: 106,698] [added: 114,335] | | | | [removed: 29] [added: 7] | % | | [removed: 82,853] [added: 106,698] | | |
| Total Homebuilding revenues | [removed: 5,538,644] [added: 5,696,725] | | | | [removed: 19] [added: 3] | % | | [removed: 4,659,110] [added: 5,538,644] | | | | [removed: 16] [added: 19] | % | | [removed: 4,033,596] [added: 4,659,110] | | |
| Home sale cost of revenues (a) | [removed: 4,310,528] [added: 4,343,249] | | | | [removed: 12] [added: 1] | % | | [removed: 3,833,451] [added: 4,310,528] | | | | [removed: 11] [added: 12] | % | | [removed: 3,444,398] [added: 3,833,451] | | |
| Land sale cost of revenues [removed: (b)] | [removed: 104,426] [added: 23,748] | | | | [removed: 10] [added: (77] | [removed: %] [added: )%] | | [removed: 94,880] [added: 104,426] | | | | [removed: 60] [added: 10] | % | | [removed: 59,279] [added: 94,880] | | |
| Selling, general, and administrative expenses ("SG&A") [removed: (c)] [added: (b)] | [removed: 568,500] [added: 667,815] | | | | [removed: 11] [added: 17] | % | | [removed: 514,457] [added: 568,500] | | | | [removed: (1] [added: 11] | [removed: )%] [added: %] | | [removed: 519,583] [added: 514,457] | | |
| Equity in [removed: (earnings) loss] [added: earnings] of unconsolidated entities | [removed: (993] [added: (8,226] | | ) | | [removed: (74] [added: 728] | [removed: )%] [added: %] | | [removed: (3,873] [added: (993] | | ) | | [removed: 21] [added: (74] | [removed: %] [added: )%] | | [removed: (3,194] [added: (3,873] | | ) |
| Other expense, net [removed: (d)] [added: (c)] | [removed: 80,753] [added: 38,745] | | | | [removed: 22] [added: (52] | [removed: %] [added: )%] | | [removed: 66,298] [added: 80,753] | | | | [removed: (77] [added: 22] | [removed: )%] [added: %] | | [removed: 293,102] [added: 66,298] | | |
| Interest income, net | [removed: (3,683] [added: (3,783] | | ) | | [removed: (10] [added: 3] | [removed: )%] [added: %] | | [removed: (4,094] [added: (3,683] | | ) | | [removed: 9] [added: (10] | [removed: %] [added: )%] | | [removed: (3,742] [added: (4,094] | | ) |
| Income [removed: (loss)] before income taxes | $ | [removed: 479,113] [added: 635,177] | | | [removed: 203] [added: 33] | % | | $ | [removed: 157,991] [added: 479,113] | | | [removed: 157] [added: (203] | [removed: %] [added: )%] | | $ | [removed: (275,830] [added: 157,991] | [removed: )] |
| Gross margin from home sales | [removed: 20.5] [added: 23.3] | | % | | [removed: 470] [added: 280] bps | | | [removed: 15.8] [added: 20.5] | | % | | [removed: 300] [added: 470] bps | | | [removed: 12.8] [added: 15.8] | | % |
| SG&A as a percentage of home sale revenues | [removed: 10.5] [added: 11.8] | | % | | [removed: (80)] [added: 130] bps | | | [removed: 11.3] [added: 10.5] | | % | | [removed: (190)] [added: (80)] bps | | | [removed: 13.2] [added: 11.3] | | % |
| Closings (units) | [removed: 17,766] [added: 17,196] | | | | [removed: 8] [added: (3] | [removed: %] [added: )%] | | [removed: 16,505] [added: 17,766] | | | | 8 | % | | [removed: 15,275] [added: 16,505] | | |
| Average selling price | $ | [removed: 305] [added: 329] | | | [removed: 11] [added: 8] | % | | $ | [removed: 276] [added: 305] | | | [removed: 7] [added: 11] | % | | $ | [removed: 259] [added: 276] | |
| Units | [removed: 17,080] [added: 16,652] | | | | [removed: (10] [added: (3] | )% | | [removed: 19,039] [added: 17,080] | | | | [removed: 25] [added: (10] | [removed: %] [added: )%] | | [removed: 15,215] [added: 19,039] | | |
| Dollars [removed: (e)] [added: (d)] | $ | [removed: 5,394,566] [added: 5,558,937] | | | [removed: (1] [added: 3] | [removed: )%] [added: %] | | $ | [removed: 5,424,300] [added: 5,394,566] | | | [removed: 37] [added: (1] | [removed: %] [added: )%] | | $ | [removed: 3,953,829] [added: 5,424,300] | |
| Cancellation rate | 15 | | % | | | | | 15 | | % | | | | | [removed: 19] [added: 15] | | % |
| Active communities at December 31 | [removed: 577] [added: 598] | | | | [removed: (14] [added: 4] | [removed: )%] [added: %] | | [removed: 670] [added: 577] | | | | [removed: (4] [added: (14] | )% | | [removed: 700] [added: 670] | | |
| Units | [removed: 5,772] [added: 5,850] | | | | [removed: (11] [added: 1] | [removed: )%] [added: %] | | [removed: 6,458] [added: 5,772] | | | | [removed: 65] [added: (11] | [removed: %] [added: )%] | | [removed: 3,924] [added: 6,458] | | |
| Dollars | $ | [removed: 1,901,796] [added: 1,943,861] | | | [removed: (2] [added: 2] | [removed: )%] [added: %] | | $ | [removed: 1,931,538] [added: 1,901,796] | | | [removed: 82] [added: (2] | [removed: %] [added: )%] | | $ | [removed: 1,059,649] [added: 1,931,538] | |
The overall U.S. housing market continues to be influenced by a combination of low interest rates and affordable home prices that have kept monthly mortgage payments affordable relative to historical levels and the rental market.
This environment has contributed to our experiencing relatively stable overall demand in 2014.
On slightly lower unit volumes, we generated a 4% increase in home sale revenues to $5.7 billion.
We leveraged this growth into a 33% increase in reported pretax income of $635 million for our homebuilding operations by improving gross margins by 280 basis points to 23.3%, amongst the highest annual gross margins reported in the Company's history.
Including our Financial Services operations, we realized pretax income growth of 31% to $690 million.
We generated positive cash flow from operations in 2014 due primarily to improved profitability.
| • | Raised our quarterly dividend by 60% to $0.08 per share; |
| • | Lowered our ratio of debt to total capitalization to 27.5%; and |
| • | Ended the year with a total cash balance of $1.3 billion. |
Assuming market conditions remain consistent with our expectations, we also expect to continue to invest increasing amounts into our land portfolio following our disciplined capital allocation process.
Our first priority in allocating capital is to invest responsibly in our business and then to return excess funds to shareholders in the form of dividends and share repurchases on a routine and systematic basis.
By intelligently investing in our business while routinely returning funds to shareholders, we are aligning our capital allocation decisions with our value creation strategy and our fundamental goal of increasing long-term total shareholder returns.
We are optimistic heading into 2015.
We believe the positive factors of an improving economy with declining energy costs, rising employment, lower mortgage rates and related fees, beneficial long-term demographic trends, and a generally healthy supply of inventory will continue to support a slow and sustained housing recovery.
Within this environment, we remain focused on driving additional gains in construction and asset efficiency to deliver higher returns on invested capital.
Consistent with our positive market view and long-term business strategy, we expect to use our capital to support future growth, while consistently returning funds to shareholders.
| • | Homebuilding income before income taxes improved each year from 2012 to 2014, primarily as the result of higher gross margins and revenues. Homebuilding income before income taxes also reflected the following significant items ($000's omitted): |
| Corporate office relocation (see [Note 2](#sB630505897D0D5106C79673AF4229EE6)) | 16,344 | | | | 15,376 | | | | — | | |
| Insurance reserve adjustments (see [Note 12](#s57794A3354316563858A673AF3C8D06A)) | 69,267 | | | | — | | | | — | | |
| | $ | 105,363 | | | $ | 93,148 | | | $ | 49,266 | |
The acquisition of certain real estate assets from Dominion Homes in August 2014 (see [Note 1](#s7AA47F467CB02CDE9B8D673AF3F04865)) was not material to our results of operations or financial condition.
| • | Our effective tax rate is affected by a number of factors, the most significant of which are the valuation allowance related to our deferred tax assets, changes in tax laws or other circumstances that impact the value of our deferred tax assets, and changes in our unrecognized tax benefits. Due to the effects of these factors, our effective tax rates in 2014, 2013, and 2012 are not correlated to the amount of our income before income taxes. Income tax expense (benefit) reflects reversals of deferred tax asset valuation allowances totaling $45.6 million in 2014 and $2.1 billion in 2013. The income tax benefit in 2012 was attributable primarily to the favorable resolution of certain federal and state income tax matters. See [Note 9](#sED545D03DE2C66080A11673AF3DCD209) to the Consolidated Financial Statements for additional information. |
| (b) | SG&A includes costs associated with the relocation of our corporate headquarters totaling $7.6 million and $15.0 million in 2014 and 2013, respectively, and charges totaling $69.3 million to increase general liability insurance reserves in 2014. |
The increase in average selling price occurred in substantially all of our local markets and reflects an ongoing shift in our revenue mix toward move-up and active adult buyers along with improved market conditions that have allowed for increased sale prices, including higher levels of house options and lot premiums.
The decrease in closings resulted from the lower net new order volume in 2014 combined with the lower beginning of the year backlog in 2014 compared with the beginning of the year 2013.
The nature of the homebuilding industry results in a lag between when the significant investments we have made in land acquisition and development the last two years yields new community openings and related home closings.
These improved gross margins reflect a combination of factors, including an improved pricing environment, contributions from our strategic pricing and house cost reduction initiatives, and lower amortized interest costs (3.4%, 4.7%, and 4.9% in 2014, 2013, and 2012, respectively).
The lower amortized interest costs resulted from a significant reduction in our outstanding debt in recent years.
The gross dollar amount of our SG&A increased $99.3 million, or 17%, in 2014 compared with 2013.
SG&A includes charges totaling $69.3 million to increase general liability insurance reserves in 2014.
The remaining increases in gross overhead dollars in 2014 compared with 2013 were primarily due to variable costs related to the higher revenue volume.
| | 2014 | | | | 2013 | | | | 2012 | | |
Net new orders decreased 3% in 2014 compared with 2013.
The number of active communities increased slightly (up 4% to 598 at December 31, 2014) in 2014 versus 2013, though this was primarily due to our acquisition of certain real estate assets from Dominion Homes in August 2014 (see [Note 1](#s7AA47F467CB02CDE9B8D673AF3F04865) to the Consolidated Financial Statements).
Excluding such assets, our active community count actually declined in 2014 as our pace of new community openings lagged the number of community close-outs.
Ending backlog units, which represent orders for homes that have not yet closed, increased 1% at December 31, 2014 compared with December 31, 2013 as measured in units and increased by 2% over the prior year period as measured in dollars due to the increase in our average selling price.
The cancellation rate was unchanged from 2012 to 2013 at 15%.
| | | 2014 | | | 2013 | |
| | | 1,298 | | | 1,151 | |
The number of homes in production at December 31, 2014 was essentially flat (2% higher) compared to December 31, 2013.
The underlying trends in U.S. housing point toward an ongoing multi-year recovery supported by favorable demographics, an improving economy, mortgage interest rates near historic lows, and limited supplies of new and existing home inventories.
Our results in 2013 showed significant improvement in the majority of our key operating metrics in the first half of the year, while demand conditions slowed for us in the second half of the year as consumers adjusted to higher home prices and a moderate rise in mortgage interest rates.
For the full year 2013, the overall improvement in market conditions, in concert with our own tactical actions, contributed to our seventh consecutive profitable quarter.
Home closings, revenues, average selling price, inventory turns, gross margin, overhead leverage, and income before income taxes all improved in 2013 compared with 2012.
Our net new orders declined 10% in 2013 compared with 2012.
A lower number of active communities contributed to the decline in net new orders as we maintained 14% fewer active communities in 2013 compared with 2012.
The lower active community count resulted from the close-out of a number of long-term projects and is consistent with our more disciplined land investment strategy.
In addition, demand slowed in the second half of 2013 in response to higher home prices and a rise in mortgage interest rates.
We will continue to calibrate sales pace in each community to improve our gross margins and maximize returns on invested capital.
We expect that this approach will continue to result in a moderation in our net new order volume in the short-term relative to overall growth in the U.S. homebuilding industry and relative to certain of our competitors.
While we believe higher mortgage interest rates are inevitable and may have a moderating effect on demand and pricing, we believe this impact will be outweighed in the long-term by other factors driving increased sales volume as overall new home sales in the U.S. remain low compared with historical levels.
The significant improvements reported for 2013 also allowed us to continue to enhance our financial position.
We generated significant positive cash flow from operations in each of the last two years via a combination of improved profitability and inventory management.
| | |
| --- | --- |
| • | Increased our total cash balance to $1.7 billion; |
| • | Reinstated a quarterly dividend; |
| • | Lowered our ratio of debt to total capitalization from 53.4% to 30.7%, in part due to the reversal of a valuation allowance against our deferred tax assets. |
In the short-term, we will continue to focus on maximizing our operating margins, despite the possibility of rising house cost pressures from material and labor prices, by using our existing land assets more effectively, allocating capital more effectively, and aggressively controlling unsold "spec" inventory to enhance our balance sheet.
We believe we have positioned ourselves to deliver improved long-term returns.
In planning for the longer term, we continue to maintain confidence that we are in the early stages of a broad, sustainable recovery in the U.S. new home market.
While the U.S. macroeconomic environment continues to face challenges and each local market will experience varying results, we are continuing to pursue strategic land positions that meet our underwriting requirements in well-positioned submarkets and believe that sustained execution of our strategy will continue to result in increased profits and improved returns on invested capital over the housing cycle.
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | Years Ended December 31, | | | | | | | | | | |
| Goodwill impairments (see [Note 2](#s9AEC9DBC8BAD2232B482018ECD5B1DA7)) | — | | | | — | | | | 240,541 | | |
| | $ | 77,772 | | | $ | 49,266 | | | $ | 281,965 | |
Our Homebuilding operating results in 2013 and 2012 improved significantly from the loss experienced in 2011 due to higher revenues and gross margins, improved overhead leverage, and lower charges, as listed in the above table.
The following is a summary of income (loss) before income taxes for our Homebuilding operations ($000’s omitted):
| (b) | Includes net realizable value adjustments for land held for sale of $3.6 million, $1.5 million, and $9.8 million for 2013, 2012, and 2011, respectively. |
The increase in average selling price reflected a shift in our revenue mix toward move-up and active adult buyers and improved market conditions.
The increase in closings was concentrated primarily in our North and Southwest segments.
Excluding the impact of land impairments and capitalized interest amortization, adjusted home sale gross margins improved to 25.2% in 2013 from 20.9% in 2012 and 17.9% in 2011 (see the Non-GAAP Financial Measures section for a reconciliation of adjusted home sale gross margins).
These improved gross margins reflect a combination of factors, including an improved pricing environment, shifts in the product mix of homes closed toward move-up and active adult buyers, better alignment of our product offering with consumer demand, and contributions from our strategic pricing and house cost reduction initiatives.
These margin contributions included net realizable value adjustments related to land held for sale totaling $3.6 million, $1.5 million, and $9.8 million in 2013, 2012, and 2011, respectively.
The gross dollar amount of our SG&A decreased $5.1 million, or 1%, in 2012 compared with 2011 due to improved overhead leverage, partially offset by higher incentive compensation resulting from our improved operating results.
| Goodwill impairments [(Note 2)](#s9AEC9DBC8BAD2232B482018ECD5B1DA7) | — | | | | — | | | | 240,541 | | |
Net new order levels increased 25% in 2012 compared with 2011 while selling from 4% fewer active communities in 2012 (we had 670 active communities at December 31, 2012).
The cancellation rate was 15% in 2012 compared with 19% in 2011.
Ending backlog units increased 65% at December 31, 2012 compared with December 31, 2011 due to the decrease in net new orders.
An excerpt. Shown here: 40 of 264 rewritten, 40 of 117 added and 40 of 161 removed. The counts are complete. For every sentence, read Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in the FY2014 filing and the FY2013 filing.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
7 rewritten, 2 added, 1 removed, 29 unchanged
The following tables set forth, as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] our rate-sensitive financing obligations, principal cash flows by scheduled maturity, weighted-average interest rates, and estimated fair value ($000’s omitted).
| | As of December 31, [removed: 2012] [added: 2014] for the Years ending December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | [removed: 2013] [added: 2015] | | | | [removed: 2014] [added: 2016] | | | | [removed: 2015] [added: 2017] | | | | [removed: 2016] [added: 2018] | | | | [removed: 2017] [added: 2019] | | | | Thereafter | | | | Total | | | | Fair Value | | |
| Average interest rate | [removed: —] [added: 5.25] | | % | | [removed: 5.49] [added: 6.50] | | % | | [removed: 5.24] [added: 7.63] | | % | | [removed: 6.50] [added: —] | | % | | [removed: 7.63] [added: —] | | % | | [removed: 6.80] [added: 6.71] | | % | | [removed: 6.36] [added: 6.53] | | % | | | | |
Hypothetical changes in the fair values of our financial instruments arising from immediate parallel shifts in long-term mortgage rates of 50, 100, and 150 basis points would not be material to our financial [removed: results.][added: results due to the offsetting nature in the movements in fair value of our financial instruments.]
Such risks, uncertainties and other factors include, among other things: interest rate changes and the availability of mortgage financing; continued volatility in the debt and equity markets; competition within the industries in which we operate; the availability and cost of land and other raw materials used by us in our homebuilding operations; the impact of any changes to our strategy in responding to the cyclical nature of the industry, including any changes regarding our land positions; the availability and cost of insurance covering risks associated with our businesses; shortages and the cost of labor; weather related slowdowns; slow growth initiatives and/or local building moratoria; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans; the interpretation of or changes to tax, labor and environmental laws; economic changes nationally or in our local markets, including inflation, deflation, changes in consumer confidence and preferences and the state of the market for homes in general; legal or regulatory proceedings or claims; [added: our ability to generate sufficient cash flow in order to successfully implement our capital allocation priorities;] required accounting changes; terrorist acts and other acts of war; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature.
See [Item 1A – Risk [removed: Factors](#s037B02A58A03FABF9D40018EDF37307D)] [added: Factors](#s95D1567205F3DBAC3AB0673B0EC76560)] for a further discussion of these and other risks and uncertainties applicable to our businesses.
| Senior notes | $ | 237,994 | | | $ | 465,245 | | | $ | 123,000 | | | $ | — | | | $ | — | | | $ | 1,000,000 | | | $ | 1,826,239 | | | $ | 1,952,774 | |
In periods of low or decreasing interest rates, the length of exposure will also generally increase as customers desire to lock before the possibility of rising rates.
| Senior notes | $ | — | | | $ | 398,852 | | | $ | 369,222 | | | $ | 465,245 | | | $ | 150,000 | | | $ | 1,150,000 | | | $ | 2,533,319 | | | $ | 2,663,451 | |
Cover and table of contents
63 rewritten, 13 added, 18 removed, 233 unchanged
For the fiscal year ended December 31, [removed: 2013][added: 2014]
Registrant’s telephone number, including area code: [removed: (248) 647-2750][added: (404) 978-6400]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K [added: (§ 229.405 of this chapter)] is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
The aggregate market value of the registrant’s voting stock held by nonaffiliates of the registrant as of June 30, [removed: 2013,] [added: 2014,] based on the closing sale price per share as reported by the New York Stock Exchange on such date, was [removed: $7,299,008,871.][added: $7,529,488,415.]
As of February [removed: 1, 2014,] [added: 2, 2015,] the registrant had [removed: 381,299,600] [added: 368,198,659] shares of common stock outstanding.
Applicable portions of the Proxy Statement for the [removed: 2014] [added: 2015] Annual Meeting of Shareholders are incorporated by reference in Part III of this Form.
| 1A | [Risk [removed: Factors](#s037B02A58A03FABF9D40018EDF37307D)] [added: Factors](#s95D1567205F3DBAC3AB0673B0EC76560)] | [removed: [9](#s037B02A58A03FABF9D40018EDF37307D)] [added: [9](#s95D1567205F3DBAC3AB0673B0EC76560)] |
| 1B | [Unresolved Staff [removed: Comments](#s702B8238787A23C44C7F018EDF6917C8)] [added: Comments](#s0B646B003A4085D0770B673B0EF725C8)] | [removed: [15](#s702B8238787A23C44C7F018EDF6917C8)] [added: [15](#s0B646B003A4085D0770B673B0EF725C8)] |
| 3 | [Legal [removed: Proceedings](#sC17424D175AEBAB6B5DA018EDFB90AEE)] [added: Proceedings](#s96E2D876E2D31F072940673B0F641C53)] | [removed: [15](#sC17424D175AEBAB6B5DA018EDFB90AEE)] [added: [15](#s96E2D876E2D31F072940673B0F641C53)] |
| 4 | [Mine Safety [removed: Disclosures](#s17672CE6014028F28608018EDFE10889)] [added: Disclosures](#s30D2319B83271C08D84A673B0F7287E0)] | [removed: [15](#s17672CE6014028F28608018EDFE10889)] [added: [15](#s30D2319B83271C08D84A673B0F7287E0)] |
| 4A | [Executive Officers of the [removed: Registrant](#sE8D3EFA0E6556BEEC243018EE013C3B3)] [added: Registrant](#s12339E61414E7EF8E18F673B0FAF38B9)] | [removed: [16](#sE8D3EFA0E6556BEEC243018EE013C3B3)] [added: [16](#s12339E61414E7EF8E18F673B0FAF38B9)] |
| 5 | [Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s5DD10D7B992F3C0EB811018ED040C7E2)] [added: Securities](#s8E1EEAC8BCE9A567835A673AF7C4E7FD)] | [removed: [17](#s5DD10D7B992F3C0EB811018ED040C7E2)] [added: [17](#s8E1EEAC8BCE9A567835A673AF7C4E7FD)] |
| 6 | [Selected Financial [removed: Data](#sF19C3EED5AB756D46F64018EE08BE725)] [added: Data](#s6F4FE0201858B2D12DA8673B103E637D)] | [removed: [19](#sF19C3EED5AB756D46F64018EE08BE725)] [added: [19](#s6F4FE0201858B2D12DA8673B103E637D)] |
| 7 | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sD918B9D373260E9478E2018EE0D1D876)] [added: Operations](#s0629C1397930C79917DA673B1098DAD8)] | [removed: [21](#sD918B9D373260E9478E2018EE0D1D876)] [added: [21](#s0629C1397930C79917DA673B1098DAD8)] |
| 7A | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sB1971E7F29F64BF218BD018EE38D46C3)] [added: Risk](#s3BCC21D63F9A9D4BCAF2673B12FC697E)] | [removed: [44](#sB1971E7F29F64BF218BD018EE38D46C3)] [added: [41](#s3BCC21D63F9A9D4BCAF2673B12FC697E)] |
| 8 | [Financial Statements and Supplementary [removed: Data](#s7CBAB942C8790C6C2CF0018EE3AB54DA)] [added: Data](#s333887092E8B56EF6C03673B13239EAD)] | [removed: [46](#s7CBAB942C8790C6C2CF0018EE3AB54DA)] [added: [43](#s333887092E8B56EF6C03673B13239EAD)] |
| 9 | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sEBCB162E30BF12478249018EE8C0EE1F)] [added: Disclosure](#sD014810B30BE5789E5A4673B1995721F)] | [removed: [92](#sEBCB162E30BF12478249018EE8C0EE1F)] [added: [87](#sD014810B30BE5789E5A4673B1995721F)] |
| 9A | [Controls and [removed: Procedures](#sB50B4DD71834DE2BB43D018EE8C0D729)] [added: Procedures](#s38F80ECD746982786C64673B19A1502D)] | [removed: [92](#sB50B4DD71834DE2BB43D018EE8C0D729)] [added: [87](#s38F80ECD746982786C64673B19A1502D)] |
| 9B | [Other [removed: Information](#s21BA41F059EF55A0171F018EE8D4955F)] [added: Information](#s5B71E29B8A1874D992B5673B19CD30AF)] | [removed: [93](#s21BA41F059EF55A0171F018EE8D4955F)] [added: [89](#s5B71E29B8A1874D992B5673B19CD30AF)] |
| | [Part [removed: III](#s7B1B73E8210C8FCBA619018EE8FC8DE7)] [added: III](#s9386CE0B77D657E8FB56673B19D861EA)] | |
| 10 | [Directors, Executive Officers and Corporate [removed: Governance](#sED4C6F0E2835AF07D8E2018EE92E73A1)] [added: Governance](#sABF6202DED6701792A5C673B1A23447B)] | [removed: [94](#sED4C6F0E2835AF07D8E2018EE92E73A1)] [added: [89](#sABF6202DED6701792A5C673B1A23447B)] |
| 11 | [Executive [removed: Compensation](#s90B52FE7E3E3C4A4F062018EE94C07F9)] [added: Compensation](#sD0F432C26DF9909A6B6D673B1A2F58EA)] | [removed: [94](#s90B52FE7E3E3C4A4F062018EE94C07F9)] [added: [89](#sD0F432C26DF9909A6B6D673B1A2F58EA)] |
| 12 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s9FA31E9464D848DF9792018EE97E41FC)] [added: Matters](#s64611CC34729E41BB189673B1A76D9F6)] | [removed: [94](#s9FA31E9464D848DF9792018EE97E41FC)] [added: [89](#s64611CC34729E41BB189673B1A76D9F6)] |
| 13 | [Certain Relationships and Related Transactions and Director [removed: Independence](#sB78B573E04C11C2F5272018EE9A68A69)] [added: Independence](#s1A1D5E25ABECEA304524673B1A7D15E5)] | [removed: [94](#sB78B573E04C11C2F5272018EE9A68A69)] [added: [89](#s1A1D5E25ABECEA304524673B1A7D15E5)] |
| 14 | [Principal Accountant Fees and [removed: Services](#s1362CAB75D335B7A66BF018EE9D8642D)] [added: Services](#s9C814CC4E3CFAC09B4DD673B1AC978B1)] | [removed: [94](#s1362CAB75D335B7A66BF018EE9D8642D)] [added: [89](#s9C814CC4E3CFAC09B4DD673B1AC978B1)] |
| 15 | [Exhibits and Financial Statement [removed: Schedules](#s45C2A8BCB9EBC5C23F1A018EEA28CD6F)] [added: Schedules](#sFB6DE6D30918649DCF43673B1B1D3DD0)] | [removed: [95](#s45C2A8BCB9EBC5C23F1A018EEA28CD6F)] [added: [90](#sFB6DE6D30918649DCF43673B1B1D3DD0)] |
Through our brands, which include Pulte Homes, Del Webb, and [removed: Centex (acquired through our merger with Centex Corporation ("Centex") in 2009),] [added: Centex,] we offer a wide variety of home designs, including single-family detached, townhouses, condominiums, and duplexes at different prices and with varying levels of options and amenities to our major customer groups: entry-level, move-up, and active adult.
Over our history, we have delivered over [removed: 625,000] [added: 640,000] homes.
As of December 31, [removed: 2013,] [added: 2014,] we conducted our operations in [removed: 48] [added: 49] markets located throughout [removed: 27] [added: 26] states.
| Northeast: | | Connecticut, [removed: Delaware,] Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Virginia |
| North: | | Illinois, Indiana, [added: Kentucky,] Michigan, Minnesota, Missouri, Northern California, Ohio, [removed: Oregon,] Washington |
Financial information for each of our reportable business segments is included in [Note [removed: 5](#s30FF169F2F85F46D9A4C018ECD65F321)] [added: 4](#sA04C0AFE2BA2122FF3AE673AF3BEB00A)] to our Consolidated Financial Statements.
| | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | | [removed: 2009] [added: 2010] | | |
| Home sale revenues | $ | [removed: 5,424,309] [added: 5,662,171] | | | $ | [removed: 4,552,412] [added: 5,424,309] | | | $ | [removed: 3,950,743] [added: 4,552,412] | | | $ | [removed: 4,419,812] [added: 3,950,743] | | | $ | [removed: 3,869,297] [added: 4,419,812] | |
| Home closings | [removed: 17,766] [added: 17,196] | | | | [removed: 16,505] [added: 17,766] | | | | [removed: 15,275] [added: 16,505] | | | | [removed: 17,095] [added: 15,275] | | | | [removed: 15,013] [added: 17,095] | | |
[removed: In 2013, this] [added: This] trend continued [added: in 2014] as new home sales in the U.S. rose [removed: 16%] [added: 2%] to approximately [removed: 428,000] [added: 435,000] homes, an approximate [removed: 40%] [added: 42%] increase from [removed: the bottom of the housing cycle in] 2011.
Although current industry volume remains low compared with historical levels, the improved environment and the actions we have taken contributed to our return to profitability in 2012 and [removed: a] significant [removed: increase] [added: increases] in our profitability in [removed: 2013.][added: 2013 and 2014.]
Our Homebuilding operations are geographically diverse within the U.S. As of December 31, [removed: 2013,] [added: 2014,] we had [removed: 577] [added: 598] active communities.
Sales prices of unit closings during [removed: 2013] [added: 2014] ranged from less than $100,000 to greater than [removed: $1,200,000,] [added: $1,500,000,] with [removed: 86%] [added: 84%] falling within the range of [removed: $100,000] [added: $150,000] to [removed: $450,000.][added: $500,000.]
The average unit selling price in [removed: 2013] [added: 2014] was [removed: $305,000,] [added: $329,000,] compared with [added: $305,000 in 2013,] $276,000 in 2012, $259,000 in 2011, [removed: $259,000 in 2010,] and [removed: $258,000] [added: $259,000] in [removed: 2009.][added: 2010.]
10-K 1 a201410-k.htm 10-K
3350 Peachtree Road NE, Suite 150
Atlanta, Georgia 30326
\[\]
| | [Part I](#sF31FD762B4F1E2CB81A6673B0E26A6F7) | |
| 1 | [Business](#s862DFFC4270A2C8C3AF2673B0E6A25C1) | [3](#s862DFFC4270A2C8C3AF2673B0E6A25C1) |
| 2 | [Properties](#s3C2C435E4DEA0014F81F673B0F194554) | [15](#s3C2C435E4DEA0014F81F673B0F194554) |
| | [Part II](#sB210A7C9A96035EC7F71673B0FC07C9B) | |
| | [Part IV](#s4C595700B7C6D02B25EB673B1AD641FF) | |
| | [Signatures](#sB703764F4F773FAD9A78673B1B597405) | [94](#sB703764F4F773FAD9A78673B1B597405) |
Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again, we historically experience variability in our quarterly results from operations due to the seasonal nature of the homebuilding industry.
This seasonal activity increases our working capital requirements in our third and fourth quarters to support our home production and loan origination volumes.
As a result of the seasonality of our operations, our quarterly results of operations are not necessarily indicative of the results that may be expected for the full year.
10-K 1 a201310-k.htm 10-K
100 Bloomfield Hills Parkway, Suite 300
Bloomfield Hills, Michigan 48304
| PulteGroup, Inc. 7.375% Senior Notes due 2046 | | New York Stock Exchange |
\[X\]
| | [Part I](#sA95D7C052EFB5ECB4872018EDE8DC2D7) | |
| 1 | [Business](#sB572D875BE5A0FF42E6A018EDEBF1615) | [3](#sB572D875BE5A0FF42E6A018EDEBF1615) |
| 2 | [Properties](#s03CEEB9A838BCB926A71018EDF872B6A) | [15](#s03CEEB9A838BCB926A71018EDF872B6A) |
| | [Part II](#sDB14DE33EACEA2ED7DE1018EE0318DD4) | |
| | [Part IV](#sD09A791FDA6C68379039018EE9F661C2) | |
| | [Signatures](#sB98386F7C8D902D7165F018EEA461CA2) | [99](#sB98386F7C8D902D7165F018EEA461CA2) |
| | |
| --- | --- |
Additionally, we may determine that certain land assets no longer fit into our strategic operating plans.
Beginning in 2011, we implemented an intensive effort to improve our product offerings and production processes through the following programs:
Conversion of apartments to condominiums further provides an alternative to traditional housing, as does manufactured housing.
While the challenging market conditions experienced in recent years lessened the seasonal variations of our results, we have experienced a return to a more traditional demand pattern as new orders were higher in the first half of the year and home closings increased in each quarter throughout the year.
If and when the homebuilding industry more fully recovers from the recent downturn, we believe these traditional seasonal patterns will continue.
An excerpt. Shown here: 40 of 63 rewritten, all 13 added and all 18 removed. The counts are complete. For every sentence, read Cover and table of contents in the FY2014 filing and the FY2013 filing.
Item 2. PROPERTIES
2 rewritten, 0 added, 0 removed, 4 unchanged
Our homebuilding and corporate headquarters are located in leased office facilities at [removed: 100 Bloomfield Hills Parkway, Bloomfield Hills, Michigan 48304.][added: 3350 Peachtree Road NE, Suite 150, Atlanta, GA 30326.]
We also maintain various support functions in leased facilities [removed: near Phoenix,] [added: in Tempe,] Arizona and [removed: Atlanta, Georgia.][added: Bloomfield Hills, Michigan.]
Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
10 rewritten, 1 added, 7 removed, 20 unchanged
| Richard J. Dugas, Jr. | | [removed: 48] [added: 49] | | Chairman, President and Chief Executive Officer | | 2002 |
| Robert T. O'Shaughnessy | | [removed: 48] [added: 49] | | Executive Vice President and Chief Financial Officer | | 2011 |
| Harmon D. Smith | | [removed: 50] [added: 51] | | Executive Vice [removed: President - Homebuilding Operations and Area] President, [removed: Texas] [added: Field Operations] | | 2011 |
| James R. Ellinghausen | | [removed: 55] [added: 56] | | Executive Vice President, Human Resources | | 2005 |
| Steven M. Cook | | [removed: 55] [added: 56] | | Senior Vice President, General Counsel and Secretary | | 2006 |
| Ryan R. Marshall | | [removed: 39] [added: 40] | | [removed: Area] [added: Executive Vice] President, [removed: Southeast] [added: Homebuilding Operations] | | 2012 |
| James L. Ossowski | | [removed: 45] [added: 46] | | Vice President, Finance and Controller | | 2013 |
Mr. Smith was appointed Executive Vice [removed: President - Homebuilding Operations and Area] President, [removed: Texas,] [added: Field Operations] in May [removed: 2012,] [added: 2014] and previously held the position of [added: Executive Vice President, Homebuilding Operations and] Area President, [removed: Gulf Coast] [added: Texas] since [removed: 2008.][added: May 2012.]
He [removed: has] served as an Area President over various geographical markets since 2006.
[removed: Mr. Marshall was appointed Area President, Southeast in November 2012 and previously] [added: Previously he] held the positions of Area President, [added: Southeast since November 2012, Area President,] Florida since May [removed: 2012] [added: 2012,] and Division President, South Florida since 2006.
Mr. Marshall was appointed Executive Vice President, Homebuilding Operations in May 2014.
| Stephen P. Schlageter | | 43 | | Area President, Northeast | | 2012 |
| Patrick J. Beirne | | 50 | | Area President, Central | | 2011 |
| John J. Chadwick | | 52 | | Area President, Southwest | | 2012 |
Mr. Schlageter was appointed Area President, Northeast in November 2012 and previously held the positions of Vice President, Strategic Planning since October 2010 and Division President, Raleigh since November 2003.
Mr. Beirne was appointed Area President, Central in 2012 and has served as an Area President over various geographical markets since 2006.
Mr. Chadwick was appointed Area President, Southwest in 2012 and previously served as Division President, Arizona.
Since 2006, Mr. Chadwick has held the position of Area President or Division President over various geographical markets.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
12 rewritten, 10 added, 13 removed, 20 unchanged
The table below sets forth, for the quarterly periods indicated, the range of high and low [removed: closing] [added: intraday sales] prices for our common shares and dividend per share information:
| | December 31, [removed: 2013] [added: 2014] | | | | | | | | | | | | December 31, [removed: 2012] [added: 2013] | | | | | | | | | | |
At February [removed: 1, 2014,] [added: 2, 2015,] there were [removed: 2,868] [added: 2,717] shareholders of record.
| | (a) Total number of shares purchased [removed: (1)] | | | (b) Average price paid per share [removed: (1)] | | | | (c) Total number of shares purchased as part of publicly announced plans or programs | | | (d) Approximate dollar value of shares that may yet be purchased under the plans or programs ($000’s omitted) | | | |
| [removed: (2)] [added: (1)] | [removed: Pursuant to the two $100 million share repurchase programs authorized and announced by] [added: In July 2013,] our Board of Directors [removed: in October 2002 and October 2005, the $200 million share repurchase] authorized [removed: and announced in February 2006, and the $250 million share repurchase authorized and announced in July 2013 (for] a [removed: total] share repurchase [removed: authorization of $650 million), we have repurchased a total of 16,925,409 shares for a total of $415.8] [added: program totaling $250] million. We have fully utilized the [removed: authorizations provided by the 2002, 2005, and 2006 share repurchase authorizations] [added: July 2013 authorization] and will no longer conduct share repurchases under [removed: these programs. The July 2013] [added: this program. In October 2014, the Board of Directors approved a] share repurchase authorization [removed: has $234.3] [added: totaling $750 million, of which $738.5] million [removed: remaining] [added: remained available] as of December 31, [removed: 2013.] [added: 2014.] There is no expiration date for this program. [added: During 2014, we repurchased 12.9 million shares under these programs.] |
The information required by this item with respect to equity compensation plans is set forth under [Item [removed: 12](#s9FA31E9464D848DF9792018EE97E41FC)] [added: 12](#s64611CC34729E41BB189673B1A76D9F6)] of this annual report on Form 10-K and is incorporated herein by reference.
The following line graph compares for the fiscal years ended December 31, [removed: 2009,] 2010, 2011, 2012, [added: 2013,] and [removed: 2013] [added: 2014] (a) the yearly cumulative total shareholder return (i.e., the change in share price plus the cumulative amount of dividends, assuming dividend reinvestment, divided by the initial share price, expressed as a percentage) on PulteGroup’s common shares, with (b) the cumulative total return of the Standard & Poor’s 500 Stock Index, and with (c) the Dow Jones U.S. Select Home Construction Index.
Fiscal Year Ended December 31, [removed: 2013][added: 2014]
[removed: ][added: ]
| | | [removed: 2008 | | |] 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | | [added: | 2014 | |]
| Dow Jones U.S. Select Home Construction Index | | 100.00 | | | [removed: 103.13] [added: 111.03] | | | [removed: 114.65] [added: 95.67] | | | [removed: 104.90] [added: 194.40] | | | [removed: 188.49] [added: 215.76] | | | [removed: 223.18] [added: 202.92] | |
* Assumes $100 invested on December 31, [removed: 2008,] [added: 2009,] and the reinvestment of dividends.
| 1st Quarter | $ | 21.65 | | | $ | 18.21 | | | $ | 0.05 | | | $ | 21.97 | | | $ | 17.98 | | | $ | — | |
| 2nd Quarter | 20.47 | | | | 18.01 | | | | 0.05 | | | | 24.47 | | | | 17.46 | | | | — | | |
| 3rd Quarter | 20.64 | | | | 17.47 | | | | 0.05 | | | | 20.57 | | | | 14.23 | | | | 0.10 | | |
| 4th Quarter | 22.03 | | | | 16.56 | | | | 0.08 | | | | 20.49 | | | | 15.28 | | | | 0.05 | | |
| October 1, 2014 to October 31, 2014 | 3,010,175 | | | $ | 17.30 | | | 3,010,175 | | | $ | 784,290 | | (1) |
| November 1, 2014 to November 30, 2014 | 725,088 | | | 21.07 | | | | 725,088 | | | $ | 769,010 | | (1) |
| December 1, 2014 to December 31, 2014 | 1,449,647 | | | 21.08 | | | | 1,449,647 | | | $ | 738,456 | | (1) |
| Total | 5,184,910 | | | $ | 18.89 | | | 5,184,910 | | | | | | |
| PULTEGROUP, INC. | | 100.00 | | | 75.20 | | | 63.10 | | | 181.60 | | | 205.20 | | | 218.50 | |
| S&P 500 Index - Total Return | | 100.00 | | | 115.06 | | | 117.49 | | | 136.30 | | | 180.44 | | | 205.14 | |
| 1st Quarter | $ | 21.67 | | | $ | 18.02 | | | $ | — | | | $ | 9.61 | | | $ | 6.52 | | | $ | — | |
| 2nd Quarter | 24.25 | | | | 17.54 | | | | — | | | | 10.70 | | | | 7.69 | | | | — | | |
| 3rd Quarter | 20.39 | | | | 15.11 | | | | 0.10 | | | | 16.98 | | | | 10.02 | | | | — | | |
| 4th Quarter | 20.37 | | | | 15.54 | | | | 0.05 | | | | 18.61 | | | | 15.24 | | | | — | | |
| October 1, 2013 to October 31, 2013 | — | | | $ | — | | | — | | | $ | 269,321 | | (2) |
| November 1, 2013 to November 30, 2013 | 894,286 | | | 16.77 | | | | 886,509 | | | $ | 254,467 | | (2) |
| December 1, 2013 to December 31, 2013 | 1,238,872 | | | 18.34 | | | | 1,100,000 | | | $ | 234,290 | | (2) |
| Total | 2,133,158 | | | $ | 17.68 | | | 1,986,509 | | | | | | |
| | |
| --- | --- |
| (1) | During the fourth quarter of 2013, a total of 146,649 shares were surrendered by employees for payment of minimum tax obligations upon the vesting or exercise of previously granted stock-based compensation awards. Such shares were not repurchased as part of our publicly-announced stock repurchase programs. |
| PULTEGROUP, INC. | | 100.00 | | | 91.49 | | | 68.80 | | | 57.73 | | | 166.15 | | | 187.99 | |
| S&P 500 Index - Total Return | | 100.00 | | | 126.47 | | | 145.52 | | | 148.59 | | | 172.37 | | | 228.17 | |
Item 6. SELECTED FINANCIAL DATA
28 rewritten, 2 added, 4 removed, 28 unchanged
| | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | | [removed: 2009 (a)] [added: 2010] | | |
| Revenues | $ | [removed: 5,538,644] [added: 5,696,725] | | | $ | [removed: 4,659,110] [added: 5,538,644] | | | $ | [removed: 4,033,596] [added: 4,659,110] | | | $ | [removed: 4,447,627] [added: 4,033,596] | | | $ | [removed: 3,966,589] [added: 4,447,627] | |
| Income (loss) before income taxes | $ | [removed: 479,113] [added: 635,177] | | | $ | [removed: 157,991] [added: 479,113] | | | $ | [removed: (275,830] [added: 157,991] | [removed: )] | | $ | [removed: (1,240,155] [added: (275,830] | ) | | $ | [removed: (1,920,081] [added: (1,240,155] | ) |
| Revenues | $ | [removed: 140,951] [added: 125,638] | | | $ | [removed: 160,888] [added: 140,951] | | | $ | [removed: 103,094] [added: 160,888] | | | $ | [removed: 121,663] [added: 103,094] | | | $ | [removed: 117,800] [added: 121,663] | |
| Income (loss) before income taxes | $ | [removed: 48,709] [added: 54,581] | | | $ | [removed: 25,563] [added: 48,709] | | | $ | [removed: (34,470] [added: 25,563] | [removed: )] | | $ | [removed: 5,609] [added: (34,470] | [added: )] | | $ | [removed: (55,038] [added: 5,609] | [removed: )] |
| Revenues | $ | [removed: 5,679,595] [added: 5,822,363] | | | $ | [removed: 4,819,998] [added: 5,679,595] | | | $ | [removed: 4,136,690] [added: 4,819,998] | | | $ | [removed: 4,569,290] [added: 4,136,690] | | | $ | [removed: 4,084,389] [added: 4,569,290] | |
| Income (loss) before income taxes | $ | [removed: 527,822] [added: 689,758] | | | $ | [removed: 183,554] [added: 527,822] | | | $ | [removed: (310,300] [added: 183,554] | [removed: )] | | $ | [removed: (1,234,546] [added: (310,300] | ) | | $ | [removed: (1,975,119] [added: (1,234,546] | ) |
| Income tax expense (benefit) | [removed: (2,092,294] [added: 215,420] | | [removed: )] | | [removed: (22,591] [added: (2,092,294] | | ) | | [removed: (99,912] [added: (22,591] | | ) | | [removed: (137,817] [added: (99,912] | | ) | | [removed: (792,552] [added: (137,817] | | ) |
| Net income (loss) | $ | [removed: 2,620,116] [added: 474,338] | | | $ | [removed: 206,145] [added: 2,620,116] | | | $ | [removed: (210,388] [added: 206,145] | [removed: )] | | $ | [removed: (1,096,729] [added: (210,388] | ) | | $ | [removed: (1,182,567] [added: (1,096,729] | ) |
| Basic | $ | [removed: 6.79] [added: 1.27] | | | $ | [removed: 0.54] [added: 6.79] | | | $ | [removed: (0.55] [added: 0.54] | [removed: )] | | $ | [removed: (2.90] [added: (0.55] | ) | | $ | [removed: (3.94] [added: (2.90] | ) |
| Diluted | $ | [removed: 6.72] [added: 1.26] | | | $ | [removed: 0.54] [added: 6.72] | | | $ | [removed: (0.55] [added: 0.54] | [removed: )] | | $ | [removed: (2.90] [added: (0.55] | ) | | $ | [removed: (3.94] [added: (2.90] | ) |
| Basic | [removed: 383,077] [added: 370,377] | | | | [removed: 381,562] [added: 383,077] | | | | [removed: 379,877] [added: 381,562] | | | | [removed: 378,585] [added: 379,877] | | | | [removed: 300,179] [added: 378,585] | | |
| Effect of dilutive securities | [removed: 3,789] [added: 3,725] | | | | [removed: 3,002] [added: 3,789] | | | | [removed: —] [added: 3,002] | | | | — | | | | — | | |
| Diluted | [removed: 386,866] [added: 374,102] | | | | [removed: 384,564] [added: 386,866] | | | | [removed: 379,877] [added: 384,564] | | | | [removed: 378,585] [added: 379,877] | | | | [removed: 300,179] [added: 378,585] | | |
| Shareholders’ equity | $ | [removed: 12.19] [added: 13.01] | | | $ | [removed: 5.66] [added: 12.19] | | | $ | [removed: 5.07] [added: 5.66] | | | $ | [removed: 5.59] [added: 5.07] | | | $ | [removed: 8.39] [added: 5.59] | |
| Cash dividends declared | $ | [removed: 0.15] [added: 0.23] | | | $ | [removed: —] [added: 0.15] | | | $ | — | | | $ | — | | | $ | — | |
| House and land inventory | $ | [removed: 3,978,561] [added: 4,392,100] | | | $ | [removed: 4,214,046] [added: 3,978,561] | | | $ | [removed: 4,636,468] [added: 4,214,046] | | | $ | [removed: 4,781,813] [added: 4,636,468] | | | $ | [removed: 4,940,358] [added: 4,781,813] | |
| Total assets | [removed: 8,734,143] [added: 8,569,410] | | | | [removed: 6,734,409] [added: 8,734,143] | | | | [removed: 6,885,620] [added: 6,734,409] | | | | [removed: 7,699,376] [added: 6,885,620] | | | | [removed: 10,051,222] [added: 7,699,376] | | |
| Senior notes | [removed: 2,058,168] [added: 1,818,561] | | | | [removed: 2,509,613] [added: 2,058,168] | | | | [removed: 3,088,344] [added: 2,509,613] | | | | [removed: 3,391,668] [added: 3,088,344] | | | | [removed: 4,281,532] [added: 3,391,668] | | |
| Shareholders’ equity | [removed: 4,648,952] [added: 4,804,954] | | | | [removed: 2,189,616] [added: 4,648,952] | | | | [removed: 1,938,615] [added: 2,189,616] | | | | [removed: 2,135,167] [added: 1,938,615] | | | | [removed: 3,194,440] [added: 2,135,167] | | |
| Markets, at year-end | [removed: 48] [added: 49] | | | | [removed: 58] [added: 48] | | | | [removed: 61] [added: 58] | | | | [removed: 67] [added: 61] | | | | [removed: 69] [added: 67] | | |
| Active communities, at year-end | [removed: 577] [added: 598] | | | | [removed: 670] [added: 577] | | | | [removed: 700] [added: 670] | | | | [removed: 786] [added: 700] | | | | [removed: 882] [added: 786] | | |
| Closings (units) | [removed: 17,766] [added: 17,196] | | | | [removed: 16,505] [added: 17,766] | | | | [removed: 15,275] [added: 16,505] | | | | [removed: 17,095] [added: 15,275] | | | | [removed: 15,013] [added: 17,095] | | |
| Net new orders (units) | [removed: 17,080] [added: 16,652] | | | | [removed: 19,039] [added: 17,080] | | | | [removed: 15,215] [added: 19,039] | | | | [removed: 15,148] [added: 15,215] | | | | [removed: 14,185] [added: 15,148] | | |
| Backlog (units), at year-end | [removed: 5,772] [added: 5,850] | | | | [removed: 6,458] [added: 5,772] | | | | [removed: 3,924] [added: 6,458] | | | | [removed: 3,984] [added: 3,924] | | | | [removed: 5,931] [added: 3,984] | | |
| Average selling price (per unit) | $ | [removed: 305,000] [added: 329,000] | | | $ | [removed: 276,000] [added: 305,000] | | | $ | [removed: 259,000] [added: 276,000] | | | $ | 259,000 | | | $ | [removed: 258,000] [added: 259,000] | |
| Gross margin from home sales [removed: (b)] [added: (a)] | [removed: 20.5] [added: 23.3] | | % | | [removed: 15.8] [added: 20.5] | | % | | [removed: 12.8] [added: 15.8] | | % | | [removed: 9.4] [added: 12.8] | | % | | [removed: (10.5] [added: 9.4] | | [removed: )%] [added: %] |
| [removed: (b)] [added: (a)] | Homebuilding interest expense, which represents the amortization of capitalized interest, and land impairment charges are included in home sale cost of revenues. |
| | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | | | 2010 | | |
| | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | | | 2010 | | |
| | |
| --- | --- |
| (a) | Includes operations of Centex since August 18, 2009. |
| (a) | Includes operations of Centex Corporation since August 18, 2009. |
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
459 rewritten, 198 added, 190 removed, 932 unchanged
December 31, [removed: 2013] [added: 2014] and [removed: 2012][added: 2013]
| | [added: 2014 | | | |] 2013 | | | | 2012 | | |
| Cash and equivalents [removed: | $] [added: at beginning of period] | 1,580,329 | | | [removed: $] | 1,404,760 | | [added: | | 1,083,071 | | |]
| Restricted cash | [removed: 72,715] [added: 16,358] | | | | [removed: 71,950] [added: 72,715] | | |
| House and land inventory | [removed: 3,978,561] [added: 4,392,100] | | | | [removed: 4,214,046] [added: 3,978,561] | | |
[removed: |] Land held for sale [removed: | 61,735 | | | | 91,104 | | |]
| Land, not owned, under option agreements | [removed: 24,024] [added: 30,186] | | | | [removed: 31,066] [added: 24,024] | | |
| Residential mortgage loans available-for-sale | [removed: 287,933] [added: 339,531] | | | | [removed: 318,931] [added: 287,933] | | |
| Investments in unconsolidated entities | [removed: 45,323] [added: 40,368] | | | | [removed: 45,629] [added: 45,323] | | |
| Other assets | [removed: 460,621] [added: 513,032] | | | | [removed: 407,675] [added: 460,621] | | |
| Intangible assets | [removed: 136,148] [added: 123,115] | | | | [removed: 149,248] [added: 136,148] | | |
| Deferred tax assets, net | [removed: 2,086,754] [added: 1,720,668] | | | | [removed: —] [added: 2,086,754] | | |
| | $ | [removed: 8,734,143] [added: 8,569,410] | | | $ | [removed: 6,734,409] [added: 8,734,143] | |
| Accounts payable, including book overdrafts of [removed: $35,827] [added: $32,586] and [removed: $42,053] [added: $35,827] in [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] respectively | $ | [removed: 202,736] [added: 270,516] | | | $ | [removed: 178,274] [added: 202,736] | |
| Customer deposits | [removed: 134,858] [added: 142,642] | | | | [removed: 101,183] [added: 134,858] | | |
| Accrued and other liabilities | [removed: 1,377,750] [added: 1,343,774] | | | | [removed: 1,418,063] [added: 1,377,750] | | |
| Income tax liabilities | [removed: 206,015] [added: 48,722] | | | | [removed: 198,865] [added: 206,015] | | |
| Financial Services debt | [removed: 105,664] [added: 140,241] | | | | [removed: 138,795] [added: 105,664] | | |
| Senior notes | [removed: 2,058,168] [added: 1,818,561] | | | | [removed: 2,509,613] [added: 2,058,168] | | |
| Total liabilities | [removed: 4,085,191] [added: 3,764,456] | | | | [removed: 4,544,793] [added: 4,085,191] | | |
| Common stock, $0.01 par value; 500,000,000 shares authorized, [removed: 381,299,600] [added: 369,458,530] and [removed: 386,608,436] [added: 381,299,600] shares issued and outstanding at December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] respectively | [removed: 3,813] [added: 3,695] | | | | [removed: 3,866] [added: 3,813] | | |
| Additional paid-in capital | [removed: 3,052,016] [added: 3,072,996] | | | | [removed: 3,030,889] [added: 3,052,016] | | |
| Accumulated other comprehensive loss | [removed: (795] [added: (690] | | ) | | [removed: (992] [added: (795] | | ) |
| Retained earnings [removed: (accumulated deficit)] | [removed: 1,593,918] [added: 1,728,953] | | | | [removed: (844,147] [added: 1,593,918] | | [removed: )] |
| Total shareholders’ equity | [removed: 4,648,952] [added: 4,804,954] | | | | [removed: 2,189,616] [added: 4,648,952] | | |
For the years ended December 31, [added: 2014,] 2013, [removed: 2012,] and [removed: 2011][added: 2012]
| | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |
| Home sale revenues | $ | [removed: 5,424,309] [added: 5,662,171] | | | $ | [removed: 4,552,412] [added: 5,424,309] | | | $ | [removed: 3,950,743] [added: 4,552,412] | |
| Land sale revenues | [removed: 114,335] [added: 34,554] | | | | [removed: 106,698] [added: 114,335] | | | | [removed: 82,853] [added: 106,698] | | |
| | [removed: 5,538,644] [added: 5,696,725] | | | | [removed: 4,659,110] [added: 5,538,644] | | | | [removed: 4,033,596] [added: 4,659,110] | | |
| Financial Services | [removed: 140,951] [added: 125,638] | | | | [removed: 160,888] [added: 140,951] | | | | [removed: 103,094] [added: 160,888] | | |
| Total revenues | [removed: 5,679,595] [added: 5,822,363] | | | | [removed: 4,819,998] [added: 5,679,595] | | | | [removed: 4,136,690] [added: 4,819,998] | | |
| Home sale cost of revenues | [removed: 4,310,528] [added: 4,343,249] | | | | [removed: 3,833,451] [added: 4,310,528] | | | | [removed: 3,444,398] [added: 3,833,451] | | |
| Land sale cost of revenues | [removed: 104,426] [added: 23,748] | | | | [removed: 94,880] [added: 104,426] | | | | [removed: 59,279] [added: 94,880] | | |
| | [removed: 4,414,954] [added: 4,366,997] | | | | [removed: 3,928,331] [added: 4,414,954] | | | | [removed: 3,503,677] [added: 3,928,331] | | |
| Financial Services expenses | [removed: 92,379] [added: 71,239] | | | | [removed: 135,511] [added: 92,379] | | | | [removed: 137,666] [added: 135,511] | | |
| Selling, general, and administrative expenses | [removed: 568,500] [added: 667,815] | | | | [removed: 514,457] [added: 568,500] | | | | [removed: 519,583] [added: 514,457] | | |
| Other expense, net | [removed: 80,753] [added: 38,745] | | | | [removed: 66,298] [added: 80,753] | | | | [removed: 293,102] [added: 66,298] | | |
| Interest income | [removed: (4,395] [added: (4,632] | | ) | | [removed: (4,913] [added: (4,395] | | ) | | [removed: (5,055] [added: (4,913] | | ) |
| Interest expense | [removed: 712] [added: 849] | | | | [removed: 819] [added: 712] | | | | [removed: 1,313] [added: 819] | | |
| | 2014 | | | | 2013 | | |
| Cash and equivalents | $ | 1,292,862 | | | $ | 1,580,329 | |
| | $ | 8,569,410 | | | $ | 8,734,143 | |
For the years ended December 31, 2014, 2013, and 2012
For the years ended December 31, 2014, 2013, and 2012
| Stock option exercises | 1,422 | | | 14 | | | | 15,613 | | | | — | | | | — | | | | 15,627 | | |
| Dividends declared | — | | | — | | | | 72 | | | | — | | | | (86,442 | | ) | | (86,370 | | ) |
| Stock repurchases | (13,220 | ) | | (132 | | ) | | — | | | | — | | | | (252,887 | | ) | | (253,019 | | ) |
| Excess tax benefits (deficiencies) from stock-based compensation | — | | | — | | | | (8,491 | | ) | | — | | | | — | | | | (8,491 | | ) |
| Net income | — | | | — | | | | — | | | | — | | | | 474,338 | | | | 474,338 | | |
| Shareholders' Equity, December 31, 2014 | 369,459 | | | $ | 3,695 | | | $ | 3,072,996 | | | $ | (690 | ) | | $ | 1,728,953 | | | $ | 4,804,954 | |
For the years ended December 31, 2014, 2013, and 2012
| Net income | $ | 474,338 | | | $ | 2,620,116 | | | $ | 206,145 | |
| Equity in earnings of unconsolidated entities | (8,408 | | ) | | (1,130 | | ) | | (4,059 | | ) |
| Cash used for business acquisition | (82,419 | | ) | | — | | | | — | | |
Business acquisition
We acquired certain real estate assets from Dominion Homes in August 2014 for $82.4 million in cash and the assumption of certain payables related to such assets.
The net assets acquired are located in Columbus, Ohio, and Louisville and Lexington, Kentucky, and included approximately 8,200 lots, including approximately 400 homes in inventory and control of approximately 900 lots through option contracts.
We also assumed a sales order backlog of 622 homes.
The acquired net assets were recorded at their estimated fair values.
The acquisition of these assets was not material to our results of operations or financial condition.
| Net income | $ | 474,338 | | | $ | 2,620,116 | | | $ | 206,145 | |
| Basic | $ | 1.27 | | | $ | 6.79 | | | $ | 0.54 | |
| Diluted | $ | 1.26 | | | $ | 6.72 | | | $ | 0.54 | |
We capitalize interest cost into homebuilding inventories.
value of the community.
See [Note 3](#sCB05022D30EBBFAE7A49673AF3B41535).
No VIEs required consolidation at either December 31, 2014 or December 31, 2013 because we determined that we were not the primary beneficiary.
| | $ | 127,280 | | | $ | 1,890,585 | | | $ | 30,186 | | | $ | 91,034 | | | $ | 1,390,286 | | | $ | 24,024 | |
See [Note 12](#s57794A3354316563858A673AF3C8D06A).
| | $ | 4,423 | | | $ | 4,337 | | | $ | 8,191 | | | $ | 607 | |
New accounting pronouncements
In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-04, “Receivables - Troubled Debt Restructurings by Creditors,” which clarifies when an in substance repossession or foreclosure of residential real estate property collateralizing a consumer mortgage loan has occurred.
By doing so, this guidance helps determine when the creditor should derecognize the loan receivable and recognize the real estate property.
The guidance is effective for us beginning January 1, 2015 and is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”).
The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services.
ASU 2014-09 is effective for us for fiscal and interim periods beginning January 1, 2017 and allows for full retrospective or modified retrospective methods of adoption.
We are currently evaluating the impact that the standard will have on our financial statements.
In June 2014, the FASB issued Accounting Standards Update No. 2014-11, "Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures” ("ASU 2014-11"), which makes limited amendments to ASC 860, "Transfers and Servicing." The ASU requires entities to account for repurchase-to-maturity transactions as secured borrowings, eliminates accounting guidance on linked repurchase financing transactions, and expands disclosure requirements related to certain transfers of financial assets.
PULTEGROUP, INC.
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Shareholders' Equity, January 1, 2011 | 382,028 | | | $ | 3,820 | | | $ | 2,972,919 | | | $ | (1,519 | ) | | $ | (840,053 | ) | | $ | 2,135,167 | |
| Stock repurchases | (364 | ) | | (4 | | ) | | (3,128 | | ) | | — | | | | 296 | | | | (2,836 | | ) |
| Net income (loss) | — | | | — | | | | — | | | | — | | | | (210,388 | | ) | | (210,388 | | ) |
| Goodwill impairments | — | | | | — | | | | 240,541 | | |
| Cash and equivalents at beginning of period | 1,404,760 | | | | 1,083,071 | | | | 1,483,390 | | |
Restricted cash consists primarily of deposits maintained with financial institutions under certain cash-collateralized letter of credit agreements (see [Note 7](#s20F325B67BD5C67DA790018ECD65A843)).
Some of these unconsolidated entities purchase, develop, and/or sell land and homes.
The cost method of accounting is used for investments in which we have less than a 20% ownership interest and do not have the ability to exercise significant influence.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Additionally, each unconsolidated entity evaluates its long-lived assets, such as inventory, for recoverability in accordance with ASC 360-10, “Property, Plant, and Equipment – Impairment or Disposal of Long-Lived Assets” (“ASC 360-10”).
Our proportionate share of any such impairments is also recorded to equity in (earnings) loss of unconsolidated entities in the Consolidated Statements of Operations.
Evaluations of recoverability under both ASC 323 and ASC 360-10 are primarily based on projected cash flows.
Such receivables are reported net of allowance for credit losses within other assets.
The following represents our notes receivable and related allowance for credit losses ($000’s omitted):
| Notes receivable, gross | $ | 59,995 | | | $ | 57,841 | |
| Allowance for credit losses | (27,051 | | ) | | (26,865 | | ) |
Such receivables are generally reported in other assets.
See Residential mortgage loans available-for-sale in [Note 1](#s0D55546D1EBEA60BBA5E018ECDA10720) for a discussion of our receivables related to mortgage operations.
Company contributions to these plans were suspended during 2011 but reinstated in 2012.
| Goodwill impairments [(Note 2)](#s9AEC9DBC8BAD2232B482018ECD5B1DA7) | — | | | | — | | | | 240,541 | | |
All stock options, unvested restricted stock, and other potentially dilutive instruments were excluded from the calculation during 2011 due to the net loss recorded during the period.
We measure compensation cost for stock options at fair value on the grant date and recognize compensation expense on the graded vesting method over the vesting period.
The graded vesting method provides for vesting of portions of the overall awards at interim dates and results in greater expense in earlier years than the straight-line method.
The fair value of our stock options is determined using the Black-Scholes valuation model.
If we are determined to be the primary beneficiary of the VIE, we are required to consolidate the VIE.
Certain of our land option agreements are with entities considered VIEs.
In evaluating whether we are required to consolidate a VIE, we take into consideration that the VIE is generally protected from the first dollar of loss under our land option agreement due to our deposit.
Likewise, the VIE's gains are generally capped based on the purchase price within the land option agreement.
However, we generally have little control or influence over the operations of these VIEs due to our lack of an equity interest in them.
Additionally, creditors of the VIE typically have no recourse against us, and we do not provide financial or other support to these VIEs other than as stipulated in the land option agreements.
Historically, cancellations of land option agreements have resulted in write-offs of the related deposits and pre-acquisition costs but have not exposed us to the overall risks or losses of the applicable VIEs.
No VIEs required consolidation at either December 31, 2013 or December 31, 2012.
Such amounts represent the remaining purchase price under the land option agreements, some of which are with VIEs, in the event we exercise the purchase rights under the agreements.
| | $ | 91,034 | | | $ | 1,390,286 | | | $ | 24,024 | | | $ | 70,116 | | | $ | 923,392 | | | $ | 31,066 | |
Home purchasers are provided with a limited warranty against certain building defects.
| | $ | 8,191 | | | $ | 607 | | | $ | 6,320 | | | $ | 1,000 | |
Goodwill
An excerpt. Shown here: 40 of 459 rewritten, 40 of 198 added and 40 of 190 removed. The counts are complete. For every sentence, read Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA in the FY2014 filing and the FY2013 filing.
Item 9A. CONTROLS AND PROCEDURES
10 rewritten, 7 added, 2 removed, 28 unchanged
Management, including our Chairman, President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, [removed: 2013.][added: 2014.]
Based upon, and as of the date of that evaluation, our Chairman, President and Chief Executive Officer and Executive Vice President and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December 31, [removed: 2013.][added: 2014.]
In order to ensure that the Company’s internal control over financial reporting is effective, management regularly assesses such controls and did so most recently for its financial reporting as of December 31, [removed: 2013.][added: 2014.]
Management’s assessment was based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (1992] [added: (2013] Framework).
Based on this assessment, management asserts that the Company has maintained effective internal control over financial reporting as of December 31, [removed: 2013.][added: 2014.]
Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this annual report, has issued its report on the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2013.][added: 2014.]
We have audited PulteGroup, Inc.’s internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (1992] [added: (2013] Framework) (the COSO criteria).
In our opinion, PulteGroup, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of PulteGroup, Inc. as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] and the related consolidated statements of operations, comprehensive [removed: income (loss),] [added: income,] shareholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2013] [added: 2014] and our report dated February [removed: 5, 2014] [added: 4, 2015] expressed an unqualified opinion thereon.
There has been no change in our internal control over financial reporting during the quarter ended December 31, [removed: 2013] [added: 2014] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
On August 22, 2014, the Company completed the acquisition of certain real estate assets from Dominion Homes.
As permitted by the Securities and Exchange Commission, management excluded the operations related to such assets from its assessment of internal control over financial reporting as of December 31, 2014.
Such operations constituted approximately $105 million of consolidated total assets as of December 31, 2014, and $74 million of consolidated total revenues for the year then ended.
As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of certain real estate assets acquired from Dominion Homes on August 22, 2014, which are included in the 2014 consolidated financial statements of PulteGroup, Inc. and constituted $105 million of consolidated total assets as of December 31, 2014, and $74 million of consolidated total revenues for the year then ended.
Our audit of internal control over financial reporting of PulteGroup, Inc. also did not include an evaluation of the internal control over financial reporting of the operations of certain real estate assets acquired from Dominion Homes.
Atlanta, Georgia
February 4, 2015
Detroit, Michigan
February 5, 2014
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
3 rewritten, 0 added, 0 removed, 4 unchanged
Information required by this Item with respect to members of our Board of Directors and with respect to our audit committee will be contained in the Proxy Statement for the [removed: 2014] [added: 2015] Annual Meeting of Shareholders [removed: (“2014] [added: (“2015] Proxy Statement”) under the captions “Election of Directors” and “Committees of the Board of Directors - Audit Committee” and in the chart disclosing Audit Committee membership and is incorporated herein by this reference.
Information required by this Item with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 will be contained in the [removed: 2014] [added: 2015] Proxy Statement under the caption “Beneficial Security Ownership - Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by this reference.
Information required by this Item with respect to our code of ethics will be contained in the [removed: 2014] [added: 2015] Proxy Statement under the caption “Corporate Governance - Governance Guidelines; Code of Ethical Business Conduct; Code of Ethics” and is incorporated herein by this reference.
Item 11. EXECUTIVE COMPENSATION
1 rewritten, 0 added, 0 removed, 2 unchanged
Information required by this Item will be contained in the [removed: 2014] [added: 2015] Proxy Statement under the captions [removed: “2013] [added: “2014] Executive Compensation” and [removed: “2013] [added: “2014] Director Compensation” and is incorporated herein by this reference, provided that the Compensation and Management Development Committee Report shall not be deemed to be “filed” with this Annual Report on Form 10-K.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLER MATTERS
1 rewritten, 0 added, 0 removed, 2 unchanged
Information required by this Item will be contained in the [removed: 2014] [added: 2015] Proxy Statement under the captions “Beneficial Security Ownership” and “Equity Compensation Plan Information” and is incorporated herein by this reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
1 rewritten, 0 added, 0 removed, 0 unchanged
Information required by this Item will be contained in the [removed: 2014] [added: 2015] Proxy Statement under the captions “Certain Relationships and Related Transactions” and “Election of Directors - Independence” and is incorporated herein by this reference.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
1 rewritten, 0 added, 0 removed, 3 unchanged
Information required by this Item will be contained in the [removed: 2014] [added: 2015] Proxy Statement under the captions “Audit and Non-Audit Fees” and “Audit Committee Preapproval Policies” and is incorporated herein by reference.
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
36 rewritten, 18 added, 14 removed, 134 unchanged
| [Consolidated Balance Sheets at December 31, [removed: 2013] [added: 2014] and [removed: 2012](#s587DA6FC02EF53D3460F018ECD6F6902)] [added: 2013](#sA9FD92D79FB5AA833439673AF684CF49)] | [removed: [46](#s7A5A24F26B427ADBEB4C018ECDC9EA99)] [added: [43](#sA9FD92D79FB5AA833439673AF684CF49)] |
| [Consolidated Statements of Operations for the years ended December 31, [added: 2014,] 2013, [removed: 2012,] and [removed: 2011](#s587DA6FC02EF53D3460F018ECD6F6902)] [added: 2012](#sB5EB661A3DB877E228C9673AF5B28EAD)] | [removed: [47](#sD1E6860CE17F2CC17F7E018ECD47370C)] [added: [44](#sB5EB661A3DB877E228C9673AF5B28EAD)] |
| [Consolidated Statements of Comprehensive Income [removed: (Loss)] for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#sF79EF1226E82C42670D3018ECF13B11C)] [added: 2012](#s5DF87C4695214135AB9E673AF7746692)] | [removed: [48](#sF79EF1226E82C42670D3018ECF13B11C)] [added: [45](#s5DF87C4695214135AB9E673AF7746692)] |
| [Consolidated Statements of Shareholders' Equity for the years ended December 31, [added: 2014,] 2013, [removed: 2012,] and [removed: 2011](#s587DA6FC02EF53D3460F018ECD6F6902)] [added: 2012](#s0415CBEBE0A9D8A4845C673AF58AEAE9)] | [removed: [49](#s96DE62E759AD343DD874018ECE4B0705)] [added: [46](#s0415CBEBE0A9D8A4845C673AF58AEAE9)] |
| [Consolidated Statements of Cash Flows for the years ended December 31, [added: 2014,] 2013, [removed: 2012,] and [removed: 2011](#s587DA6FC02EF53D3460F018ECD6F6902)] [added: 2012](#sBC3E85278781983DF119673AF40E0195)] | [removed: [50](#s71954834488FAC742306018ECD29DED8)] [added: [47](#sBC3E85278781983DF119673AF40E0195)] |
| [Notes to Consolidated Financial [removed: Statements](#s79B374765C954CBAE751018EE4699B82)] [added: Statements](#s375514D3152EFEC3C990673B145889AD)] | [removed: [51](#s79B374765C954CBAE751018EE4699B82)] [added: [48](#s375514D3152EFEC3C990673B145889AD)] |
| | | [removed: (c)] [added: (l)] | | [removed: Facility Agreement dated as of June 23, 2009 among] PulteGroup, [removed: Inc., Various Financial Institutions, and Deutsche Bank AG, New York Branch] [added: Inc. 2013 Stock Incentive Plan] (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K, filed with the SEC on [removed: June 26, 2009)] [added: May 13, 2013)] |
| | | [removed: (d)] [added: (c)] | | PulteGroup, Inc. 2000 Stock Incentive Plan for Key Employees (Incorporated by reference to Exhibit 4.3 of our Registration Statement on Form S-8, Registration No. 333-66284) |
| | | [removed: (e)] [added: (d)] | | PulteGroup, Inc. 2000 Stock Plan for Nonemployee Directors (Incorporated by reference to Exhibit 4.3 of our Registration Statement on Form S-8, Registration No. 333-66284) |
| | | [removed: (f)] [added: (e)] | | PulteGroup, Inc. 2002 Stock Incentive Plan (Incorporated by reference to our Proxy Statement dated April 3, 2002 and as Exhibit 4.3 of our Registration Statement on Form S-8, No. 333-123223) |
| | | [removed: (g)] [added: (f)] | | PulteGroup, Inc. 2008 Senior Management Incentive Plan (Incorporated by reference to our Proxy Statement dated April 7, 2008) |
| | | [removed: (h)] [added: (g)] | | PulteGroup, Inc. 2013 Senior Management Incentive Plan (Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K, filed with the SEC on May 13, 2013) |
| | | [removed: (i)] [added: (h)] | | PulteGroup, Inc. Long-Term Incentive Program (Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K, filed with the SEC on May 20, 2008) |
| | | [removed: (j)] [added: (i)] | | Form of PulteGroup, Inc. Long Term Incentive Award Agreement (Incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K, filed with the SEC on May 20, 2008) |
| | | [removed: (k)] [added: (j)] | | Form of PulteGroup, Inc. 2008-2010 Grant Acceptance Agreement - Company Performance Measures (Incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K, filed with the SEC on May 20, 2008) |
| | | [removed: (l)] [added: (k)] | | Form of PulteGroup, Inc. 2008-2010 Grant Acceptance Agreement - Individual Performance Measures (Incorporated by reference to Exhibit 10.5 of our Current Report on Form 8-K, filed with the SEC on May 20, 2008) |
| | | [removed: (m)] [added: (n)] | | [added: Form of Restricted Stock Unit Award Agreement under] PulteGroup, Inc. 2013 Stock Incentive Plan (Incorporated by reference to Exhibit [removed: 10.1] [added: 10(c)] of our [removed: Current] [added: Quarterly] Report on Form [removed: 8-K, filed with] [added: 10-Q for] the [removed: SEC on May 13, 2013)] [added: quarter ended March 31, 2014)] |
| | | [removed: (n)] [added: (m)] | | PulteGroup, Inc. 2004 Stock Incentive Plan (as Amended and Restated as of July 9, 2009) (Incorporated by reference to Exhibit 10(a) of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009) |
| | | (p) | | Form of Restricted Stock Award Agreement (as amended) under PulteGroup, Inc. 2004 Stock Incentive Plan [removed: (Filed herewith)] [added: (Incorporated by reference to Exhibit 10(p) of our Annual Report on Form 10-K for the year ended December 31, 2013)] |
| | | (q) | | Form of Restricted Stock Award Agreement (as amended) under PulteGroup, Inc. 2000 Stock Incentive Plan for Key Employees [removed: ( Incorporated] [added: (Incorporated] by reference to Exhibit 10(b) of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010) |
| | | (ai) | | Third Amendment to Master Repurchase Agreement dated as of [removed: September 13, 2013] [added: January 24, 2014] among Comerica Bank, as Agent and a Buyer, the other Buyers party hereto and Pulte Mortgage LLC, as Seller [removed: (filed herewith)] [added: (Incorporated by reference to Exhibit 10(ai) of our Annual Report on Form 10-K for the year ended December 31, 2013)] |
| (12) | | | | Ratio of Earnings to Fixed Charges at December 31, [removed: 2013] [added: 2014] (Filed herewith) |
| February [removed: 5, 2014] [added: 4, 2015] | By: | | /s/ Robert T. O'Shaughnessy |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capabilities and on the [removed: dates] [added: date] indicated:
| [removed: /s/ Richard J. Dugas, Jr.] | [removed: |] Chairman of the Board of Directors, President, and Chief Executive Officer (Principal Executive Officer) | | [removed: February 5, 2014] | [added: Executive Vice President and Chief Financial Officer (Principal Financial Officer) | | | Vice President, Finance and Controller (Principal Accounting Officer) |]
| [added: | /s/] Richard J. Dugas, Jr. | | | [added: /s/ Robert T. O'Shaughnessy] | | [added: | /s/ James L. Ossowski |]
| [removed: /s/ Robert T. O'Shaughnessy] | | [added: | | | | |] Executive Vice President and Chief Financial Officer [removed: (Principal Financial Officer)] | [removed: | February 5, 2014 |]
| [removed: Robert T. O'Shaughnessy] | | | | | [added: | | /s/ Robert T. O'Shaughnessy |]
| [removed: /s/] [added: |] Brian P. Anderson | | [added: |] Member of Board of Directors | [added: }] | [removed: February 5, 2014] | [added: |]
| [removed: /s/] [added: |] Bryce Blair | | [added: |] Member of Board of Directors | [added: }] | [removed: February 5, 2014] | [added: |]
| [removed: /s/] [added: |] Thomas J. Folliard | | [added: |] Member of Board of Directors | [added: }] | [removed: February 5, 2014] | [added: |]
| [removed: /s/] [added: |] Cheryl W. Grisé | | [added: |] Member of Board of Directors | [added: }] | [removed: February 5, 2014] | [added: |]
| [removed: /s/] [added: |] André J. Hawaux | | [added: |] Member of Board of Directors | [added: }] | [removed: February 5, 2014] | [added: |]
| [removed: /s/] [added: |] Debra J. Kelly-Ennis | | [added: |] Member of Board of Directors | [added: }] | [removed: February 5, 2014] | [added: |]
| [removed: /s/] [added: |] Patrick J. O’Leary | | [added: |] Member of Board of Directors | [added: }] | [removed: February 5, 2014] | [added: |]
| [removed: /s/] [added: |] James J. Postl | | [added: |] Member of Board of Directors | [added: }] | [removed: February 5, 2014] | [added: |]
| | | (aj) | | Fourth Amendment to Master Repurchase Agreement dated as of September 8, 2014 among Comerica Bank, as Agent and a Buyer, the other Buyers party thereto and Pulte Mortgage LLC, as Seller (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on September 10, 2014) |
| | | (ak) | | Credit Agreement dated as of July 23, 2014 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 Hereto (Incorporated by reference to Exhibit 10(a) of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014) |
| (24) | | | | Power of Attorney (filed herewith) |
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| | February 4, 2015 | | | | | | |
| | | | | | | | |
| | Richard J. Dugas, Jr. | | | Robert T. O'Shaughnessy | | | James L. Ossowski |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | Robert T. O'Shaughnessy |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | |
| --- | --- | --- | --- | --- |
| | | (aj) | | Separation Agreement dated as of November 30, 2012, between PulteGroup, Inc. and John B. Bertero III (Incorporated by referenced to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on December 4, 2012) |
| Signature | | Title | | Date |
| /s/ James L. Ossowski | | Vice President, Finance and Controller (Principal Accounting Officer) | | February 5, 2014 |
| James L. Ossowski | | | | |
| Brian P. Anderson | | | | |
| Bryce Blair | | | | |
| Thomas J. Folliard | | | | |
| Cheryl W. Grisé | | | | |
| André J. Hawaux | | | | |
| Debra J. Kelly-Ennis | | | | |
| Patrick J. O’Leary | | | | |
| James J. Postl | | | | |