Pulte Group

Annual Report Project
PulteGroup, INC
CHAD THOMAS
ACG2021 Section 001

Executive Summary
• PulteGroup, INC is a strong leader in the homebuilding industry. Within
the past year, this company has merged with Centex Homes in order to
consolidate operating costs and return to profitability. PulteGroup has
committed itself to evolving with the times by focusing on building more
eco-friendly homes. Because of its boldness and willingness to succeed,
PulteGroup shows strong signs of remaining the leader in the homebuilding
industry and will likely continue to set the building standards for all
homebuilding companies to follow.
• PulteGroup, INC 2009 Annual Report:
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzkzMjR8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Part A. Introduction
• Chief Executive Officer: Richard J. Douglas, Jr.
• Home Office: Bloomfield, Michigan
• Ending Date of Latest Fiscal Year: December 31, 2009
• Principal Product/Services: PulteGroup, Inc. is a publicly-help
holding company whose subsidiaries engage in the homebuilding (the
core business) and financial services businesses.
▫ Subsidiaries: Pulte Diversified Companies, INC. (including Pulte Home
Corporation, Pulte International Corporation, and other subsidiaries
engaged in the homebuilding business); Del Webb Corporation; Centex
Corporation; and other subsidiaries engaged in the homebuilding
business.
▫ Homebuilding (the core business) is engaged in the acquisition and
development of land primarily for residential purposes and the
construction of housing on such land.
▫ Financial services segment (secondary business) consists primarily
of mortgage banking and title operations
• Primary Areas of Operation: Within the continental United States
including 67 markets, 29 states and the District of Columbia.

Part A. Audit Report
• Independent Auditors: Ernst & Young LLP.
• The auditors evaluated the consolidated balance
sheets, consolidated statements of operation,
stockholders’ equity, comprehensive income
(loss), and cash flow for 2008 and 2009.
• The auditors did not find any discrepancies with
the financial statements.

Part A. Stock Market Information
• Most recent price of the companies stock: $8.42
• Twelve month trading range of the company’s stock:
7.70 – 13.91
• Dividend per share: n/a (non-profitable shares)
• Date of the above information: September 24, 2010
• Due to the recent economic recession, PulteGroup’s stocks are
decreasing which presents a great opportunity for
stockholders to buy stocks at a low price. Since it’s
beginnings, PulteGroup has proven itself a worthy and stable
company. I can only assume that it will survive the current
recession and will remain a leader in homebuilding. If
stockholders invest now, at this low price, they should
certainly profit in the end when the market reemerges and the
and price of PulteGroup’s stock steadily increases.

Part B. Industry Situation and
Company Plans
As a result of the current economic challenges, the sale of new homes throughout the United
States has significantly fallen over the past 4 years. In fact, new home sales have decreased
71% since it’s peak in 2005. Despite these significant challenges, PulteGroup has survived
likely due to its willingness to take bold action. As of April 2009, PulteGroup merged with
Centex Homes, another well-known and respected company in the housing industry. The
hope is that this merger will allow PulteGroup to capitalize on merger-related and broadermarket
opportunities and return PulteGroup to profitability. In fact, PulteGroup expects
estimated savings of $350 million annually post-merger.
Additionally, PulteGroup has committed to integrating a more eco-friendly design and
building practice. In 2009 PulteGroup was honored as the recipient of the 2009 Leadership
for Energy and Environmental Design (LEED) Award by the U.S. Green building Council.
http://phx.corporate-ir.net/phoenix.zhtml?c=77968&p=irol-newsArticle&id=1274448&highlight=
http://www.homechannelnews.com/story.aspx?id=130503&type=web
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzkzMjR8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Part C. Income Statement
2009 2008
Gross Profit (401,255) (1,669,786)
Income from Operations (1,932,372) (1,669,786)
Net Income (1,182,567) (1,473,113)
Multistep format.
Although still operating at a loss, the gross profit and net income improved from
2008 to 2009. In fact, the gross profit significantly improved. On the other hand,
the income from operations declined.

Part C. Balance Sheet
2009 2008
Assets 10,051,222 7,708,458
Liabilities 6,856,782 4,872,760
Stockholder s’ Equity 3,194,440 2,835,698
From 2008 to 2009, assets and stockholders’ equity both increased, while liabilities
decreased. The greatest change was noted in the assets account.

Part C. Statement of Cash Flows
• Cash flows from operations are
less than net income for 2008
and 2009.
• Since the merger with Centex
Homes, PulteGroup has grown
through investment activities.
For example, through the
merger, PulteGroup has gained
access to roughly 60,000 lots.
• The company’s primary source
of financing is via long-term
loans.
• Overall, there has been a
decrease in cash over the past 2
years.

Part D. Accounting Policies
Significant Accounting Policies Note Topics for Financial Statements
• Revenue Recognition: Revenue and related
profit are generally recognized at the time of
the closing of the sale.
• Inventory: Stated at the lower of
accumulated costs or fair value as
determined in accordance with ASC 360-10.
• Cash Equivalence: Institutional money
market investments and time deposits with
a maturity of 3 months or less.
• Restricted Cash: Maintains certain cash
balances that are restricted as to use.
• Plant, Property, and Equipment:
Maintenance and repair costs are expensed
as incurred. Depreciation is computed
principally by the straight line method
based upon estimated useful life.
• Foreign currency
• Subsequent events
• Cash and equivalents
• Restricted cash
• Intangible assets
• Goodwill
• Fixed assets and depreciation
• Advertising cost
• Employee benefits
• Other expense (income)
• Discontinued operations
• Earnings per share
• Stock-based compensation
• New accounting pronouncements
• Revenue recognition
• Sales incentives
• Inventory
• Land held for sale
• Allowance for warranties
• Interest income on mortgage loans
• Title services

Part E. Financial Analysis
Liquidity Ratios
2009 2008 Comment
Working Capital 3,607,593 4,987,628 Decrease in profit from sales.
Current Ratio 3.09% 3.9% Ratio is greater than 2.0. This
is a positive sign for the
company.
Receivable Turnover 5.65 times 12.85 times There was a significant
decrease in receivable
turnover likely due to lack of
production.
Average Days’ Sales
Uncollected
64.6 days 24.4 days The amount of time has
increased for accounts
receivable likely due to the
struggling economy.
Inventory Turnover 0.88 times 1.75 times Inventory turnover decreased
from 2008 to 2009, but is
still the industry’s leader.
Average Days’ Inventory on
Hand
415 days 209 days The average days of inventory
increased from 2008 to 2009
due to the struggling
economy.

Part E. Financial Analysis
Profitability Ratios
2009 2008 Comment
Profit Margin (29%) (23%) Profit margin is
starting to slowly
level off.
Asset Turnover 0.51 0.70 Assets are used
wisely but the
housing industry is
still struggling.
Return on Assets (13%) (19%) Net income is still
very low, which
accounts for the loss
of ROA.
Return of Equity (39%) (41%) Losses are also
beginning to level
off.

Part E. Financial Analysis
Solvency Ratio
2009 2008
Debt to Equity 2.15 or 215% 1.72 or 172%
Comment: The high percentages of the debt to equity prove that the recovery
of this company’s financial status will take many years. These percentages also
show that the stockholders control this company.

Price/Earnings
Per Share
Part E. Financial Analysis
Market Strength Ratios
2009 2008
(2.5) (1.7)
Dividend Yield 0 0
Comment: Stockholders will not receive any returns on their investments as of
2008 and 2009.