Table of Contents

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-9804

PULTE HOMES, INC.
(Exact name of registrant as specified in its charter)

33 Bloomfield Hills Parkway, Suite 200
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (248) 647-2750
Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [   ]

Aggregate market value of voting stock held by nonaffiliates of the registrant as of February 28, 2002: $2,568,284,622
Number of shares of common stock outstanding as of February 28, 2002: 60,342,644

Documents Incorporated by Reference

Applicable portions of the Proxy Statement for the 2002 Annual Meeting of Shareholders are incorporated by reference in Part III of this Form.

Table of Contents

PULTE HOMES, INC.
TABLE OF CONTENTS

2

Table of Contents

PART I

ITEM 1. BUSINESS

Pulte Homes, Inc.

     Pulte Homes, Inc. (“Pulte” or the “Company”) is a publicly held holding company whose subsidiaries engage in the homebuilding and financial services businesses. Our assets consist principally of the capital stock of our subsidiaries, cash and investments. Our income primarily consists of dividends from our subsidiaries and interest on investments. Our direct subsidiaries include Pulte Diversified Companies, Inc. (PDCI), Del Webb Corporation and other subsidiaries which are engaged in the homebuilding business. PDCI’s operating subsidiaries include Pulte Home Corporation (PHC), Pulte International Corporation (International) and other subsidiaries which are engaged in the homebuilding business. PDCI’s non-operating thrift subsidiary, First Heights Bank, fsb (First Heights), is classified as a discontinued operation (see Note 4 of Notes to Consolidated Financial Statements). We also have a mortgage banking company, Pulte Mortgage Corporation (PMC), which is a subsidiary of PHC.

     We have three reportable business segments: Homebuilding, Financial Services and Corporate. The Homebuilding segment consists of the following two business units:

	•		Domestic Homebuilding, our core business, is engaged in the acquisition and development of land primarily for residential purposes within the continental United States and the construction of housing on such land targeted for the first-time, first and second move-up, and active adult home buyers.
	•		International Homebuilding is primarily engaged in the acquisition and development of land primarily for residential purposes, and the construction of housing on such land in Mexico, Puerto Rico and Argentina.

     The Financial Services segment consists principally of mortgage banking operations conducted through PMC and its subsidiaries.

     Corporate is a non-operating business segment whose primary purpose is to support the operations of our subsidiaries as the internal source of financing, to develop and implement strategic initiatives centered on new business development and operating efficiencies, and to provide the necessary administrative functions to support Pulte as a publicly traded entity.

     Financial information, including revenue, pre-tax income and identifiable assets of each of our business segments is included in Note 2 of Notes to Consolidated Financial Statements.

3

Table of Contents

Homebuilding Operations

     Unit sales (settlements) and net new orders in any year are strongly influenced by local, regional and national market economic conditions.

Domestic Homebuilding

     We build a wide variety of homes, including detached units, townhouses, condominium apartments and duplexes, with varying prices, models, options and lot sizes, all sold for use as principal residences. Since 1990, we have more than quadrupled our annual unit closings, unit orders and unit backlog levels. Including 2001 sales of nearly 23,000 homes, we have closed nearly 300,000 homes since our inception.

     On July 31, 2001, we merged with Del Webb Corporation in a tax-free stock-for-stock transaction. Del Webb is primarily a homebuilder with operations in six states. For the fiscal year ended June 30, 2001, Del Webb reported net income of $91.2 million on revenues of $1.9 billion and 7,038 unit settlements. Backlog reported at June 30, 2001, was 3,682 units valued at approximately $994 million. This merger expands and supports our leadership position. In particular, we believe the merger will strengthen our position among active adult homebuyers, enhance our overall land position, provide operational savings from economies of scale while enhancing purchasing leverage, and enhance our overall competitive position. In accordance with our operational strategy, we will continue to evaluate available strategic acquisition opportunities that coincide with our long-range goals.

     As of December 31, 2001, our Domestic Homebuilding operations offered homes for sale in 440 communities at sales prices ranging from $75,000 to $1,200,000. Sales prices of homes currently offered for sale in 76% of our communities fall within the range of $150,000 to $450,000 with a 2001 average unit selling price of $225,000. Sales of single-family detached homes, as a percentage of total unit sales, were 82% in 2001 and 2000 and 79% in 1999, respectively. Our Domestic Homebuilding operations are geographically diverse to better insulate us from demand changes in individual markets. As of December 31, 2001, our Domestic Homebuilding business operated in 43 markets spanning 25 states.

4

Table of Contents

Homebuilding Operations (continued)

International Homebuilding

     International Homebuilding operations are primarily conducted through subsidiaries of Pulte International Corporation in Mexico, Puerto Rico and Argentina. International Homebuilding product offerings focus on the demand of first-time buyers and social interest housing in Mexico and Puerto Rico. Housing for middle-to-upper income consumers is available in Puerto Rico and Argentina. We have agreements in place with multi-national corporations to provide social interest housing in Mexico.

     Mexico    International’s 100%-owned subsidiary, Pulte International Mexico, Inc., conducts its operations primarily through five joint ventures located throughout Mexico. The largest of these ventures, Condak-Pulte S. De R.L. De C.V. (Condak-Pulte), is based in Cuidad Juarez. Condak-Pulte is currently developing communities in Juarez, Chihuahua, Nuevo Laredo, Monterrey, Reynosa, Saltillo and Matamoros, under agreements with Delphi Automotive Systems, Gigante, S.A. de C.V. and Centro Comerciales Soriana, S.A. De C. V.

     Desarrollos Residenciales Turisticos, S.A. de C.V. (DRT), another joint venture in Mexico, is constructing primarily social interest housing in Central Mexico. Current development plans for this venture include housing projects in the Bajio region surrounding Mexico City, targeting the cities of Celaya, Leon, Puebla, Queretaro, San Jose du Iturbide and San Juan del Rio.

     Effective January 1, 2002, Pulte International reorganized its structure within Mexico to create a single company, Pulte Mexico, which ranks as one of the largest builders in the country. The new operating structure will facilitate growth, enable operating leverage and improve efficiencies through standardized systems and procedures. The new company, which combines several entities, including Condak-Pulte and DRT, will be consolidated into our financial statements.

     Puerto Rico    Operations in Puerto Rico are primarily conducted through International’s 100%-owned subsidiary, Pulte International Caribbean Corporation. Desarrolladores Urbanos (Canovanas), S.E., its Puerto Rican joint venture, is developing 121 acres located in Metropolitan San Juan.

     Argentina    Operations in Argentina are conducted through Pulte S.R.L., International’s 100%-owned Argentine subsidiary which recorded its first closings during the second quarter of 2001.

Land Acquisition and Development

     Locations for development of homebuilding communities are selected after completing extensive market research, enabling us to match the location and product offering with our targeted consumer group. Factors considered include proximity to developed areas, population and job growth patterns and, if applicable, estimated development costs. We have historically managed the risk of controlling our land positions through use of option contracts and outright acquisition. We typically control land with the intent to complete sales of housing units within 24 months from the date of opening a community, except in the case of certain active-adult developments and our Del Webb operations for which the completion of housing unit sales require a longer time period. As a result, land is generally controlled after it is properly zoned and developed or is ready for development. In addition, we dispose of owned land not required in the business. Where we develop land, we engage directly in many phases of the development process, including land and site planning, obtaining environmental and other regulatory approvals, as well as constructing roads, sewers, water and drainage facilities, and other amenities. We use our staff and the services of independent engineers and consultants for land development activities. Land development work is performed primarily by subcontractors and local government authorities which construct sewer and water systems in some areas. At December 31, 2001, we owned approximately 82,400 lots and had approximately 35,000 lots under option.

Sales and Marketing

     We are dedicated to improving the quality and value of our domestic homes through innovative proprietary architectural and community designs and state-of-the-art customer marketing techniques. Analyzing various qualitative and quantitative data obtained through extensive market research, we segment our potential customers into well-defined buyer profiles. Once the demands of potential buyers are understood, we link our home design and community development efforts to the specific lifestyle of each targeted consumer group.

5

Table of Contents

Homebuilding Operations (continued)

Sales and Marketing (continued)

     To meet the demands of our various domestic customers, we have established a solid design expertise for a wide array of product lines. We believe that we are an innovator in the design of our homes and we view design capacity as an integral aspect of our marketing strategy. Our in-house architectural services teams and management, supplemented by outside consultants, are successful in creating distinctive design features, both in exterior facades and interior options and features. A strategy in certain markets is to offer “the complete house” in which all features shown in the home are included in the sales price. Standard features typically offered include vaulted ceilings, appliances, and a selection of flooring and carpet, which the buyer chooses.

     Typically, our own domestic sales teams, together with outside sales brokers, are responsible for managing the customer through the sales process. We have been committed to industry-leading customer service through a variety of quality initiatives, including the customer care program, which ensures that homeowners are comfortable at every stage of the building process. Using a seven-step, interactive process, homeowners are kept informed during their homebuilding and home owning experience. The steps include (1) a pre-construction meeting with the superintendent; (2) pre-dry wall frame walk; (3) quality assurance inspection; (4) first homeowner orientation; (5) 30-day follow-up after the close of the home; (6) three-month follow-up; and (7) an 11-month quality list after the close of the home. Fully furnished and landscaped model homes are used to showcase our homes and their distinctive design features. We have great success with the first-time buyer in the low to moderate price range; in such cases, financing under United States Government-insured and guaranteed programs is often used and is facilitated through our mortgage company. We also enjoy strong sales to the move-up buyer and, in certain markets, offer semi-custom homes in higher price ranges.

     In 2001, J.D. Power and Associates recognized our Colorado, Charlotte, Las Vegas and Southern California markets for ranking the highest in their markets in customer satisfaction in the J.D. Power and Associates 2001 New Home Builder Customer Satisfaction StudySM. The survey of ten U.S. markets noted customer service and home readiness as the two factors that most heavily influenced the customer’s overall level of satisfaction. We finished third or better in seven of the ten markets surveyed. Building on this quality foundation is our brand development program with our “Three I’s on Quality” platform. Developing the Pulte Homes brand and leveraging the strength of the “DiVosta,” “Del Webb” and “Sun City” names not only distinguishes our communities from the competition, but it also earns a price premium in the marketplace, reduces overall customer acquisition costs and can result in additional sales.

     In addition, our Homeowner for Life™ strategy and philosophy has increased our business from those who have previously owned a Pulte home or been referred by a Pulte homeowner by ensuring a positive home buying and home owning experience. In 2001, we saw an increase to 36 percent of these repeat/referral buyers. That represents almost $2 billion in revenues in 2001. We introduce our homes to prospective buyers through a variety of media advertising, illustrated brochures, Internet listings and link placements, and other advertising displays. Customers are also obtained through referrals from other Pulte customers. In addition, our website, www.pulte.com, enables users to search for their home, obtain details regarding the local schools, services and other features, examine mortgage options using an online calculator, learn more about us and communicate directly with us. Over three million potential customers have visited www.pulte.com since January 1, 2000.

     As a result of the merger with Del Webb, we are better able to address the needs of active adults, the fastest growing homebuying segment. With destination communities offering highly amenitized products, such as golf courses, recreational centers and educational classes, the active adult buyer has many options to maintain an active lifestyle.

     Our international sales and marketing efforts focus on the identification of regions throughout Mexico, Puerto Rico and Argentina which are experiencing population and industrial growth. In Mexico and Puerto Rico, the demand for affordable and social interest housing is strong. In Mexico, Condak-Pulte has entered into three separate agreements to construct affordable social interest housing with Delphi Automotive Systems, Gigante, S. A. de C.V. and Centrol Comerciales Soriana, S. A. de C.V. In Puerto Rico, the strongest customer demand is for single-family detached homes, but affordable alternative product offerings include two story attached units (townhomes) and three-story condominium units with exterior stairs (walk-ups). The Argentine market offers low levels of competition and a very large residential market in Buenos Aires.

6

Table of Contents

Homebuilding Operations (continued)

Construction

     The construction process for our domestic homes begins with the in-house design of the homes we sell. The building phase is conducted under the supervision of our on-site construction superintendents. The construction work is usually performed by subcontractors under contracts which, in many instances, cover both labor and materials on a fixed-price basis. We believe that Pulte Preferred Partnerships (P3), an extension of our quality assurance program, continues to establish new standards for contractor relations. Using a selective process, we have teamed up with what we believe are premier contractors and suppliers to improve all aspects of the land development and house construction processes.

     We maintain efficient construction operations by using standard materials and components from a variety of sources and, when possible, by building on contiguous lots. To minimize the effects of changes in construction costs, the subcontracting and purchasing of building supplies and materials are generally negotiated at or near the time when related sales contracts are signed. In addition, we utilize the leverage our size affords by actively negotiating our materials needs on a national or regional basis to minimize component production cost. We are also working to establish a more integrated system that can effectively link suppliers, contractors and the production schedule through various strategic business partnerships and e-business initiatives.

     Housing in Mexico and Puerto Rico consists primarily of reinforced poured concrete, concrete and ceramic block and/or brick construction with flat roofs and public water, electric and sanitary system connections. Our Argentine housing product is designed and constructed in a similar fashion to our domestic product but is customized for local preferences. Building materials, supplies and components are sourced locally and the construction work is performed by general contractors and/or subcontractors under contracts, which in many cases, include both labor and materials.

     We cannot determine the extent to which necessary building materials will be available at reasonable prices in the future and have, on occasion, experienced shortages of skilled labor in certain trades and of building materials in some markets.

Competition and Other Factors

     Our dedication to customer satisfaction is evidenced by our consumer and value-based brand approach to product development, and is something that we believe distinguishes us in the homebuilding industry and contributes to our long-term competitive advantage. The housing industry in the United States, however, is highly competitive. In each of our market areas, there are numerous homebuilders with which we compete. Any provider of housing units, for-sale or to rent, including apartment builders, may be considered a competitor. Conversion of apartments to condominiums further provides certain segments of the population an alternative to traditional housing, as does manufactured housing. We compete primarily on the basis of price, reputation, design and quality of our homes as well as location. The housing industry is cyclical and is affected by a number of economic and other factors including: (1) significant national and world events, which impact consumer confidence; (2) changes in interest rates; (3) changes in other costs associated with home ownership, such as property taxes and energy costs; (4) various demographic factors; (5) changes in federal income tax laws; and (6) changes in government mortgage financing programs. In addition to these factors, our business and operations could be affected by unanticipated shifts in demand for new homes.

     Our operations are subject to building, environmental and other regulations of various federal, state, local and foreign governing authorities. For our homes to qualify for Federal Housing Administration (FHA) or Veterans Administration (VA) mortgages, we must satisfy valuation standards and site, material and construction requirements of those agencies. Our compliance with federal, state, local and foreign laws relating to protection of the environment has had, to date, no material effect upon capital expenditures, earnings or competitive position. More stringent requirements could be imposed in the future on homebuilders and developers, thereby increasing the cost of compliance.

7

Table of Contents

Financial Services Operations

     Our financial services operations are conducted by our mortgage banking and other financial subsidiaries, including Pulte Mortgage Corporation and Del Webb Mortgage Corporation.

Mortgage Banking

     Our mortgage bank arranges financing through the origination of mortgage loans primarily for the benefit of our domestic homebuyers, but also services the general public. We also engage in the sale of such loans and the related servicing rights. We are a lender approved by the FHA and VA and are a seller/servicer approved by Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and other investors. In our conventional mortgage lending activities, we follow underwriting guidelines established by FNMA and FHLMC.

     Our mortgage underwriting, processing and closing functions are centralized in Denver, Colorado using a mortgage operations center (MOC) concept. We also use a centralized telephone loan officer concept where loan officers are centrally located at a mortgage application center (MAC) in Denver. Our sales representatives, who are the mortgage customers’ main contact, forward the loan applications to a MAC loan counselor who calls the customer to complete the loan application and then forwards it to the MOC for processing. We believe both the MOC and the MAC improve the speed and efficiency of our mortgage operations, thereby improving profitability and allowing us to focus on creating attractive mortgage financing opportunities for our customers.

     In originating mortgage loans, we initially use our own funds and borrowings made available to us through various credit arrangements. Subsequently, we sell such mortgage loans and mortgage-backed securities to outside investors.

     During the years ended December 31, 2001, 2000 and 1999, we originated mortgage loans for 60%, 56% and 55%, respectively, of the homes we sold. Such originations represented 79%, 83% and 79%, respectively, of our originations.

     We sell our servicing rights on a flow basis through fixed price servicing sales contracts to reduce the risks inherent in servicing loans. This strategy results in owning the servicing rights for only a short period of time, usually three to four months after the loan is originated, which substantially reduces impairment issues with respect to the fair value of these reported assets.

     The mortgage industry in the United States is highly competitive. We compete with other mortgage companies and financial institutions to provide attractive mortgage financing to both our customers and to the general public. In originating and servicing mortgage loans, we are subject to rules and regulations of the FHA, VA, GNMA, FNMA and FHLMC. The Internet is also an important resource for homebuyers in obtaining financing as a number of companies provide online approval for their customers. These Internet-based mortgage companies may also be considered competitors.

Discontinued Operations

     During the first quarter of 1994, we adopted a plan of disposal for First Heights and announced our strategy to exit the thrift industry and increase our focus on housing and related mortgage banking. First Heights sold all but one of its 32 bank branches and related deposits to two unrelated purchasers. The sale was substantially completed during the fourth quarter of 1994.

     Although in 1994, we expected to complete the plan of disposal within a reasonable period of time, contractual disputes with the Federal Deposit Insurance Corporation (FDIC) prevented the prepayment of the Federal Savings and Loan Insurance Corporation Resolution Fund (FRF) notes, thereby precluding us from completing the disposal in accordance with our original plan. To provide liquidity for the sale, First Heights liquidated its investment portfolios and its single-family residential loan portfolio and, as provided in the Assistance Agreement, entered into a Liquidity Assistance Note (LAN) with the FDIC acting in its capacity as manager of the FRF notes. The LAN was collateralized by the FRF notes. The LAN and FRF notes matured in September 1998; however, payment of these obligations was withheld by both parties pending resolution of all open matters with the FDIC. As discussed in Note 10 of Notes to Consolidated Financial Statements, the Company settled its litigation with the FDIC in October 2001, and as part of that settlement all obligations under the LAN and FRF notes were extinguished.

8

Table of Contents

Financial Services Operations (continued)

Discontinued Operations (continued)

     First Heights no longer holds any deposits, nor does it maintain an investment portfolio. First Heights’ day-to-day activities are principally devoted to supporting residual regulatory compliance matters and the litigation with the United States government and are not reflective of the active operations of the former thrift, such as maintaining traditional transaction accounts, (e.g., checking and savings accounts) or making loans. Accordingly, such operations are presented as discontinued.

Corporate

     Corporate is a non-operating segment that is comprised of the Company and PDCI, both of which are holding companies. The primary purpose of Corporate is to support the operations of our subsidiaries as the internal source of financing, and to develop and implement strategic initiatives centered around new business development and operating efficiencies. Business development activities include the pursuit of additional domestic and international opportunities as well as the development of innovative building components and processes. Corporate also includes the activities associated with supporting a publicly traded company listed on the New York Stock Exchange.

     Corporate assets include equity investments in its subsidiaries, short-term financial instruments and affiliate advances. Liabilities include senior and subordinated debt and income taxes. Corporate revenues consist primarily of investment earnings of excess funds, while its expenses include costs associated with supporting a publicly traded company and its subsidiaries’ operations, and investigating strategic initiatives.

Organization/Employees

     All subsidiaries and operating units operate independently with respect to daily operations. Homebuilding real estate purchases and other significant homebuilding, mortgage banking, financing activities and similar operating decisions must be approved by the business unit and/or corporate senior management.

     At December 31, 2001, we employed approximately 9,400 persons. Our employees are not represented by any union. Subcontracted work, however, may be performed by union subcontractors. Homebuilding and mortgage banking management personnel are paid performance bonuses and incentive compensation. Performance bonuses are based on individual performance while incentive compensation is based on the performance of the applicable division or subsidiary. Our corporate management personnel are paid incentive compensation based on overall performance of the Company (see Note 7 of Notes to Consolidated Financial Statements). Each subsidiary is given autonomy regarding employment of personnel, although our senior corporate management act in an advisory capacity in the employment of subsidiary officers. We consider our employee and subcontractor relations to be satisfactory.

ITEM 2. PROPERTIES

     Our homebuilding and corporate headquarters are located at 33 Bloomfield Hills Parkway, Suite 200, Bloomfield Hills, Michigan 48304, where 34,559 square feet of office space is leased. We also lease 21,612 square feet of office space at 165 Kirts Boulevard, Troy, Michigan 48084 for certain centralized business support services. We own 148,727 square feet of office space at 6001 North 24th Street, Phoenix, Arizona 85016 for use by our Del Webb operations and for certain corporate and business services. Pulte Mortgage Corporation’s offices are located at 7475 South Joliet Street, Englewood, Colorado 80112. At this location, approximately 60,000 square feet of office space is leased. Our homebuilding markets and mortgage branch operations generally lease office space for their day-to-day operations. First Heights’ administrative office is located in 918 square feet of leased space at 2010 North Loop West, Suite 220, Houston, Texas 77018.

     Because of the nature of our homebuilding operations, significant amounts of property are held as inventory in the ordinary course of our homebuilding business. Such properties are not included in response to this Item.

9

Table of Contents

ITEM 3. LEGAL PROCEEDINGS

     We are involved in various litigation incidental to our continuing business operations. We believe that none of this litigation will have a material adverse impact on our results of operations, our financial position or our cash flows.

First Heights-related litigation

     We were a party to three lawsuits relating to First Heights’ 1988 acquisition from the Federal Savings and Loan Insurance Corporation (FSLIC) and First Heights’ ownership of five failed Texas thrifts. The first lawsuit (the “District Court Case”) was filed on July 7, 1995, in the United States District Court, Eastern District of Michigan, by the Federal Deposit Insurance Corporation (FDIC) against the Company, PDCI and First Heights (collectively, the “Pulte Parties”). The second lawsuit (the “Court of Federal Claims Case”) was filed on December 26, 1996, in the United States Court of Federal Claims (Washington, D.C.) by the Pulte Parties against the United States. The third lawsuit was filed by First Heights on January 10, 2000, in the United States District Court, Eastern District of Michigan against the FDIC regarding the amounts, including interest, the FDIC was obligated to pay First Heights on two promissory notes which had been executed by the FDIC’s predecessor, the FSLIC.

     In the District Court Case, the FDIC, as successor to the FSLIC, sought a declaration of rights and other relief related to the Assistance Agreement entered into between First Heights and the FSLIC. The FDIC and the Pulte Parties disagreed about the proper interpretation of provisions in the Assistance Agreement which provide for sharing of certain tax benefits achieved in connection with First Heights’ 1988 acquisition and ownership of the five failed Texas thrifts. The District Court Case also included certain other claims relating to the foregoing, including claims resulting from the Company’s and First Heights’ amendment of a tax sharing and allocation agreement between the Company and First Heights. The Pulte Parties disputed the FDIC’s claims and filed an answer and a counterclaim, seeking, among other things, a declaration that the FDIC had breached the Assistance Agreement in numerous respects. On December 24, 1996, the Pulte Parties voluntarily dismissed without prejudice certain of their claims in the District Court Case and, on December 26, 1996, initiated the Court of Federal Claims Case.

     On March 5, 1999, the United States District Court (the Court), entered a “Final Judgment” against First Heights and PDCI resolving by summary judgment in favor of the FDIC most of the FDIC’s claims against the Pulte Parties. The Final Judgment required PDCI and First Heights to pay the FDIC monetary damages totaling approximately $221.3 million, including interest but excluding costs (such as attorneys fees) to be determined in the future by the District Court and post-judgment interest. However, the FDIC acknowledged that it had already paid itself or withheld from assistance its obligation to pay to First Heights approximately $105 million, excluding interest thereon. We believed that we were entitled to a credit or actual payment of such amount plus interest. The Final Judgment did not address this issue. We disagreed with the District Court’s rulings and appealed the decision to the Sixth Circuit Court of Appeals.

     On October 12, 2000, the Sixth Circuit Court of Appeals rendered its opinion in which it affirmed in part, reversed in part and remanded the case to the District Court for further proceedings. The Sixth Circuit affirmed most of the District Court’s adverse liability rulings, including as to the sharing of certain tax benefits achieved in connection with First Heights’ 1988 acquisition and ownership of the five failed Texas thrifts and regarding the Company’s and First Heights’ amendment of a tax sharing and allocation agreement and rescission of a warrant assumption agreement between PDCI and First Heights. The Sixth Circuit, however, vacated the District Court’s damage calculations as to a number of issues, vacated the District Court’s pre-judgment interest award, and remanded to the District Court for a proper recalculation of all such amounts. Although the Sixth Circuit opinion left certain significant issues to be resolved through further Court proceedings, based upon its reading of the Sixth Circuit opinion, we determined that an after-tax charge of $30 million to Discontinued Operations was appropriate in 2000.

     In October 2001, the FDIC and the Pulte Parties settled the District Court Case, the related appeal to the Sixth Circuit Court of Appeals and the third lawsuit. As part of this settlement (the “Settlement”), the Pulte Parties agreed to pay to the FDIC $41.5 million, and the FDIC was permitted to retain all amounts previously withheld from First Heights including the FRF notes (see Note 4 of Notes to Consolidated Financial Statements). In addition, the First Heights Assistance Agreement was terminated, except certain tax benefit sharing provisions will continue in effect, and the warrants issued by First Heights to the FDIC were extinguished. We do not believe that the claims in the Court of Federal Claims Case are in any way prejudiced by the Settlement.

10

Table of Contents

ITEM 3. LEGAL PROCEEDINGS (continued)

First Heights-related litigation (continued)

     In the Court of Federal Claims Case, the Pulte Parties assert breaches of contract on the part of the United States in connection with the enactment of Section 13224 of the Omnibus Budget Reconciliation Act of 1993 (“OBRA”). That provision repealed portions of the tax benefits that the Pulte Parties claim they were entitled to under the contract to acquire the failed Texas thrifts. The Pulte Parties also assert another claim concerning the contract that the United States (through the FDIC as receiver) improperly attempted to amend the failed thrifts’ pre-acquisition tax returns and that this attempt was made in an effort to deprive the Pulte Parties of tax benefits for which they had contracted.

     On August 17, 2001, the United States Court of Federal Claims ruled that the United States government is liable to the Company for breach of contract by enacting Section 13224 of OBRA. The Court will now proceed to determine the amount of damages to which the Pulte Parties are entitled. While it is unclear at this time what amount the Court will award, the Pulte Parties are currently seeking approximately $80 million in after tax damages for the United States government’s breach of contract.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     This Item is not applicable.

11

Table of Contents

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

     Set forth below is certain information with respect to our executive officers as of December 31, 2001.

     The following is a brief account of the business experience of each officer during the past five years through December 31, 2001:

     Mr. Pulte was appointed Chairman of the Board in December 2001. He has also served as Chairman of the Executive Committee of the Board of Directors since January 1999. Prior to that date, he served as Chairman of the Board since January 1991.

     Mr. Mark O’Brien was appointed Chief Executive Officer in December 2001. He was appointed President in December 1998. Prior to that date, he served as Executive Vice President and Chief Operating Officer since August 1997 and had served in various capacities with our subsidiaries since 1980, most notably as President of Pulte Homes East, an operating unit of Pulte.

     Mr. Cregg was appointed Senior Vice President in December 1997 and was named Chief Financial Officer effective January 31, 1998. Before joining the Company, Mr. Cregg was Executive Vice President and Chief Financial Officer of Zenith Electronics Corporation since 1996.

     Mr. Michael O’Brien became Senior Vice President in December 1994.

     Mr. Stoller was appointed Senior Vice President in September 1999. Prior to that date, he served as Vice President and General Counsel since October 1990.

     Mr. Frees has been Vice President and Controller since May 1995.

     Mr. Nelson has been Vice President since August 1993.

     Mr. Robinson was appointed Treasurer in July 1998 and was named Vice President and Treasurer effective January 20, 1999. Mr. Robinson has served in various capacities with the Company since 1988 and held the position of Director of Research and Analysis prior to becoming Treasurer.

     There is no family relationship between any of the officers. Each officer serves at the pleasure of the Board of Directors.

12

Table of Contents

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock is listed on the New York Stock Exchange (Symbol: PHM). The table below sets forth, for the quarterly periods indicated, the range of high and low closing prices and cash dividends declared per share.

     At December 31, 2001, there were 1,684 shareholders of record.

ITEM 6. SELECTED FINANCIAL DATA

     Set forth below is selected consolidated financial data for each of the past five fiscal years. The selected financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and Notes thereto included elsewhere in this report.

13

Table of Contents

ITEM 6. SELECTED FINANCIAL DATA (continued)

14

Table of Contents

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview:

     A summary of our operating results by business segment for the years ended December 31, 2001, 2000 and 1999 is as follows ($000’s omitted, except per share data):

     A comparison of pre-tax income (loss), for the years ended December 31, 2001, 2000 and 1999 is as follows:

	•		Pre-tax income of our homebuilding business segment increased 33% in 2001 and 24% in 2000. Results in 2001 reflect a 9% increase in average selling price to $225,000 and a 120 basis point improvement in gross margin to 20%. Our 2001 results also reflect five months of the acquired operations of Del Webb Corporation as this merger was completed on July 31, 2001 (please see Note 3 of Notes to Consolidated Financial Statements). Compared to 1999, our 2000 results primarily reflect a 10% increase in domestic average selling price to $206,000 and a 100 basis point improvement in gross margins.
	•		Pre-tax income of $28,331,000 for our financial services business segment represents an increase of 49% over 2000 due to increased loan originations and secondary marketing gains resulting from a favorable interest rate environment. Del Webb’s mortgage operations also contributed to this increase. Pre-tax income decreased 9% in 2000 from 1999 to $19,009,000. Pre-tax income for 2000 was impacted by competitive market conditions due to higher interest rates early in the year, which reduced profitability. Results for 1999 also reflect a net gain of approximately $1,700,000 in connection with the sale of the mortgage-backed securities by Pulte Financial Companies, Inc., one of our subsidiaries.
	•		Pre-tax loss of our corporate business segment increased $1,156,000 in 2001 from $56,296,000 in 2000 as an increase in net interest expense, primarily due to the inclusion of Del Webb’s debt, was partially offset by lower Corporate expenditures. In 2000, our pre-tax loss increased $5,312,000 from $50,984,000 in 1999 reflecting an increase in net interest expense.

15

Table of Contents

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Homebuilding Operations:

     Our homebuilding operations are organized into two distinct business units: Domestic and International.

	•		Domestic Homebuilding operations are conducted in 43 markets, located throughout 25 states. Domestic Homebuilding offers a broad product line to meet the needs of the first-time, first and second move-up, and active adult homebuyers.
	•		International Homebuilding operations are conducted through subsidiaries of Pulte International Corporation in Mexico, Puerto Rico and Argentina. International Homebuilding product offerings focus on the demand of first-time buyers, and social interest housing in Mexico and Puerto Rico. Housing for middle-to-upper income consumer groups is also available in Puerto Rico and Argentina. We have agreements in place with multi-national corporations to provide social interest housing in Mexico.

     Certain operating data relating to our homebuilding operations and our joint ventures are as follows ($000’s omitted):

16

Table of Contents

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Homebuilding Operations (continued):

Domestic Homebuilding:

     The Domestic Homebuilding business unit represents our core business. Operations are conducted in 43 markets, located throughout 25 states, and are organized into five groups as follows:

     The metropolitan Atlanta market accounted for 10% of the total unit settlements in 2000. No other individual market represented more than 10% of total Domestic Homebuilding net new orders, unit settlements or revenues during the three years ended December 31, 2001.

     The following table presents selected unit information for our Domestic Homebuilding operations: