PulteGroup (PHM) 10-K risk factor changes: FY2020 vs FY2019

[removed: Beginning] [added: For example, beginning] in 2006 and continuing through 2011, the U.S. housing market was unfavorably impacted by severe weakness in new home sales attributable to, among other factors, weak consumer confidence, tightened mortgage standards, significant foreclosure activity, a more challenging appraisal environment, higher than normal unemployment levels, and significant uncertainty in the global economy.

During this period, we incurred significant losses, including impairments of our land inventory and certain other [removed: assets.][added: assets, and some aspects of the housing industry have yet to return to pre-2007 production levels.]

While the Tax Act [removed: lowers] [added: lowered] the tax rates applicable to many businesses and individuals, it also, among other things, (i) limits the federal deduction for mortgage interest so that it only applies to the first $750,000 of a new mortgage (as compared to $1 million under previous tax law), (ii) introduced a $10,000 cap on the federal deduction for state and local taxes, including real estate taxes, and (iii) eliminated the federal deduction for interest on certain home equity loans.

As a result, fewer individuals are expected to itemize their income tax deductions, which would [removed: mitigate] [added: reduce] the income tax advantages associated with homeownership for those individuals.

Any further changes in income tax law which [removed: eliminates] [added: eliminate] or [removed: reduces] [added: further reduce] the income tax benefits associated with home ownership could have an adverse impact on our business.

Our success depends on our ability to acquire land suitable for residential homebuilding [removed: at reasonable prices,] in accordance with our land investment criteria.

During [added: 2020 and] 2019, we experienced [added: supply chain constraints,] increases in the prices of some building [removed: materials] [added: materials,] and shortages of skilled labor in some areas.

[removed: We may not be able to pass on increases in construction] costs to customers and generally are unable to pass on any such increases to customers who have already entered into sales contracts as those sales contracts generally fix the price of the home at the time the contract is signed, which may be well in advance of the construction of the home.

For example, we incurred land-related charges totaling [added: $20.3 million,] $27.1 million, [added: and] $99.4 [removed: million, $191.9] million in [added: 2020,] 2019, [added: and] 2018, [removed: 2017,] respectively.

We may also be [removed: required] [added: asked] to indemnify underwriters that purchased and securitized loans originated by a former subsidiary of Centex Corporation ("Centex"), which we acquired in 2009, for losses incurred by investors in those securitized loans based on similar breaches of representations and warranties.

Given the unsettled [removed: litigation,] [added: nature of these claims,] changes in values of underlying collateral over time, and other uncertainties regarding the ultimate resolution of these claims, actual costs could differ from our current estimates.

At December 31, [removed: 2019,] [added: 2020,] we had cash, cash equivalents, and restricted cash of [removed: $1.3] [added: $2.6] billion as well as [removed: $737.2] [added: $750.3] million available under our revolving credit [removed: facility, net of] [added: facility ("Revolving Credit Facility"), less any] outstanding letters of [removed: credit.][added: credit issued under the terms of our credit facilities.]

At December 31, [removed: 2019,] [added: 2020,] we had outstanding letters of credit and surety bonds totaling [removed: $262.8] [added: $249.7] million and [removed: $1.4] [added: $1.5] billion, respectively.

Although we believe our approach to determining the tax treatment for such items is appropriate, no assurance can be given that the final tax authority review will not be materially different than that which is reflected in our income tax provision and related tax [added: reserves.]

As of December 31, [removed: 2019,] [added: 2020,] we had deferred tax assets, net of deferred tax liabilities, of [removed: $254.1] [added: $102.5] million, against which we provided a valuation allowance of [removed: $84.0] [added: $69.8] million.

The value of our deferred tax assets [removed: is] [added: and liabilities are] also dependent upon the tax rates expected to be in effect at the time [removed: taxable income is expected to be generated.][added: they are realized.]

A [removed: decrease] [added: change] in enacted corporate tax rates in our major jurisdictions, especially the U.S. federal corporate tax rate, would [removed: decrease] [added: change] the value of our deferred [removed: tax assets,] [added: taxes,] which could be material.

[removed: If defective materials are used,] [added: In such cases,] it can result in the need to perform extensive repairs to large numbers of homes.

We reserve for costs to cover our self-insured and deductible amounts under these policies and for any costs of claims and lawsuits based on an analysis of our historical claims, which includes an estimate of claims incurred [removed: but not yet reported.]

[removed: Because of the uncertainties inherent in these matters, we cannot provide assurance that our] [added: Our] insurance coverage, our subcontractor arrangements, and our reserves [removed: will] [added: may not] be adequate to address all our warranty and construction defect claims in the future.

[removed: In] [added: For instance, in] 2019 and 2018, several hurricanes caused disruptions in our [removed: south eastern] [added: southeastern] coastal markets but did not result in a material impact to our results of operations.

In addition, while they also did not have a material impact on our business in [added: 2020 or] 2019, the increased prevalence of forest fires in our western markets have caused disruptions to our sales operations and development delays.

[removed: As] [added: In addition, as] local governmental authorities and utilities are required to spend increasing amounts of their resources responding to and remediating weather and climate related events, their ability to provide approvals and service to new housing communities may be impaired.

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 cyberattacks from computer hackers and sophisticated organizations), catastrophic events such as fires, tornadoes and hurricanes, [removed: and] usage errors by our [removed: employees] [added: employees,] or cyber-attacks or errors by third party vendors who have access to our confidential [removed: data,] [added: data] or that of our customers.

While [added: to our knowledge] we [added: have not experienced a significant cyber-attack, we] are continuously working to improve our information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to enhance our levels of protection, to the extent possible, against cyber risks and security breaches, and monitor to prevent, detect, address and mitigate the risk of unauthorized access, misuse, computer viruses and other events that could have an impact on our business, there is no assurance that advances in computer capabilities, new technologies, methods or other developments will detect or prevent security breaches and safeguard access to proprietary or confidential information.

When we learn of practices that do not comply with applicable laws or regulations, including practices relating to homes, buildings, or multifamily [removed: rental] properties we build or finance, we move [removed: actively] to stop the non-complying practices as soon as possible, and we have taken disciplinary action regarding subcontractors and employees of ours who were aware of non-complying practices and did not take steps to address them, including in some instances terminating their employment.

[added: Adverse publicity or negative] commentary from any media outlets could damage our reputation and reduce the demand for our homes, which would adversely affect our business.

Risks Related to the COVID-19 Pandemic

Our business has been materially and adversely disrupted by the present outbreak and worldwide spread of COVID-19 and could be materially and adversely disrupted by another epidemic or pandemic, or similar public threat, or fear of such an event, and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it.

An epidemic, pandemic, or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, and/or along with any associated economic and/or social instability or distress, have a significant adverse impact on our consolidated financial statements.

On March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended containment and mitigation measures worldwide.

On March 13, 2020, the United States declared a national emergency concerning the COVID-19 outbreak, and shortly thereafter many states and municipalities also declared public health emergencies.

Along with these declarations, extraordinary and wide-ranging actions were taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world, including quarantines, “shelter-in-place” orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.

For instance, our business was impacted by restrictions on travel, the inability to keep our sales centers open for in-person customer interactions, limits on our ability to continue physical construction of homes and adjustments to many of our other business processes to limit direct interactions.

The severity of these restrictions and the extent of their impact on our operations has varied by market based upon the scope of "shelter in place" orders and public health conditions.

While all of the above-referenced steps were necessary and appropriate in light of the COVID-19 pandemic, they have impacted our ability to operate our business in its ordinary and traditional course.

Those restrictions, combined with a reduction in the availability, capacity, and efficiency of municipal and private services

necessary to progress land development, homebuilding, mortgage loan originations, and home sales, which in each case varied by market depending on the scope of the restrictions local authorities have established, tempered our sales pace and delayed home construction and deliveries.

The inconsistent pace of recovery from the cessation of normal activities in the second quarter of 2020 impacted our ability to start homes in that quarter, which impacts our ability to advance production at typical paces in some markets through the date of this report.

While our operations are now fully functioning, subject to regulated restrictions and safety constraints we have enacted in order to protect our employees, trade contractors, and customers, the current resurgence of the COVID pandemic in key areas of our operations may require us to implement restrictions on our operations.

The potential magnitude or duration of the business and economic impacts from the unprecedented public health effort to contain and combat the spread of COVID-19 are uncertain and could include, among other things, significant volatility in financial markets.

The COVID-19 public health effort may be intensified to such an extent that we will not be able to conduct any business operations in certain of our served markets or at all for an indefinite period.

In addition, efforts by local governments and agencies to lift restrictions on individuals’ daily activities and businesses’ normal operations may result in a resurgence of a pandemic or epidemic like COVID-19 and potentially prolong and intensify the impact of the crisis.

Despite the development of a vaccine and more effective treatments for the physical impacts of COVID-19, there are no reliable estimates of how long the COVID-19 pandemic will last, and therefore, the unpredictability of the current economic and public health conditions will continue to evolve.

Our business has also been impacted by constraints to the labor and supply chain we rely on to construct our homes.

The continuing pandemic has caused our employees and those of our trade partners to miss workdays due to illness or quarantine.

In addition, our supply chain has been impacted by similar labor interruptions slowing production capacity and by increased demand on raw materials generated in part by the COVID pandemic.

The combination of these factors can lead to increased costs and reductions in our production times.

Our business could also be negatively impacted over the medium-to-longer term if the disruptions related to COVID-19 decrease consumer confidence generally or with respect to purchasing a home; cause civil unrest; precipitate a prolonged economic downturn and/or an extended rise in unemployment or tempering of wage growth, any of which could lower demand for our products, impair our ability to sell and build homes in a typical manner or at all, generate revenues and cash flows, and/or access the capital or lending markets (or significantly increase the costs of doing so), as may be necessary to sustain our business; increase the costs or decrease the supply of building materials or the availability of subcontractors and other talent, including as a result of infections or medically necessary or recommended self-quarantining, or governmental mandates to direct production activities to support public health efforts; and/or result in our recognizing charges in future periods, which may be material, for inventory impairments or land option contract abandonments, or both, related to our current inventory assets.

The unprecedented uncertainty surrounding COVID-19, due to rapidly changing governmental directives, public health challenges and progress, macroeconomic consequences, and market reactions thereto, also makes it more challenging for our management to estimate the future performance of our business and develop strategies to generate growth or achieve our objectives for 2021 and beyond.

Should the adverse impacts described above (or others that are currently unknown) occur, whether individually or collectively, we would expect to experience, among other things, increases in the cancellation rates for homes in our backlog, and decreases in our net orders, homes delivered, revenues, and profitability, as we experienced in the first few weeks of our second quarter of 2020.

Such impacts could be material to our consolidated financial statements in future reporting periods.

We could also be forced to reduce our average selling prices in order to generate consumer demand or in reaction to competitive pressures.

In addition, should the COVID-19 public health effort and governmental restrictions in response to the pandemic instensify to such an extent that we cannot operate in most or all of our served markets, we could generate few or no orders and deliver few, if any, homes during the applicable period, which could be prolonged.

Along with a potential increase in cancellations of home purchase contracts, if there are prolonged government restrictions on our business and our customers, and/or an extended economic recession, we could be unable to produce revenues and cash flows sufficient to conduct our business; meet the terms of our covenants and other requirements under our debt obligations, and/or mortgages and land contracts due to land sellers and other loans; service our outstanding debt; or pay any dividends to our stockholders.

Such circumstances could, among other things, exhaust our available liquidity (and ability to access liquidity sources) and/or trigger an acceleration to pay a significant portion or all of our then-outstanding debt obligations, which we may be unable to do.

While the economic impact of COVID-19 may be reduced by financial assistance under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Consolidated Appropriations Act, 2021; or other similar COVID-19 related federal and state programs, such programs may not be sufficient to have a positive impact on our business.

Risks Associated With Our Industry

We may not be able to pass on increases in construction

but not yet reported.

Risks Related to our Business Model and Capital Structure

General Risk Factors

The

frequency and sophistication of cyber-attacks on companies has increased over the last year with significant ransomware attacks and foreign attacks on prominent computer software systems impacting a wide variety of companies and industries.

Since 2011, overall industry new home sales have increased, and we returned to profitability beginning in 2012.

However, the recovery in housing demand has been slow by historical standards and the adjustments we have made to our operating strategy may not be successful if the current housing market were to deteriorate significantly.

The combination of these changes could reduce home ownership affordability and demand, especially in regions with higher housing prices or higher state and local income taxes.

Although we have taken efforts to reduce our exposure to costs of that type, a certain amount of exposure is inherent in the homebuilding business.

As of December 31, 2019, our mortgage subsidiaries were defendants in legal proceedings in which the plaintiffs are seeking indemnification for alleged breaches of representations and warranties made by the mortgage subsidiaries in the mortgage loan sale agreements and may also be subject to other similar claims for which legal proceedings had not been instituted as of December 31, 2019.

reserves.

Adverse publicity or negative

[removed: | • | Completed] [added: During 2019, we completed] a tender offer to retire [removed: $274.0] [added: $310.0] million of our unsecured senior notes maturing in 2021. [removed: |]

The following tables and related discussion set forth key operating and financial data for our Homebuilding and Financial Services operations as of and for the fiscal years ended December 31, [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]

For similar operating and financial data and discussion of our fiscal [removed: 2018] [added: 2019] results compared to our fiscal [removed: 2017] [added: 2018] results, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of our annual report on Form 10-K for the fiscal year ended December 31, [removed: 2018,] [added: 2019,] which was filed with the SEC on January [removed: 31, 2019.][added: 30, 2020.]

| | [added: | |] Years Ended December 31, | | | | | | | [added: | |]

| Income before income taxes: | | | | | | | | [added: | | | |]

| Homebuilding | [added: | |] $ | [removed: 1,236,261] [added: 1,542,057] | | | [added: | |] $ | [removed: 1,288,804] [added: 1,236,261] | |

| Financial Services | [removed: 103,315] | | [added: 186,637] | | [removed: 58,736] | | | [added: | 103,315 | | |]

| Income before income taxes | [removed: 1,339,576] | | [added: 1,728,694] | | [removed: 1,347,540] | | | [added: | 1,339,576 | | |]

| Income tax expense | [removed: (322,876] | | [removed: )] [added: (321,855)] | | [removed: (325,517] | | [removed: )] | [added: | (322,876) | | |]

| Net income | [added: | |] $ | [removed: 1,016,700] [added: 1,406,839] | | | [added: | |] $ | [removed: 1,022,023] [added: 1,016,700] | |

| Per share data - assuming dilution: | | | | | | | | [added: | | | |]

| Net income | [added: | |] $ | [removed: 3.66] [added: 5.18] | | | [added: | |] $ | [removed: 3.55] [added: 3.66] | |

[removed: | Net] [added: *(b)Includes net] realizable value adjustments [removed: ("NRV") -] [added: on sold or] land held for sale [removed: (see [Note 2](#s0A3EF84B1B27507E91E2C055089EF42C)) | Land sale cost] of [removed: revenues | | (5,368 | | ) | | (11,489 | | ) |][added: $5.4 million in 2019 (see* *[Note 2](#id8df191d133f4f9aaee4b2fefc586b41_103)).*]

| Write-offs of deposits and pre-acquisition costs [removed: (see [Note 2](#s0A3EF84B1B27507E91E2C055089EF42C))] [added: [(Note 2)](#id8df191d133f4f9aaee4b2fefc586b41_103)] | [removed: Other expense, net] | | [removed: (13,116] [added: $] | [added: (12,390)] | [removed: )] | | [removed: (16,992] | | [removed: )] [added: $] | [added: (13,116) | |]

[removed: | • |] [added: -] Our effective tax rate was [removed: 24.1%] [added: 18.6%] and [removed: 24.2%,] [added: 24.1%] for [removed: 2019] [added: 2020] and [removed: 2018, respectively (see [Note 8](#s7DE1D1F0E0345FFAA50418CA33532688)). |][added: 2019, respectively.]

| | [added: | |] Years Ended December 31, | | | | | | | | | | [added: | | | | |]

| | [removed: 2019] | | [added: 2020] | | [added: | | | |] FY [removed: 2019] [added: 2020] vs. FY [removed: 2018] [added: 2019] | | | [removed: 2018] | | | [added: 2019 | | |]

| Home sale revenues | [added: | |] $ | [removed: 9,915,705] [added: 10,579,896] | | | [removed: 1] | [added: | 7 | |] % | | [added: | |] $ | [removed: 9,818,445] [added: 9,915,705] | |

| Land sale and other revenues [removed: *(a)*] | [removed: 62,821] | | [added: 94,017] | | [removed: (62] | [removed: )%] | | [removed: 164,504] | [added: 50] | | [added: % | | | | 62,821 | | |]

| Total Homebuilding revenues | [removed: 9,978,526] | | [added: 10,673,913] | | [removed: —] | [added: | | | 7 | |] % | | [removed: 9,982,949] | | [added: 9,978,526] | [added: | |]

| Home sale cost of revenues [removed: *(b)*] [added: *(a)*] | [removed: (7,628,700] | | [removed: )] [added: (8,004,823)] | | [removed: 1] | [added: | | | 5 | |] % | | [removed: (7,540,937] | | [removed: )] [added: (7,628,700)] | [added: | |]

| Land sale [added: and other] cost of revenues [removed: *(a) (c)*] [added: *(b)*] | [removed: (56,098] | | [removed: )] [added: (77,626)] | | [removed: (56] | [removed: )%] | | [removed: (126,560] | [added: 38] | [removed: )] | [added: % | | | | (56,098) | | |]

| Selling, general, and administrative expenses ("SG&A") [removed: *(d)*] [added: *(c)*] | [removed: (1,044,337] | | [removed: )] [added: (1,011,442)] | | [removed: 3] | [added: | | | (3) | |] % | | [removed: (1,012,023] | | [removed: )] [added: (1,044,337)] | [added: | |]

| Other expense, net *(e)* | [removed: (13,130] | | [removed: )] [added: (17,775)] | | [removed: (10] | [removed: )%] | | [removed: (14,625] | [added: 35] | [removed: )] | [added: % | | | | (13,130) | | |]

| Income before income taxes | [added: | |] $ | [removed: 1,236,261] [added: 1,542,057] | | | [removed: (4] | [removed: )%] | [added: 25] | [added: | % | | | |] $ | [removed: 1,288,804] [added: 1,236,261] | |

| Supplemental data: | | | | | | | | | | | [added: | | | | | | |]

| Gross margin from home sales [removed: *(b)*] [added: *(a)*] | [removed: 23.1] | | [added: 24.3 | |] % | | [removed: (10)] [added: | | 120] bps | | | [removed: 23.2] | | [added: | 23.1 | |] % |

| SG&A % of home sale revenues [removed: *(d)*] [added: *(c)*] | [removed: 10.5] | | [added: 9.6 | |] % | | [removed: 20] [added: | | (90)] bps | | | [removed: 10.3] | | [added: | 10.5 | |] % |

| Closings (units) | [removed: 23,232] | | [added: 24,624] | | [removed: 1] | [added: | | | 6 | |] % | | [removed: 23,107] | | [added: 23,232] | [added: | |]

| Average selling price | [added: | |] $ | [removed: 427] [added: 430] | | | [removed: 0] | [added: | 1 | |] % | | [added: | |] $ | [removed: 425] [added: 427] | |

| Net new orders: | | | | | | | | | | | [added: | | | | | | |]

| Units | [removed: 24,977] | | [added: 29,275] | | [removed: 9] | [added: | | | 17 | |] % | | [removed: 22,833] | | [added: 24,977] | [added: | |]

| Dollars | [added: | |] $ | [removed: 10,615,363] [added: 12,837,272] | | | [removed: 10] | [added: | 21 | |] % | | [added: | |] $ | [removed: 9,675,529] [added: 10,615,363] | |

| Cancellation rate | [added: | |] 14 | | % | | | | | [added: | | | | |] 14 | | % |

| Average active communities | [removed: 863] | | [added: 874] | | [removed: 4] | [added: | | | 1 | |] % | | [removed: 832] | | [added: 863] | [added: | |]

| Backlog at December 31: | | | | | | | | | | | [added: | | | | | | |]

| Units | [removed: 10,507] | | [added: 15,158] | | [removed: 20] | [added: | | | 44 | |] % | | [removed: 8,722] | | [added: 10,507] | [added: | |]

| Dollars | [added: | |] $ | [removed: 4,535,805] [added: 6,793,182] | | | [removed: 18] | [added: | 50 | |] % | | [added: | |] $ | [removed: 3,836,147] [added: 4,535,805] | |

[removed: | *(b)* | *Includes] [added: *(a)Includes] the amortization of capitalized interest; land inventory impairments [removed: of* *$8.6 million* *and* *$71.0 million* *in* *2019* *and* *2018*,] [added: of $7.0 million and $8.6 million in 2020* *and 2019*,] *respectively (see* [removed: [*Note 2*](#s0A3EF84B1B27507E91E2C055089EF42C)*);] [added: *[Note 2](#id8df191d133f4f9aaee4b2fefc586b41_103)),] and warranty charges [removed: of* *$14.8] [added: of $14.8] million* *related to a closed-out community [removed: in* *2019* *(see* [*Note 11*](#s64FF783BAC83585485E93A44A2331B86)*).* |][added: in 2019 (see* *[Note 11](#id8df191d133f4f9aaee4b2fefc586b41_145)).*]

[removed: | *(d)* | *Includes] [added: *(c)Includes] insurance reserve reversals [removed: of* *$49.4 million* *and* *$35.9 million* *in* *2019*] [added: of $93.4 million and $49.4 million in 2020*] *and* [removed: *2018,] [added: *2019,] respectively, [removed: and write-offs of] [added: partially offset by reserves against] insurance receivables [removed: of* *$22.6 million* *in 2019] [added: of $17.8 million and $22.6 million 2020 and 2019, respectively] (see* [removed: [*Note 11*](#s64FF783BAC83585485E93A44A2331B86)*).* |][added: *[Note 11](#id8df191d133f4f9aaee4b2fefc586b41_145)).*]

We experienced significant volatility in market conditions during 2020.

We ended 2019 and began 2020 in an environment exhibiting strong demand conditions.

However, on March 11, 2020, the World Health Organization declared COVID-19 a global pandemic, and the various containment and mitigation measures adopted by governments and institutions globally and in the U.S. began to have a severe economic impact, including causing the U.S. to enter into an economic recession that continues through the date of this report.

In response to the COVID-19 pandemic and various state and local orders, we instituted the following actions in March:

- Placed restrictions on business travel for our employees;

- Closed our sales centers, model homes, and design centers to the general public and shifted to appointment-only interactions with our customers where permitted, following recommended distancing and other health and safety protocols when meeting in person with a customer;

- Enhanced our virtual sales tools to give customers the ability to shop for a new home online;

- Closed the public gathering spaces of our amenity centers as well as community pools and athletic facilities;

- Modified our corporate and division office functions in order to allow all of our employees to work remotely except for essential minimum basic operations which could only be done in an office setting;

- Eliminated non-emergency warranty work in our customers’ homes;

- Modified much of our customer interactions around the mortgage origination and closing process to be virtual and minimize in-person interactions; and

- Modified our construction operations to enforce enhanced safety protocols around social distancing, hygiene, and health screening.

The severity of these restrictions and the date we resumed more normal operations have varied by market based on the reduction in restrictions under "shelter in place" orders and improvement in public health conditions.

While all of the above-referenced steps were, and some remain, necessary and appropriate in light of the COVID-19 pandemic, they impacted our ability to operate our business in its ordinary and traditional course.

However, residential construction and financial services have been designated as essential services in almost all of our markets, which has allowed us to continue operations.

As the result of the COVID-19 pandemic, our net new orders declined significantly in late March through April.

As the pandemic spread and government and business responses expanded, we focused on protecting our liquidity and closely managing our cash flows, including through the following actions:

- Delaying the acquisition of certain land parcels and slowing land development where practical;

- Limiting our investment in house construction, including strictly limiting production of new unsold "speculative" homes, and contacting backlog customers to reconfirm status before beginning construction of sold homes;

- As a precautionary measure, proactively drawing $700.0 million under the Revolving Credit Facility in March;

- Suspending the repurchase of shares under our share repurchase program; and

- Reducing headcount and other overhead expenses.

However, demand began to stabilize in May and then rebounded sharply in June and has remained strong through the date of this report.

This resulted in a 17% increase in net new orders for the full year 2020 over 2019, including a 24% increase in net new orders in the fourth quarter of 2020 over the fourth quarter of 2019.

We believe the recovery in demand reflects a number of factors, including historically low mortgage interest rates, a limited supply of new and existing home inventory, an increased appeal for homeownership and single-family living, and a desire among some buyers to exit more densely populated urban centers.

In addition to the improved demand, all of our operations are now functioning at effectively full capacity subject to health and safety protocols necessitated by the ongoing pandemic.

However, we have experienced periodic disruptions in our supply chain, including the availability of skilled labor as industry demand increases, which have elongated the production cycles in certain markets.

We are also facing cost pressures related to labor and materials, especially lumber, although we believe that we will be able to increase pricing to offset the majority of such cost increases.

Despite the volatility in 2020, the resurgence of demand resulted in the second highest annual pre-tax income and the highest year-end backlog (as measured in dollars) in our history.

These financial results, combined with the favorable outlook, have allowed us to:

- Fully repay the $700.0 million drawn on the Revolving Credit Facility;

- Reinstate our share repurchase program, including the repurchase of $75.0 million of shares in the fourth quarter of 2020;

- Increase our quarterly dividend by 17% to $0.14 per share in the fourth quarter of 2020;

- Announce a tender offer expected to be completed in March 2021 for $300 million of our senior notes scheduled to mature in 2026 and 2027;

- Increase our investments in new communities via land acquisition and development expenditures; and

- Improve our available liquidity to $3.4 billion, consisting of $2.6 billion of cash and cash equivalents and $750.3 million available under our Revolving Credit Facility as of December 31, 2020.

| | | | 2020 | | | | | | 2019 | | |

- Homebuilding income before income taxes increased 25% in 2020, primarily as the result of higher revenues, improved gross margins, and strong overhead management.

Homebuilding results also included a goodwill impairment charge of $20.2 million in 2020 (see [Note 1](#id8df191d133f4f9aaee4b2fefc586b41_97)) and net favorable insurance-related adjustments totaling $75.7 million and $26.8 million in 2020 and 2019, respectively (see [Note 11](#id8df191d133f4f9aaee4b2fefc586b41_145)).

- The increase in Financial Services income in 2020 compared with 2019 was primarily the result of the Homebuilding volume growth, an improved capture rate of homebuyers from our Homebuilding operations, and a low mortgage interest rate environment.

Favorable demographic and economic conditions, combined with the recently improving affordability of housing, have supported the ongoing recovery in U.S. new home sales that began in 2012.

In recent years, we have made significant investments to acquire and develop land inventory and open new communities.

We have grown our investment in the business in a disciplined manner by emphasizing smaller projects and working to shorten our years of owned land supply, including increasing the use of land option agreements, which now account for 41% of our controlled lots as compared with 11% at the beginning of 2012.

We have also focused our land investments on closer-in locations where we think demand is more sustainable when the market ultimately moderates.

We have accepted the trade-off of having to pay more for certain land positions where we can be more confident in future performance.

The combination of favorable demand conditions, our investments in new communities, strategic pricing, and construction efficiencies resulted in growth in our revenues each year during the period from 2012 to 2019.

We entered 2019 in the midst of an industry-wide softening in demand that began in mid-2018.

To varying degrees, the slowdown occurred across all major buyer groups and substantially all of our geographies.

This slowdown was correlated with an increase in mortgage interest rates, which contributed to ongoing affordability challenges confronting many prospective buyers.

As a result, we entered 2019 with a smaller backlog than the year before.

However, demand improved in mid-2019 as we experienced increased traffic to our communities and higher new order volume relative to the same period in 2018.

The improvement continued through the remainder of 2019, especially among first-time buyers, in part due to improving affordability driven by increasing wages, slower price appreciation, and a decline in mortgage interest rates.

Based on these favorable economic factors and our investments in new communities, we were able to generate a 9% increase in new orders and a 20% increase in ending backlog in 2019 compared with 2018.

While the slow start to 2019 resulted in our full year closings and home sale revenues each increasing only 1% over 2018, we still delivered higher earnings per share in 2019 compared with 2018.

We believe that the actions we have taken over the past few years to shorten the duration of our land inventory, increase our use of land option agreements, and drive daily execution of our business while maintaining a conservative financial position allow us to operate effectively in most economic conditions.

Additionally, our overall financial condition continues to support investing in the business while returning excess capital to shareholders, including completion of the following capital activities in 2019:

| | |

| --- | --- |

| • | Continued to invest in new communities, as reflected in the increase to 863 average active communities; |

| • | Acquired the homebuilding operations of American West located in Las Vegas, Nevada, for $163.7 million; |

| • | Increased our quarterly dividend by 9% to $0.12 per share; |

| • | Repurchased $274.3 million of common shares; |

| • | Increased our share repurchase authorization by $500.0 million; and |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | 2019 | | | | 2018 | | |

| • | Homebuilding income before income taxes remained strong in 2019. Homebuilding income before income taxes also reflected the following significant income (expense) items ($000's omitted): |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 2019 | | | | 2018 | | |

| Land inventory impairments (see [Note 2](#s0A3EF84B1B27507E91E2C055089EF42C)) | Home sale cost of revenues | | $ | (8,617 | ) | | $ | (70,965 | ) |

| Warranty claim (see [Note 11](#s64FF783BAC83585485E93A44A2331B86)) | Home sale cost of revenues | | (14,800 | | ) | | — | | |

| California land sale gains (see [Note 3](#sE80F6C7F483F5BD4B1EC6D6679CFD107)) | Land sale revenues / cost of revenues | | — | | | | 26,401 | | |

| Insurance reserve adjustments (see [Note 11](#s64FF783BAC83585485E93A44A2331B86)) | Selling, general, and administrative expenses | | 49,437 | | | | 35,873 | | |

| Write-offs of insurance receivables (see [Note 11](#s64FF783BAC83585485E93A44A2331B86)) | Selling, general, and administrative expenses | | (22,617 | | ) | | — | | |

| | | | $ | (15,081 | ) | | $ | (37,172 | ) |

For additional information on the above, see the applicable Notes to the Consolidated Financial Statements.

| • | The increase in Financial Services income in 2019 compared with 2018 was primarily the result of higher volumes, which largely resulted from an improved capture rate and margin per loan, as well as a $16.1 million increase in loan origination liabilities in 2018 (see [Note 11](#s64FF783BAC83585485E93A44A2331B86)). Interest rates generally declined during 2019, which led to a less competitive mortgage environment contributing to improved capture rate and higher gains from sales of mortgages. |

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

The following [removed: tables set] [added: table sets] forth the principal cash flows by scheduled maturity, weighted-average interest rates, and estimated fair value of our debt obligations as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] ($000’s omitted).

| | [added: | |] As of December 31, 2019 for the Years ending December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | |]

| | [added: | |] 2020 | | | | [added: | |] 2021 | | | | [added: | |] 2022 | | | | [added: | |] 2023 | | | | [added: | |] 2024 | | | | [added: | |] Thereafter | | | | [added: | |] Total | | | | [added: | |] Fair Value | | |

| Rate-sensitive liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| Fixed rate debt | [added: | |] $ | 21,327 | | | [added: | |] $ | 447,712 | | | [added: | |] $ | 10,295 | | | [added: | |] $ | — | | | [added: | |] $ | — | | | [added: | |] $ | 2,300,000 | | | [added: | |] $ | 2,779,334 | | | [added: | |] $ | 3,152,046 | |

| Average interest rate | [added: | |] 2.09 | | % | | [added: | |] 4.17 | | % | | [added: | |] 0.39 | | % | | [added: | |] — | | % | | [added: | |] — | | % | | [added: | |] 5.90 | | % | | [added: | |] 5.57 | | % | | | | | [added: | |]

| Variable rate debt *(a)* | [added: | |] $ | 326,573 | | | [added: | |] $ | — | | | [added: | |] $ | — | | | [added: | |] $ | — | | | [added: | |] $ | — | | | [added: | |] $ | — | | | [added: | |] $ | 326,573 | | | [added: | |] $ | 326,573 | |

| Average interest rate | [added: | |] 3.59 | | % | | [added: | |] — | | % | | [added: | |] — | | % | | [added: | |] — | | % | | [added: | |] — | | % | | [added: | |] — | | % | | [added: | |] 3.59 | | % | | | | | [added: | |]

| | [added: | |] As of December 31, [removed: 2018] [added: 2020] for the Years ending December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | |]

| | [removed: 2019] | | [added: 2021] | | [removed: 2020] | | | | [removed: 2021] [added: 2022] | | | | [removed: 2022] | | [added: 2023] | | [removed: 2023] | | | | [added: 2024 | | | | | | 2025 | | | | | |] Thereafter | | | | [added: | |] Total | | | | [added: | |] Fair Value | | |

| Average interest rate | [removed: 4.41] | | [added: 2.55 | |] % | | [added: | |] — | | % | | [added: | |] — | | % | | [added: | |] — | | % | | [added: | |] — | | % | | [added: | |] — | | % | | [removed: 4.41] | | [added: 2.55 | |] % | | | | | [added: | |]

There were no borrowings outstanding under our Revolving Credit Facility at [removed: either* *December] [added: either December] 31, [removed: 2019* *or* *2018.*][added: 2020 or 2019.*]

At December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] residential mortgage loans available-for-sale had an aggregate fair value of [removed: $509.0] [added: $565.0] million and [removed: $461.4] [added: $509.0] million, respectively.

At December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] we had aggregate interest rate lock commitments of [removed: $255.3] [added: $367.2] million and [removed: $285.0] [added: $255.3] million, respectively, which were originated at interest rates prevailing at the date of commitment.

Unexpired forward contracts totaled [removed: $518.2] [added: $686.4] million and [removed: $511.0] [added: $518.2] million at December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively, and whole loan investor commitments totaled [removed: $200.7] [added: $169.6] million and [removed: $187.8] [added: $200.7] million, respectively, at such dates.

As a cautionary note, except for the historical information contained herein, certain matters discussed in Item 7, *Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations,*] [added: Operations*,] and Item 7A, *Quantitative and Qualitative Disclosures About Market Risk*, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “project,” “may,” “can,” “could,” “might,” [removed: “should”,] [added: "should",] “will” and similar expressions identify forward-looking statements, including statements related to any [added: potential] impairment [removed: charge] [added: charges] and the impacts or effects thereof, expected operating and performing results, planned transactions, planned objectives of management, future developments or conditions in the industries in which we participate and other trends, developments and uncertainties that may affect our business in the future.

Such risks, uncertainties and other factors include, among other things: interest rate changes and the availability of mortgage financing; 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 and the levels of our land spend; 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 which could have a greater impact on our effective tax rate or the value of our deferred tax assets than we anticipate; 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; 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; [added: the negative impact of the COVID-19 pandemic on our financial position] and [added: ability to continue our Homebuilding or Financial Services activities at normal levels or at all in impacted areas; the duration, effect and severity of the COVID-19 pandemic; the measures that governmental authorities take to address the COVID-19 pandemic which may precipitate or exacerbate one or more of the above-mentioned and/or] other [added: risks and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period of time; 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](#s8144D1BA97C95F5CA7C416D1AE072EC9)] [added: Factors](#id8df191d133f4f9aaee4b2fefc586b41_22)] for a further discussion of these and other risks and uncertainties applicable to our businesses.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Fixed rate debt | | | $ | 451,596 | | | | | $ | 14,456 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 2,300,000 | | | | | $ | 2,766,052 | | | | | $ | 3,415,662 | |

| Average interest rate | | | 4.10 | | % | | | | 0.28 | | % | | | | — | | % | | | | — | | % | | | | — | | % | | | | 5.90 | | % | | | | 5.57 | | % | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Variable rate debt *(a)* | | | $ | 411,821 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 411,821 | | | | | $ | 411,821 | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Rate-sensitive liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Fixed rate debt | $ | 24,088 | | | $ | 9,968 | | | $ | 706,720 | | | $ | — | | | $ | — | | | $ | 2,300,000 | | | $ | 3,040,776 | | | $ | 2,898,606 | |

| Average interest rate | 5.31 | | % | | 3.81 | | % | | 4.28 | | % | | — | | % | | — | | % | | 5.90 | | % | | 5.51 | | % | | | | |

| Variable rate debt *(a)* | $ | 348,949 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 348,949 | | | $ | 348,948 | |

| | |

| --- | --- |

[removed: SECURITIES] [added: UNITED STATES SECURITIES] AND EXCHANGE COMMISSION

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission File [removed: Number 1-9804][added: Number 1-9804]

| Michigan | | [added: | | | |] 38-2766606 | [added: | |]

| (State or other jurisdiction of incorporation or organization) | | [added: | | | |] (I.R.S. Employer Identification No.) | [added: | |]

| 3350 Peachtree Road NE, Suite 150 | | | [added: | | | | | |]

| Atlanta, | [added: | |] Georgia | [added: | |] 30326 | [added: | |]

| (Address of principal executive offices) (Zip Code) | | | [added: | | | | | |]

| Registrant’s telephone number, including area code: | [added: | |] 404 | [added: | |] 978-6400 | [added: | |]

| Title of each class | [added: | |] Trading Symbol | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Shares, par value $0.01 | [added: | |] PHM | [added: | |] New York Stock Exchange | [added: | |]

| Series A Junior Participating Preferred Share Purchase Rights | | [added: | | | |] New York Stock Exchange | [added: | |]

See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange [removed: Act.][added: Act]

| Large accelerated filer | | [added: |] Accelerated filer | | [added: |] Non-accelerated filer | | [added: |] Smaller reporting company | [added: | |] Emerging growth company | [added: | |]

[removed: |] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [removed: \[ \] | | | | | | | |]

The aggregate market value of the registrant’s voting shares held by nonaffiliates of the registrant as of June 30, [removed: 2019,] [added: 2020,] based on the closing sale price per share as reported by the New York Stock Exchange on such date, was [removed: $8,648,189,224.][added: $9,077,356,567.]

As of January [removed: 23, 2020,] [added: 21, 2021,] the registrant had [removed: 269,975,049] [added: 265,894,240] shares of common shares outstanding.

Applicable portions of the Proxy Statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders are incorporated by reference in Part III of this Form.

| Item No. | | [added: | | | |] Page No. | [added: | |]

| 1A | [added: | |] [Risk [removed: Factors](#s8144D1BA97C95F5CA7C416D1AE072EC9)] [added: Factors](#id8df191d133f4f9aaee4b2fefc586b41_22)] | [removed: [8](#s8144D1BA97C95F5CA7C416D1AE072EC9)] | [added: | [8](#id8df191d133f4f9aaee4b2fefc586b41_22) | | |]

| 1B | [added: | |] [Unresolved Staff [removed: Comments](#sFB574F6A31D450F985FCC488633A36D1)] [added: Comments](#id8df191d133f4f9aaee4b2fefc586b41_25)] | [removed: [15](#sFB574F6A31D450F985FCC488633A36D1)] | [added: | [16](#id8df191d133f4f9aaee4b2fefc586b41_25) | | |]

| 3 | [added: | |] [Legal [removed: Proceedings](#s23BD0457486A52B486901713EEA7418A)] [added: Proceedings](#id8df191d133f4f9aaee4b2fefc586b41_31)] | [removed: [15](#s23BD0457486A52B486901713EEA7418A)] | [added: | [17](#id8df191d133f4f9aaee4b2fefc586b41_31) | | |]

| 4 | [added: | |] [Mine Safety [removed: Disclosures](#s0F01DF390F0E59AAAE18E485D087B315)] [added: Disclosures](#id8df191d133f4f9aaee4b2fefc586b41_34)] | [removed: [15](#s0F01DF390F0E59AAAE18E485D087B315)] | [added: | [17](#id8df191d133f4f9aaee4b2fefc586b41_34) | | |]

| 4A | [added: | |] [Information About Our Executive [removed: Officers](#s0FF6059C13E05E96A8E9293ED30D02A7)] [added: Officers](#id8df191d133f4f9aaee4b2fefc586b41_37)] | [removed: [16](#s0FF6059C13E05E96A8E9293ED30D02A7)] | [added: | [17](#id8df191d133f4f9aaee4b2fefc586b41_37) | | |]

| 5 | [added: | |] [Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#s40F09CD89E625F1AA42D094D00BC5253)] [added: Securities](#id8df191d133f4f9aaee4b2fefc586b41_43)] | [removed: [17](#s40F09CD89E625F1AA42D094D00BC5253)] | [added: | [18](#id8df191d133f4f9aaee4b2fefc586b41_43) | | |]

| 6 | [added: | |] [Selected Financial [removed: Data](#s92BCE81DD7A659DD840AF9C34BA5DB1B)] [added: Data](#id8df191d133f4f9aaee4b2fefc586b41_46)] | [removed: [19](#s92BCE81DD7A659DD840AF9C34BA5DB1B)] | [added: | [20](#id8df191d133f4f9aaee4b2fefc586b41_46) | | |]

| 7 | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sE1E7A9B64F5D50EDA9DA14AD4D705856)] [added: Operations](#id8df191d133f4f9aaee4b2fefc586b41_49)] | [removed: [21](#sE1E7A9B64F5D50EDA9DA14AD4D705856)] | [added: | [22](#id8df191d133f4f9aaee4b2fefc586b41_49) | | |]

| 7A | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s44A76DDA12BE5427904F8BE739814E0C)] [added: Risk](#id8df191d133f4f9aaee4b2fefc586b41_70)] | [removed: [38](#s44A76DDA12BE5427904F8BE739814E0C)] | [added: | [41](#id8df191d133f4f9aaee4b2fefc586b41_70) | | |]

| 8 | [added: | |] [Financial Statements and Supplementary [removed: Data](#s7FD7934CF0EA5F9C8B3ABFD0865805AA)] [added: Data](#id8df191d133f4f9aaee4b2fefc586b41_73)] | [removed: [40](#s7FD7934CF0EA5F9C8B3ABFD0865805AA)] | [added: | [44](#id8df191d133f4f9aaee4b2fefc586b41_73) | | |]

| 9 | [added: | |] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s5EBEE8CB21BB509BA9847A56F5505CB7)] [added: Disclosure](#id8df191d133f4f9aaee4b2fefc586b41_160)] | [removed: [84](#s5EBEE8CB21BB509BA9847A56F5505CB7)] | [added: | [79](#id8df191d133f4f9aaee4b2fefc586b41_160) | | |]

| 9A | [added: | |] [Controls and [removed: Procedures](#s4F3F5C842EC75D91A8DA8C29651F5258)] [added: Procedures](#id8df191d133f4f9aaee4b2fefc586b41_163)] | [removed: [84](#s4F3F5C842EC75D91A8DA8C29651F5258)] | [added: | [79](#id8df191d133f4f9aaee4b2fefc586b41_163) | | |]

| 9B | [added: | |] [Other [removed: Information](#sC3147FD79DB85415BFF9614E2F8EE07E)] [added: Information](#id8df191d133f4f9aaee4b2fefc586b41_166)] | [removed: [86](#sC3147FD79DB85415BFF9614E2F8EE07E)] | [added: | [81](#id8df191d133f4f9aaee4b2fefc586b41_166) | | |]

| | [removed: [Part III](#sA4799FC95C765F7EA0A320A5640AED08)] | | [added: [Part III](#id8df191d133f4f9aaee4b2fefc586b41_169) | | | | | |]

| 10 | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#s96A9E61EFE9B55E5BD434548077AD6F2)] [added: Governance](#id8df191d133f4f9aaee4b2fefc586b41_172)] | [removed: [86](#s96A9E61EFE9B55E5BD434548077AD6F2)] | [added: | [81](#id8df191d133f4f9aaee4b2fefc586b41_172) | | |]

| 11 | [added: | |] [Executive [removed: Compensation](#s55760FC75A8351FBA39CADE3222A672B)] [added: Compensation](#id8df191d133f4f9aaee4b2fefc586b41_175)] | [removed: [86](#s55760FC75A8351FBA39CADE3222A672B)] | [added: | [81](#id8df191d133f4f9aaee4b2fefc586b41_175) | | |]

| 12 | [added: | |] [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder [removed: Matters](#s41A3AE94A3C25FA28E070A94E60A1D0B)] [added: Matters](#id8df191d133f4f9aaee4b2fefc586b41_178)] | [removed: [86](#s41A3AE94A3C25FA28E070A94E60A1D0B)] | [added: | [81](#id8df191d133f4f9aaee4b2fefc586b41_178) | | |]

| 13 | [added: | |] [Certain Relationships and Related Transactions and Director [removed: Independence](#sE05C32450D6D5F5EB74C6BE6C1859F60)] [added: Independence](#id8df191d133f4f9aaee4b2fefc586b41_181)] | [removed: [86](#sE05C32450D6D5F5EB74C6BE6C1859F60)] | [added: | [81](#id8df191d133f4f9aaee4b2fefc586b41_181) | | |]

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\[ \]

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| | | | [Part I](#id8df191d133f4f9aaee4b2fefc586b41_10) | | | | | |

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| 1 | | | [Business](#id8df191d133f4f9aaee4b2fefc586b41_13) | | | [3](#id8df191d133f4f9aaee4b2fefc586b41_13) | | |

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| 2 | | | [Properties](#id8df191d133f4f9aaee4b2fefc586b41_28) | | | [16](#id8df191d133f4f9aaee4b2fefc586b41_28) | | |

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| | | | [Part II](#id8df191d133f4f9aaee4b2fefc586b41_40) | | | | | |

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UNITED STATES

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PULTEGROUP, INC.

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Act.

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| ☒ | | ☐ | | ☐ | | ☐ | ☐ |

| | [Part I](#s7F6E59F40DD359EE9AAFF99F93F27682) | |

| 1 | [Business](#s78B858548CC05AF7A42F78D99F735C6B) | [3](#s78B858548CC05AF7A42F78D99F735C6B) |

| 2 | [Properties](#s3E30539BBE27542F8A9ADB9518B8F8CC) | [15](#s3E30539BBE27542F8A9ADB9518B8F8CC) |

| | [Part II](#sBE4DDCF927B05BC4B6A9EA06A4B49C24) | |

| | [Part IV](#s7113DCFC67A554C9A02C00A697BC9EAD) | |

| | [Signatures](#s0E83F7D92E8F5BFDB2BFC7271D6E1021) | [91](#s0E83F7D92E8F5BFDB2BFC7271D6E1021) |

As of December 31, 2019, we conducted our operations in 42 markets located throughout 23 states.

For reporting purposes, our Homebuilding operations are aggregated into six reportable segments:

| Northeast: | | *Connecticut, Maryland, Massachusetts, New Jersey, Pennsylvania, Virginia* |

| Southeast: | | *Georgia, North Carolina, South Carolina, Tennessee* |

| Florida: | | *Florida* |

| Midwest: | | *Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio* |

| Texas: | | *Texas* |

| West: | | *Arizona, California, Nevada, New Mexico, Washington* |

We also have a reportable segment for our financial services operations, which consists principally of mortgage banking, title, and insurance brokerage operations.

Our Financial Services segment operates generally in the same geographic markets as our Homebuilding segments.

Financial information for each of our reportable business segments is included in [Note 3](#sE80F6C7F483F5BD4B1EC6D6679CFD107) to our Consolidated Financial Statements.

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| | Years Ended December 31, ($000’s omitted) | | | | | | | | | | | | | | | | | | |

| | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

| Home sale revenues | $ | 9,915,705 | | | $ | 9,818,445 | | | $ | 8,323,984 | | | $ | 7,451,315 | | | $ | 5,792,675 | |

| Home closings | 23,232 | | | | 23,107 | | | | 21,052 | | | | 19,951 | | | | 17,127 | | |

For information and analysis of recent trends in our operations, see Item 7, *Management’s Discussion and Analysis of Financial Condition and Results of Operations*.

The increase in average selling price in recent years resulted from a number of factors, including favorable market conditions and changes in the geographical and product mix of homes sold.

Our average unit selling price since 2015 was also impacted by our acquisition in January 2016 of substantially all of the assets of JW Homes ("Wieland"), a brand geared toward move-up homebuyers.

Sales of single-family detached homes, as a percentage of total unit sales, were 85% in 2019 and 2018, compared with 88% in 2017, 87% in 2016, and 86% in 2015.

The decrease in the percentage of single-family detached homes since 2017 can be attributed to the geographic mix of homes sold and an increase in the number of our communities in more urban locations where higher density attached homes are more commonplace.

We also

Through our Del Webb brand, we address the needs of active adults, to whom we offer both destination communities and “in place” communities, for homebuyers who prefer to remain in their current geographic area.

In total across our organization, we lease approximately 1.1 million square feet of office space.

The Company considers its properties suitable and adequate for its current business operations.

| Name | | [added: | | | |] Age | | [added: | | | |] Position | | [added: | | | |] Year Became An Executive Officer | [added: | |]

| Ryan R. Marshall | | [removed: 45] | | [added: | | 46 | | | | | |] President and Chief Executive Officer | | [added: | | | |] 2012 | [added: | |]

| John [added: J.] Chadwick | | [removed: 58] | | [added: | | 59 | | | | | |] Executive Vice President and Chief Operating Officer | | [added: | | | |] 2019 | [added: | |]

| Robert T. O'Shaughnessy | | [removed: 54] | | [added: | | 55 | | | | | |] Executive Vice President and Chief Financial Officer | | [added: | | | |] 2011 | [added: | |]

| Todd N. Sheldon | | [removed: 52] | | [added: | | 53 | | | | | |] Executive Vice President, General Counsel and Corporate Secretary | | [added: | | | |] 2017 | [added: | |]

| Michelle Hairston | | [removed: 43] | | [added: | | 44 | | | | | |] Senior Vice President, Human Resources | | [added: | | | |] 2018 | [added: | |]

Mr. [removed: Ossowski] [added: O'Meara] was appointed [removed: Senior] Vice [removed: President, Finance] [added: President and Controller] in February 2017 and previously held the position of [removed: Vice President, Finance and] [added: Assistant] Controller since [removed: February] [added: January] 2013.

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| Brien P. O'Meara | | | | | | 48 | | | | | | Vice President and Controller | | | | | | 2020 | | |

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| James L. Ossowski | | 51 | | Senior Vice President, Finance | | 2013 |

| Stephen P. Schlageter | | 49 | | Senior Vice President, Operations and Strategy | | 2018 |

She served as an Area Vice President, Human Resources over various geographical markets since 2009.

Mr. Schlageter was appointed Senior Vice President, Operations & Strategy in September 2017 and previously held the position of Area President over various geographical markets since 2012.

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At January [removed: 23, 2020,] [added: 21, 2021,] there were [removed: 2,175] [added: 2,110] shareholders of record.

| | [added: | |] Total number of shares purchased (1) | | | [added: | | |] Average price paid per share | | | | [added: | |] Total number of shares purchased as part of publicly announced plans or programs | | | [added: | | |] Approximate dollar value of shares that may yet be purchased under the plans or programs ($000’s omitted) | | | | [added: | |]

[removed: | (1) | During 2019,] [added: (1)During 2020,] participants surrendered [removed: 0.4] [added: 0.3] million shares for payment of minimum tax obligations upon the vesting or exercise of previously granted share-based compensation awards. [removed: Such shares were not repurchased as part of our publicly-announced share repurchase programs and are excluded from the table above. |]

[removed: | (2) | The] [added: (2)The] Board of Directors approved a share repurchase authorization totaling $500.0 million in January 2018 and an increase of $500.0 million to such authorization in May 2019. [removed: There is no expiration date for this program, under which $525.5 million remained available as of December 31, 2019. During 2019, we repurchased 8.4 million shares for a total of $274.3 million under this program. |]

The information required by this item with respect to equity compensation plans is set forth under [Item [removed: 12](#s41A3AE94A3C25FA28E070A94E60A1D0B)] [added: 12](#id8df191d133f4f9aaee4b2fefc586b41_178)] 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: 2015,] 2016, 2017, 2018, [removed: and] 2019, [added: and 2020,] (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 [removed: Ended December] [added: Ended December] 31, [removed: 2019][added: 2020]

[removed: ][added: ]

| | | [removed: 2014] | | | | 2015 | | | | [added: | |] 2016 | | | | [added: | |] 2017 | | | | [added: | |] 2018 | | | | [added: | |] 2019 | | | [added: | | | 2020 | | |]

| Dow Jones U.S. Select Home Construction Index | | [added: | | | |] 100.00 | | | | [removed: 105.45] | | [added: 102.22] | | [removed: 107.79] | | | | [removed: 172.63] [added: 163.71] | | | | [removed: 119.58] | | [added: 113.40] | | [removed: 178.89] | | | [added: | 169.65 | | | | | | 215.44 | | |]

* Assumes $100 invested on December 31, [removed: 2014,] [added: 2015,] and the reinvestment of dividends.

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| October 1, 2020 to October 31, 2020 | | | 347,737 | | | | | | $ | 46.38 | | | | | 347,737 | | | | | | $ | 413,744 | | (2) | | |

| November 1, 2020 to November 30, 2020 | | | 746,242 | | | | | | 42.96 | | | | | | 746,242 | | | | | | $ | 381,684 | | (2) | | |

| December 1, 2020 to December 31, 2020 | | | 622,773 | | | | | | 43.05 | | | | | | 622,773 | | | | | | $ | 354,873 | | (2) | | |

| Total | | | 1,716,752 | | | | | | $ | 43.69 | | | | | 1,716,752 | | | | | | | | | | | |

Such shares were not repurchased as part of our publicly-announced share repurchase programs and are excluded from the table above.

There is no expiration date for this program, under which $354.9 million remained available as of December 31, 2020.

During 2020, we repurchased 4.5 million shares for a total of $170.7 million under this program.

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| PULTEGROUP, INC. | | | | | | $ | 100.00 | | | | | $ | 105.12 | | | | | $ | 192.81 | | | | | $ | 152.78 | | | | | $ | 231.20 | | | | | $ | 260.44 | |

| S&P 500 Index - Total Return | | | | | | 100.00 | | | | | | 111.96 | | | | | | 136.40 | | | | | | 130.42 | | | | | | 171.49 | | | | | | 203.04 | | |

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| October 1, 2019 to October 31, 2019 | 55,178 | | | $ | 40.27 | | | 55,178 | | | $ | 553,271 | | (2) |

| November 1, 2019 to November 30, 2019 | 414,862 | | | 38.70 | | | | 414,862 | | | $ | 537,215 | | (2) |

| December 1, 2019 to December 31, 2019 | 294,564 | | | 39.61 | | | | 294,564 | | | $ | 525,548 | | (2) |

| Total | 764,604 | | | $ | 39.16 | | | 764,604 | | | | | | |

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| PULTEGROUP, INC. | | $ | 100.00 | | | $ | 84.46 | | | $ | 88.79 | | | $ | 162.86 | | | $ | 129.04 | | | $ | 195.28 | |

| S&P 500 Index - Total Return | | 100.00 | | | | 101.38 | | | | 113.51 | | | | 138.29 | | | | 132.23 | | | | 173.86 | | |

| | [added: | |] Years Ended December 31, (000’s omitted, except per share data) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| OPERATING DATA: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Homebuilding: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Revenues | [added: | |] $ | [removed: 9,978,526] [added: 10,673,913] | | | [added: | |] $ | [removed: 9,982,949] [added: 9,978,526] | | | [added: | |] $ | [removed: 8,385,526] [added: 9,982,949] | | | [added: | |] $ | [removed: 7,495,404] [added: 8,385,526] | | | [added: | |] $ | [removed: 5,844,658] [added: 7,495,404] | |

| Income before income taxes | [added: | |] $ | [removed: 1,236,261] [added: 1,542,057] | | | [added: | |] $ | [removed: 1,288,804] [added: 1,236,261] | | | [added: | |] $ | [removed: 865,332] [added: 1,288,804] | | | [added: | |] $ | [removed: 860,766] [added: 865,332] | | | [added: | |] $ | [removed: 757,317] [added: 860,766] | |

| Financial Services: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Revenues | [added: | |] $ | [removed: 234,431] [added: 362,169] | | | [added: | |] $ | [removed: 205,382] [added: 234,431] | | | [added: | |] $ | [removed: 192,160] [added: 205,382] | | | [added: | |] $ | [removed: 181,126] [added: 192,160] | | | [added: | |] $ | [removed: 140,445] [added: 181,126] | |

| Income before income taxes | [added: | |] $ | [removed: 103,315] [added: 186,637] | | | [added: | |] $ | [removed: 58,736] [added: 103,315] | | | [added: | |] $ | [removed: 73,496] [added: 58,736] | | | [added: | |] $ | [removed: 73,084] [added: 73,496] | | | [added: | |] $ | [removed: 58,706] [added: 73,084] | |

| Consolidated results: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Revenues | [added: | |] $ | [removed: 10,212,957] [added: 11,036,082] | | | [added: | |] $ | [removed: 10,188,331] [added: 10,212,957] | | | [added: | |] $ | [removed: 8,577,686] [added: 10,188,331] | | | [added: | |] $ | [removed: 7,676,530] [added: 8,577,686] | | | [added: | |] $ | [removed: 5,985,103] [added: 7,676,530] | |

| Income before income taxes | [added: | |] $ | [removed: 1,339,576] [added: 1,728,694] | | | [added: | |] $ | [removed: 1,347,540] [added: 1,339,576] | | | [added: | |] $ | [removed: 938,828] [added: 1,347,540] | | | [added: | |] $ | [removed: 933,850] [added: 938,828] | | | [added: | |] $ | [removed: 816,023] [added: 933,850] | |

| Income tax expense | [removed: (322,876] | | [removed: )] [added: (321,855)] | | [removed: (325,517] | | [removed: )] | | [removed: (491,607] [added: (322,876)] | | [removed: )] | | [removed: (331,147] | | [removed: )] [added: (325,517)] | | [removed: (321,933] | | [removed: )] | [added: | (491,607) | | | | | | (331,147) | | |]

| Net income | [added: | |] $ | [removed: 1,016,700] [added: 1,406,839] | | | [added: | |] $ | [removed: 1,022,023] [added: 1,016,700] | | | [added: | |] $ | [removed: 447,221] [added: 1,022,023] | | | [added: | |] $ | [removed: 602,703] [added: 447,221] | | | [added: | |] $ | [removed: 494,090] [added: 602,703] | |

| PER SHARE DATA: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Net income per share: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Basic | [added: | |] $ | [removed: 3.67] [added: 5.19] | | | [added: | |] $ | [removed: 3.56] [added: 3.67] | | | [added: | |] $ | [removed: 1.45] [added: 3.56] | | | [added: | |] $ | [removed: 1.76] [added: 1.45] | | | [added: | |] $ | [removed: 1.38] [added: 1.76] | |

| Diluted | [added: | |] $ | [removed: 3.66] [added: 5.18] | | | [added: | |] $ | [removed: 3.55] [added: 3.66] | | | [added: | |] $ | [removed: 1.44] [added: 3.55] | | | [added: | |] $ | [removed: 1.75] [added: 1.44] | | | [added: | |] $ | [removed: 1.36] [added: 1.75] | |

| Number of shares used in calculation: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Basic | [added: | | 268,553 | | | | | |] 274,495 | | | | [added: | |] 283,578 | | | | [removed: 305,089] | | [added: 305,089] | | [removed: 339,747] | | | | [removed: 356,576] [added: 339,747] | | |

| Effect of dilutive securities | [added: | | 861 | | | | | |] 802 | | | | [added: | |] 1,287 | | | | [removed: 1,725] | | [added: 1,725] | | [removed: 2,376] | | | | [removed: 3,217] [added: 2,376] | | |

| Diluted | [added: | | 269,414 | | | | | |] 275,297 | | | | [added: | |] 284,865 | | | | [removed: 306,814] | | [added: 306,814] | | [removed: 342,123] | | | | [removed: 359,793] [added: 342,123] | | |

| Shareholders’ equity | [added: | |] $ | [removed: 20.20] [added: 24.66] | | | [added: | |] $ | [removed: 17.39] [added: 20.20] | | | [added: | |] $ | [removed: 14.60] [added: 17.39] | | | [added: | |] $ | [removed: 13.63] [added: 14.60] | | | [added: | |] $ | 13.63 | |

| Cash dividends declared | [added: | |] $ | [removed: 0.45] [added: 0.50] | | | [added: | |] $ | [removed: 0.38] [added: 0.45] | | | [added: | |] $ | [removed: 0.36] [added: 0.38] | | | [added: | |] $ | 0.36 | | | [added: | |] $ | [removed: 0.33] [added: 0.36] | |

| | [added: | |] December [removed: 31, ($000’s] [added: 31, ($000’s] omitted) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| BALANCE SHEET DATA: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| House and land inventory | [added: | |] $ | [removed: 7,680,614] [added: 7,721,798] | | | [added: | |] $ | [removed: 7,253,353] [added: 7,680,614] | | | [added: | |] $ | [removed: 7,147,130] [added: 7,253,353] | | | [added: | |] $ | [removed: 6,770,655] [added: 7,147,130] | | | [added: | |] $ | [removed: 5,450,058] [added: 6,770,655] | |

| Total assets | [added: | | 12,205,498 | | | | | |] 10,715,597 | | | | [added: | |] 10,172,976 | | | | [removed: 9,686,649] | | [added: 9,686,649] | | [removed: 10,178,200] | | | | [removed: 9,189,406] [added: 10,178,200] | | |

| Notes payable | [added: | | 2,752,302 | | | | | |] 2,765,040 | | | | [added: | |] 3,028,066 | | | | [removed: 3,006,967] | | [added: 3,006,967] | | [removed: 3,129,298] | | | | [removed: 2,109,841] [added: 3,129,298] | | |

| Shareholders’ equity | [added: | | 6,569,989 | | | | | |] 5,458,180 | | | | [added: | |] 4,817,782 | | | | [removed: 4,154,026] | | [added: 4,154,026] | | [removed: 4,659,363] | | | | [removed: 4,759,325] [added: 4,659,363] | | |

| | [added: | |] Years Ended December 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| OTHER DATA: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Markets, at year-end | [added: | | 40 | | | | | |] 42 | | | | [added: | |] 44 | | | | [removed: 47] | | [added: 47] | | [removed: 49] | | | | [removed: 50] [added: 49] | | |

| Average active communities | [added: | | 874 | | | | | |] 863 | | | | [added: | |] 832 | | | | [removed: 779] | | [added: 779] | | [removed: 705] | | | | [removed: 618] [added: 705] | | |

| Closings (units) | [added: | | 24,624 | | | | | |] 23,232 | | | | [added: | |] 23,107 | | | | [removed: 21,052] | | [added: 21,052] | | [removed: 19,951] | | | | [removed: 17,127] [added: 19,951] | | |

| Net new orders (units) | [added: | | 29,275 | | | | | |] 24,977 | | | | [added: | |] 22,833 | | | | [removed: 22,626] | | [added: 22,626] | | [removed: 20,326] | | | | [removed: 18,008] [added: 20,326] | | |

| Backlog (units), at year-end | [added: | | 15,158 | | | | | |] 10,507 | | | | [added: | |] 8,722 | | | | [removed: 8,996] | | [added: 8,996] | | [removed: 7,422] | | | | [removed: 6,731] [added: 7,422] | | |

| Average selling price (per unit) | [added: | |] $ | [removed: 427,000] [added: 430,000] | | | [added: | |] $ | [removed: 425,000] [added: 427,000] | | | [added: | |] $ | [removed: 395,000] [added: 425,000] | | | [added: | |] $ | [removed: 373,000] [added: 395,000] | | | [added: | |] $ | [removed: 338,000] [added: 373,000] | |

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| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

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| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

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December 31, [added: 2020 and] 2019 [removed: and 2018]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | |

| ASSETS | | | | | | | | [added: | | | |]

| Cash and equivalents | [added: | |] $ | [removed: 1,217,913] [added: 2,582,205] | | | [added: | |] $ | [removed: 1,110,088] [added: 1,217,913] | |

| Restricted cash | [removed: 33,543] | | [added: 50,030] | | [removed: 23,612] | | | [added: | 33,543 | | |]

| Total cash, cash equivalents, and restricted cash | [removed: 1,251,456] | | [added: 2,632,235] | | [removed: 1,133,700] | | | [added: | 1,251,456 | | |]

| House and land inventory | [removed: 7,680,614] | | [added: 7,721,798] | | [removed: 7,253,353] | | | [added: | 7,680,614 | | |]

| Land held for sale | [removed: 24,009] | | [added: 27,962] | | [removed: 36,849] | | | [added: | 24,009 | | |]

| Residential mortgage loans available-for-sale | [removed: 508,967] | | [added: 564,979] | | [removed: 461,354] | | | [added: | 508,967 | | |]

| Investments in unconsolidated entities | [removed: 59,766] | | [added: 35,562] | | [removed: 54,590] | | | [added: | 59,766 | | |]

| Other assets | [removed: 895,686] | | [added: 923,270] | | [removed: 830,359] | | | [added: | 895,686 | | |]

| Intangible assets | [removed: 124,992] | | [added: 163,425] | | [removed: 127,192] | | | [added: | 124,992 | | |]

| Deferred tax [removed: assets, net] [added: assets] | [removed: 170,107] | | [added: 136,267] | | [removed: 275,579] | | | [added: | 170,107 | | |]

| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | [added: | | | |]

| [removed: Liabilities:] [added: Liabilities:] | | | | | | | | [added: | | | |]

| Accounts payable, including book overdrafts of [removed: $51,827] [added: $84,505] and [removed: $54,381] [added: $51,827] at December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively | [added: | |] $ | [removed: 435,916] [added: 511,321] | | | [added: | |] $ | [removed: 352,029] [added: 435,916] | |

| Customer deposits | [removed: 294,427] | | [added: 449,474] | | [removed: 254,624] | | | [added: | 294,427 | | |]

| Financial Services debt | [removed: 326,573] | | [added: 411,821] | | [removed: 348,412] | | | [added: | 326,573 | | |]

| Notes payable | [removed: 2,765,040] | | [added: 2,752,302] | | [removed: 3,028,066] | | | [added: | 2,765,040 | | |]

| Total liabilities | [removed: 5,257,417] | | [added: 5,635,509] | | [removed: 5,355,194] | | | [added: | 5,257,417 | | |]

| [removed: Shareholders’ equity:] [added: Shareholders’ equity:] | | | | | | | | [added: | | | |]

| Preferred shares, $0.01 par value; 25,000,000 shares authorized, none issued | [added: | |] $ | — | | | [added: | |] $ | — | |

| Common shares, $0.01 par value; 500,000,000 shares authorized, [removed: 270,235,297] [added: 266,464,063] and [removed: 277,109,507] [added: 270,235,297] shares issued and outstanding at December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively | [removed: 2,702] | | [added: 2,665] | | [removed: 2,771] | | | [added: | 2,702 | | |]

| Additional paid-in capital | [removed: 3,235,149] | | [added: 3,261,412] | | [removed: 3,201,427] | | | [added: | 3,235,149 | | |]

| Accumulated other comprehensive loss | [removed: (245] | | [removed: )] [added: (145)] | | [removed: (345] | | [removed: )] | [added: | (245) | | |]

| Retained earnings | [removed: 2,220,574] | | [added: 3,306,057] | | [removed: 1,613,929] | | | [added: | 2,220,574 | | |]

| Total shareholders’ equity | [removed: 5,458,180] | | [added: 6,569,989] | | [removed: 4,817,782] | | | [added: | 5,458,180 | | |]

For the years [removed: ended December] [added: ended December] 31, [removed: 2019, 2018, and 2017][added: 2020, 2019, and 2018]

| | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [removed: 2017] [added: 2019] | | | [added: | | | 2018 | | |]

| Revenues: | | | | | | | | | | | | [added: | | | | | |]

| Homebuilding | | | | | | | | | | | | [added: | | | | | |]

| Home sale revenues | [added: | |] $ | [removed: 9,915,705] [added: 10,579,896] | | | [added: | |] $ | [removed: 9,818,445] [added: 9,915,705] | | | [added: | |] $ | [removed: 8,323,984] [added: 9,818,445] | |

| Land sale and other revenues | [removed: 62,821] | | [added: 94,017] | | [removed: 164,504] | | | | [removed: 61,542] [added: 62,821] | | | [added: | | | 164,504 | | |]

| | [removed: 9,978,526] | | [added: 10,673,913] | | [removed: 9,982,949] | | | | [removed: 8,385,526] [added: 9,978,526] | | | [added: | | | 9,982,949 | | |]

| Financial Services | [removed: 234,431] | | [added: 362,169] | | [removed: 205,382] | | | | [removed: 192,160] [added: 234,431] | | | [added: | | | 205,382 | | |]

| Total revenues | [removed: 10,212,957] | | [added: 11,036,082] | | [removed: 10,188,331] | | | | [removed: 8,577,686] [added: 10,212,957] | | | [added: | | | 10,188,331 | | |]

| Homebuilding Cost of Revenues: | | | | | | | | | | | | [added: | | | | | |]

| Home sale cost of revenues | [removed: (7,628,700] | | [removed: )] [added: (8,004,823)] | | [removed: (7,540,937] | | [removed: )] | | [removed: (6,461,152] [added: (7,628,700)] | | [removed: )] | [added: | | | (7,540,937) | | |]

| Land sale [added: and other] cost of revenues | [removed: (56,098] | | [removed: )] [added: (77,626)] | | [removed: (126,560] | | [removed: )] | | [removed: (134,449] [added: (56,098)] | | [removed: )] | [added: | | | (126,560) | | |]

| | [removed: (7,684,798] | | [removed: )] [added: (8,082,449)] | | [removed: (7,667,497] | | [removed: )] | | [removed: (6,595,601] [added: (7,684,798)] | | [removed: )] | [added: | | | (7,667,497) | | |]

| | | | $ | 12,205,498 | | | | | $ | 10,715,597 | |

| Deferred tax liabilities | | | 103,548 | | | | | | — | | |

| Accrued and other liabilities | | | 1,407,043 | | | | | | 1,435,461 | | |

| | | | $ | 12,205,498 | | | | | $ | 10,715,597 | |

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| Goodwill impairment | | | (20,190) | | | | | | — | | | | | | — | | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Share issuances | | | 756 | | | | | | 8 | | | | | | 4,088 | | | | | | — | | | | | | — | | | | | | 4,096 | | |

| Dividends declared | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (135,138) | | | | | | (135,138) | | |

| Share repurchases | | | (4,542) | | | | | | (46) | | | | | | — | | | | | | — | | | | | | (170,630) | | | | | | (170,676) | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,406,839 | | | | | | 1,406,839 | | |

| Shareholders' equity, December 31, 2020 | | | 266,464 | | | | | | $ | 2,665 | | | | | $ | 3,261,412 | | | | | $ | (145) | | | | | $ | 3,306,057 | | | | | $ | 6,569,989 | |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net income | | | $ | 1,406,839 | | | | | $ | 1,016,700 | | | | | $ | 1,022,023 | |

| Goodwill impairment | | | 20,190 | | | | | | — | | | | | | — | | |

| Other assets | | | (46,307) | | | | | | (16,668) | | | | | | (65,641) | | |

| Net cash provided by operating activities | | | 1,784,342 | | | | | | 1,076,002 | | | | | | 1,448,280 | | |

| | | | | | | | | | | | | | | | | | |

| Distributions of capital from unconsolidated entities | | | 27,939 | | | | | | 214 | | | | | | 11,275 | | |

| Net cash used in investing activities | | | (107,947) | | | | | | (224,686) | | | | | | (40,475) | | |

| | | | | | | | | | | | | | | | | | |

On January 24, 2020, we acquired the operations of Innovative Construction Group ("ICG"), an offsite construction framing company located in Jacksonville, Florida, for $104.0 million, of which $83.3 million was paid in January 2020 while additional payments of $10.4 million will be settled in 2021 and 2022, respectively.

The acquired net assets were recorded at their estimated fair values, including intangible assets of $27.8 million associated with customer relationships and $1.8 million associated with the ICG tradename, which are being amortized over seven\- and five-year useful lives, respectively.

The acquisition also resulted in $48.7 million of tax deductible goodwill.

In accordance with ASC 350, management evaluates the recoverability of goodwill by comparing the carrying value of the Company’s reporting units to their fair value.

Fair value is determined using accepted valuation methods, including the use of discounted cash flows supplemented by market-based assessments of fair value.

As a result of the significant decline in equity market valuations that occurred during the period between our acquisition of ICG in January 2020 and March 31, 2020, we determined that an event-driven goodwill impairment test was appropriate for the ICG goodwill, which resulted in an impairment totaling $20.2 million in the first quarter of 2020.

PULTEGROUP, INC.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | $ | 10,715,597 | | | $ | 10,172,976 | |

| Accrued and other liabilities | 1,399,368 | | | | 1,360,483 | | |

| Income tax liabilities | 36,093 | | | | 11,580 | | |

| | | | | | | | | | | | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Shareholders' Equity, December 31, 2016 | 319,090 | | | $ | 3,191 | | | $ | 3,116,490 | | | $ | (526 | ) | | $ | 1,540,208 | | | $ | 4,659,363 | |

| Stock option exercises | 2,352 | | | 24 | | | | 27,696 | | | | — | | | | — | | | | 27,720 | | |

| Share issuances | 1,008 | | | 13 | | | | 3,555 | | | | — | | | | — | | | | 3,568 | | |

| Dividends declared | — | | | — | | | | — | | | | — | | | | (110,046 | | ) | | (110,046 | | ) |

| Share repurchases | (35,698 | ) | | (360 | | ) | | — | | | | — | | | | (909,971 | | ) | | (910,331 | | ) |

| Net income | — | | | — | | | | — | | | | — | | | | 447,221 | | | | 447,221 | | |

| Other assets | (15,125 | | ) | | (64,174 | | ) | | 55,099 | | |

| Net cash provided by (used in) operating activities | 1,077,545 | | | | 1,449,747 | | | | 663,080 | | |

| Net cash provided by (used in) investing activities | (226,229 | | ) | | (41,942 | | ) | | (50,242 | | ) |

In January 2020, we acquired substantially all of the operations of Innovative Construction Group, an offsite construction framing company located in Jacksonville, Florida.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

| | |

| --- | --- |

| *(a)* | *Includes an* *$8.0 million* *impairment of an investment in an unconsolidated entity in* *2017* *(see* [*Note 2*](#s0A3EF84B1B27507E91E2C055089EF42C)*).* |

probable that the stated performance targets will be achieved and record cumulative adjustments in the period in which estimates change.

Such

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | $ | 9,530 | | | $ | 1,805 | | | $ | 9,904 | | | $ | 8,501 | |

We adopted ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), effective January 1, 2017.

Excess tax benefits or deficiencies for stock-based compensation are now reflected in the Consolidated Statements of Operations as a component of income tax expense, whereas previously they were recognized in equity.

We have also elected to account for forfeitures as they occur, rather than estimate expected forfeitures.

As a result of adopting ASU 2016-09, we applied the modified retrospective approach and recorded a cumulative-effect adjustment that increased our retained earnings and deferred tax assets as of January 1, 2017 by $18.6 million, as a result of previously unrecognized excess tax benefits (see [Note 8](#s7DE1D1F0E0345FFAA50418CA33532688)).

Additionally, the impact of recognizing excess tax benefits and deficiencies in the consolidated statement of operations resulted in a $7.7 million reduction in our income tax expense for 2017.

We are currently evaluating the impact the standard will have on our financial statements and do not expect a material impact on our financial statements.

ASU 2017-04 is effective for us for annual and interim periods beginning January 1, 2020, and will be applied prospectively.

We do not expect ASU 2017-04 to have a material impact on our financial statements.

The Company is currently evaluating the impact of the adoption of ASU 2019-12 on its financial statements.

| | $ | 7,680,614 | | | $ | 7,253,353 | |

| | | | | | | | | | | | | | |

| | |

| --- | --- |

Management, including our 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: 2019.][added: 2020.]

Based upon, and as of the date of that evaluation, our 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: 2019.][added: 2020.]

[removed: | (a) | Management’s] [added: (a)Management’s] Annual Report on Internal Control Over Financial Reporting [removed: |]

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: 2019.][added: 2020.]

Based on this assessment, management asserts that the Company has maintained effective internal control over financial reporting as of December 31, [removed: 2019.][added: 2020.]

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: 2019.][added: 2020.]

[removed: | (b) | Report] [added: (b)Report] of Independent Registered Public Accounting Firm [removed: |]