PULTE HOMES INC/MI/ - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

( ) 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)


MICHIGAN		38-2766606
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

100 Bloomfield Hills Parkway, Suite 300
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (248) 647-2750

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12-b2 of the Exchange Act). YES (X) NO ( )

Number of shares of common stock outstanding as of July 31, 2004: 126,918,434

Website Access to Company Reports, Codes and Charters

Our internet website address is www.pulte.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after we electronically file with or furnish them to the Securities and Exchange Commission. Our code of ethics for principal officers, our corporate governance guidelines and the charters of the Audit, Compensation, and Nominating and Governance Committees of our Board of Directors are also posted on our website and are available in print upon request.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PULTE HOMES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

($000’s omitted)


	June 30,		December 31,
	2004		2003
	(Unaudited)
ASSETS
Cash and equivalents	$	90,318	$	404,092
Unfunded settlements		80,786		122,300
House and land inventory		6,800,556		5,528,410
Land held for sale		223,640		251,237
Land, not owned, under option agreements		124,618		73,256
Residential mortgage loans available-for-sale		335,480		541,126
Goodwill		307,693		307,693
Intangible assets, net		139,579		143,704
Other assets		842,018		691,534

Total assets	$	8,944,688	$	8,063,352

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable, accrued and other liabilities, including book overdrafts of $275,273 and $222,681, respectively	$	2,007,279	$	1,897,705
Unsecured short-term borrowings		127,000		—
Collateralized short-term debt, recourse solely to applicable non-guarantor subsidiary assets		290,219		479,287
Income taxes		109,163		79,391
Deferred income tax liability		25,753		7,874
Senior notes and subordinated debentures		2,573,925		2,150,972

Total liabilities		5,133,339		4,615,229
Shareholders’ equity		3,811,349		3,448,123

	$	8,944,688	$	8,063,352

Note: The condensed consolidated balance sheet at December 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

See accompanying Notes to Condensed Consolidated Financial Statements.

PULTE HOMES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(000’s omitted, except per share data)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Revenues:
Homebuilding	$	2,494,484		$	1,925,711		$	4,507,763		$	3,449,150
Financial services		23,874			31,774			48,446			59,370
Corporate		562			700			1,459			2,255

Total revenues		2,518,920			1,958,185			4,557,668			3,510,775

Expenses:
Homebuilding, principally cost of sales		2,186,010			1,730,593			3,982,649			3,124,023
Financial services		16,131			12,488			31,714			24,225
Corporate, net		24,430			22,746			45,555			39,670

Total expenses		2,226,571			1,765,827			4,059,918			3,187,918

Other income:
Equity income		10,383			4,475			17,606			13,135

Income from continuing operations before income taxes		302,732			196,833			515,356			335,992
Income taxes		115,023			74,833			195,810			127,691

Income from continuing operations		187,709			122,000			319,546			208,301
Loss from discontinued operations		(106	)		(283	)		(314	)		(447	)

Net income	$	187,603		$	121,717		$	319,232		$	207,854

Per share data:
Basic:
Income from continuing operations	$	1.49		$	1.01		$	2.55		$	1.72
Loss from discontinued operations		—			—			—			—

Net income	$	1.49		$	1.00		$	2.54		$	1.71

Assuming dilution:
Income from continuing operations	$	1.45		$	.98		$	2.48		$	1.67
Loss from discontinued operations		—			—			—			—

Net income	$	1.45		$	.97		$	2.48		$	1.67

Cash dividends declared	$	.05		$	.02		$	.10		$	.04

Number of shares used in calculation:
Basic:
Weighted-average common shares outstanding		126,254			121,368			125,538			121,350
Assuming dilution:
Effect of dilutive securities		3,102			3,576			3,287			3,202

Adjusted weighted-average common shares and effect of dilutive securities		129,356			124,944			128,825			124,552

See accompanying Notes to Condensed Consolidated Financial Statements.

PULTE HOMES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

($000’s omitted)

(Unaudited)


										Accumulated
										Other
				Additional						Comprehensive
	Common			Paid-in			Unearned			Income			Retained
	Stock			Capital			Compensation			(Loss)			Earnings			Total
Shareholders’ Equity, December 31, 2003	$	1,252		$	1,015,991		$	(656	)	$	(39,142	)	$	2,470,678		$	3,448,123
Stock option exercise, including tax benefit of $21,505		15			47,435			—			—			—			47,450
Stock-based compensation		—			10,923			—			—			—			10,923
Restricted stock award		2			(2	)		—			—			—			—
Restricted stock award amortization		—			—			347			—			—			347
Cash dividends declared		—			—			—			—			(12,679	)		(12,679	)
Comprehensive income:
Net income		—			—			—			—			319,232			319,232
Change in fair value of derivatives		—			—			—			(230	)		—			(230	)
Foreign currency translation adjustments		—			—			—			(1,817	)		—			(1,817	)

Total comprehensive income																	317,185

Shareholders’ Equity, June 30, 2004	$	1,269		$	1,074,347		$	(309	)	$	(41,189	)	$	2,777,231		$	3,811,349

Shareholders’ Equity, December 31, 2002	$	1,222		$	932,551		$	(9,866	)	$	(35,371	)	$	1,871,890		$	2,760,426
Stock option exercise, including tax benefit of $9,134		14			25,452			—			—			—			25,466
Stock-based compensation		—			6,344			—			—			—			6,344
Restricted stock award		4			(4	)		—			—			—			—
Restricted stock award amortization		—			—			2,814			—			—			2,814
Cash dividends declared		—			—			—			—			(4,885	)		(4,885	)
Stock repurchases		(8	)		(6,062	)		—			—			(12,234	)		(18,304	)
Comprehensive income:
Net income		—			—			—			—			207,854			207,854
Change in fair value of derivatives		—			—			—			2,094			—			2,094
Foreign currency translation adjustments		—			—			—			2,271			—			2,271

Total comprehensive income																	212,219

Shareholders’ Equity, June 30, 2003	$	1,232		$	958,281		$	(7,052	)	$	(31,006	)	$	2,062,625		$	2,984,080

See accompanying Notes to Condensed Consolidated Financial Statements.

PULTE HOMES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

($000’s omitted)

(Unaudited)


	For The Six Months Ended
	June 30,
	2004			2003
Cash flows from operating activities:
Net income	$	319,232		$	207,854
Adjustments to reconcile net income to net cash flows used in operating activities:
Amortization and depreciation		22,026			19,042
Stock-based compensation expense		11,270			9,158
Deferred income taxes		17,879			7,092
Other, net		(16,631	)		(2,012	)
Increase (decrease) in cash due to:
Inventories		(1,307,949	)		(783,989	)
Residential mortgage loans available-for-sale		205,646			156,678
Other assets		84,387			(21,068	)
Accounts payable, accrued and other liabilities		117,617			108,585
Income taxes		56,880			(25,194	)

Net cash used in operating activities		(489,643	)		(323,854	)

Cash flows from investing activities:
Distributions from unconsolidated entities		29,846			10,334
Investments in unconsolidated entities		(142,290	)		(5,763	)
Proceeds from sales of property and equipment		5,159			640
Capital expenditures		(38,586	)		(17,062	)
Other, net		503			—

Net cash used in investing activities		(145,368	)		(11,851	)

Cash flows from financing activities:
Proceeds from borrowings		629,747			695,946
Repayment of borrowings		(322,744	)		(576,229	)
Issuance of common stock		25,945			16,332
Common stock repurchases		—			(18,304	)
Dividends paid		(12,679	)		(4,885	)

Net cash provided by financing activities		320,269			112,860

Net decrease in cash and equivalents		(314,742	)		(222,845	)
Effect of exchange rate changes on cash and equivalents		968			764
Cash and equivalents at beginning of period		404,092			613,168

Cash and equivalents at end of period	$	90,318		$	391,087

Supplemental disclosure of cash flow information—cash paid during the period for:
Interest, net of amounts capitalized	$	15,220		$	19,833

Income taxes	$	119,994		$	138,370

See accompanying Notes to Condensed Consolidated Financial Statements.

PULTE HOMES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of presentation and significant accounting policies

The consolidated financial statements include the accounts of Pulte Homes, Inc. and all of its direct and indirect subsidiaries (the “Company”). The direct subsidiaries of Pulte Homes, Inc. include Pulte Diversified Companies, Inc., Del Webb Corporation (“Del Webb”) and other subsidiaries that are engaged in the homebuilding business. Pulte Diversified Companies, Inc.’s operating subsidiaries include Pulte Home Corporation, Pulte International Corporation (International) and other subsidiaries that are engaged in the homebuilding business. Pulte Diversified Companies, Inc.’s non-operating thrift subsidiary, First Heights Bank, fsb (“First Heights”), is classified as a discontinued operation. The Company also has a mortgage banking company, Pulte Mortgage LLC (“Pulte Mortgage”), which is a subsidiary of Pulte Home Corporation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. These financial statements should be read in conjunction with the Company’s consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2003.

Certain amounts previously reported in the 2003 financial statements and notes thereto were reclassified to conform to the 2004 presentation. In addition, all share and per share amounts have been restated to reflect the Company’s two-for-one stock split effected January 2, 2004.

Allowance for warranties

Home purchasers are provided with warranties against certain building defects. The specific terms and conditions of those warranties vary geographically. Most warranties cover different aspects of the home’s construction and operating systems for a period of up to ten years. The Company estimates the costs to be incurred under these warranties and records a liability for the amount of such costs at the time product revenue is recognized. Factors that affect the Company’s warranty liability include the number of homes sold, historical and anticipated rates of warranty claims, and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes to the Company’s allowance for warranties are as follows ($000’s omitted):


	Six Months Ended
	June 30,
	2004			2003
Allowance for warranties at beginning of period	$	62,216		$	51,973
Warranty reserves provided		45,277			33,149
Payments and other adjustments		(44,502	)		(35,415	)

Allowance for warranties at end of period	$	62,991		$	49,707

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

1. Basis of presentation and significant accounting policies (continued)

Stock-based compensation

The Company currently has several stock-based employee compensation plans. Effective January 1, 2003, the Company adopted the preferable fair value recognition provisions of SFAS No. 123, “Accounting for Stock Issued to Employees.” The Company selected the prospective method of adoption as permitted by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.” Under the prospective method, the Company will recognize compensation expense based on the fair value provisions of SFAS No. 123 for all new stock option grants effective January 1, 2003. Grants made prior to January 1, 2003 will continue to be accounted for under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. With the exception of certain variable stock option grants, no stock-based employee compensation cost is reflected in net income for grants made prior to January 1, 2003, as all options granted in those years had an exercise price equal to the market value of the underlying common stock on the date of grant.

The following table illustrates the effect on net income and earnings per share as if the fair value method had been applied to all outstanding stock options in each period. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Net income, as reported ($000’s omitted)	$	187,603		$	121,717		$	319,232		$	207,854
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects ($000’s omitted)		2,306			2,858			4,918			3,224
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects ($000’s omitted)		(4,492	)		(3,306	)		(8,083	)		(5,942	)

Pro forma net income ($000’s omitted)	$	185,417		$	121,269		$	316,067		$	205,136

Earnings per share:
Basic - as reported	$	1.49		$	1.00		$	2.54		$	1.71

Basic - pro forma	$	1.47		$	1.00		$	2.52		$	1.69

Diluted - as reported	$	1.45		$	.97		$	2.48		$	1.67

Diluted - pro forma	$	1.43		$	.97		$	2.45		$	1.65

The Company also recorded compensation expense for restricted stock awards, net of related tax effects, of $1.0 million and $2.1 million for the three and six months ended June 30, 2004, compared with $1.3 million and $2.5 million for the three and six months ended June 30, 2003. These amounts have been excluded from the reconciliation above as they would have no impact on pro forma net income as presented.

Land, not owned, under option agreements

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities,” as amended by FIN 46-R issued in December 2003 (collectively referred to as “FIN 46”). Until this interpretation was issued, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the expected losses from the variable interest entity’s activities or is entitled to receive a majority of the entity’s expected residual returns. FIN 46 applied immediately to all variable interest entities created after January 31, 2003 and was effective in the first interim period ending after December 31, 2003 for variable interest entities created prior to February 1, 2003.

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

1. Basis of presentation and significant accounting policies (continued)

In the ordinary course of business, the Company enters into land option agreements in order to procure land for the construction of homes in the future. Pursuant to these land option agreements, the Company will provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. Under FIN 46, if the entity holding the land under option is a variable interest entity, the Company’s deposit represents a variable interest in that entity.

In applying the provisions of FIN 46, the Company evaluated all land option agreements (including those created prior to February 1, 2003) and determined that the Company was subject to a majority of the expected losses or entitled to receive a majority of the expected residual returns under a limited number of these agreements. As the primary beneficiary under these agreements, the Company is required to consolidate variable interest entities at fair value. At June 30, 2004 and December 31, 2003, the Company classified $124.6 and $73.3 million, respectively, as land, not owned, under option agreements on the balance sheet, representing the fair value of land under contract, including deposits. The corresponding liability has been classified within accounts payable, accrued and other liabilities on the balance sheet. The adoption of FIN 46 had no impact on the Company’s results of operations or cash flows.

New accounting pronouncements

In March 2004, the Securities and Exchange Commission (“SEC”) released SEC Staff Accounting Bulletin No. 105 (“SAB 105”), Application of Accounting Principles to Loan Commitments. SAB 105 provides the SEC staff position regarding the application of accounting principles generally accepted in the United States to loan commitments that relate to the origination of mortgage loans held for resale. SAB 105 contains specific guidance on the inputs to a valuation-recognition model to measure loan commitments accounted for at fair value. Current accounting guidance requires the commitment to be recognized on the balance sheet at fair value from its inception through its expiration or funding. SAB 105 requires that fair-value measurement include only differences between the guaranteed interest rate in the loan commitment and a market interest rate, excluding any expected future cash flows related to the customer relationship or loan servicing. In addition, SAB 105 requires the disclosure of both the accounting policy for loan commitments including the methods and assumptions used to estimate the fair value of loan commitments and any associated hedging strategies. SAB 105 is effective for all loan commitments accounted for as derivatives and entered into subsequent to March 31, 2004. The issuance of SAB 105 had an insignificant impact on our results of operations, financial condition and cash flows.

2. Segment information

We have two reportable business segments, Homebuilding and Financial Services, and one non-operating segment, Corporate.

The Homebuilding segment consists of the following operations:

• Domestic Homebuilding, our core business, is engaged in the acquisition and development of land principally for residential purposes within the continental United States and the construction of homes 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 principally for residential purposes, and the construction of homes on such land in Mexico, Puerto Rico and Argentina.

The Financial Services segment consists principally of mortgage banking and title insurance operations conducted through Pulte Mortgage and other subsidiaries.

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

2. Segment information (continued)

Corporate is a non-operating segment that supports the operations of our subsidiaries by acting as the internal source of financing, developing and implementing strategic initiatives centered on new business development and operating efficiencies, and providing the administrative support associated with being a publicly traded entity listed on the New York Stock Exchange.


	Operating Data by Segment ($000’s omitted)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Revenues:
Homebuilding	$	2,494,484		$	1,925,711		$	4,507,763		$	3,449,150
Financial services		23,874			31,774			48,446			59,370
Corporate		562			700			1,459			2,255

Total revenues		2,518,920			1,958,185			4,557,668			3,510,775

Cost of sales (a):
Homebuilding		1,943,304			1,521,583			3,517,870			2,736,552

Selling, general and administrative:
Homebuilding		232,489			199,988			446,443			377,551
Financial services		14,655			10,761			28,740			20,821
Corporate		11,761			15,596			20,325			21,156

Total selling, general and administrative		258,905			226,345			495,508			419,528

Interest:
Financial services		1,476			1,727			2,974			3,404
Corporate		12,673			10,164			25,205			20,735

Total interest		14,149			11,891			28,179			24,139

Other (income) expense, net:
Homebuilding		10,217			9,022			18,336			9,920
Corporate		(4	)		(3,014	)		25			(2,221	)

Total other (income) expense, net		10,213			6,008			18,361			7,699

Total costs and expenses		2,226,571			1,765,827			4,059,918			3,187,918

Equity income:
Homebuilding		9,757			2,903			15,880			10,306
Financial services		626			1,572			1,726			2,829

Total equity income		10,383			4,475			17,606			13,135

Income (loss) before income taxes:
Homebuilding		318,231			198,021			540,994			335,433
Financial services		8,369			20,858			18,458			37,974
Corporate		(23,868	)		(22,046	)		(44,096	)		(37,415	)

Total income before income taxes	$	302,732		$	196,833		$	515,356		$	335,992

(a) Domestic homebuilding interest expense, which represents the amortization of capitalized interest, has been included as part of homebuilding cost of sales.

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

2. Segment information (continued)


	Asset Data by Segment ($000's omitted)
			Financial
	Homebuilding		Services		Corporate		Total
At June 30, 2004:
Inventory	$	6,800,556	$	—	$	—	$	6,800,556

Total assets		8,516,075		388,377		40,236	$	8,944,688

At December 31, 2003:
Inventory	$	5,528,410	$	—	$	—	$	5,528,410

Total assets		7,305,447		584,976		172,929	$	8,063,352

3. Inventory

Major components of the Company’s inventory were as follows ($000’s omitted):


	June 30,		December 31,
	2004		2003
Homes under construction	$	2,724,760	$	2,124,222
Land under development		3,410,088		2,876,256
Land held for future development		665,708		527,932

Total	$	6,800,556	$	5,528,410

4. Investments in unconsolidated entities

The Company’s investments in unconsolidated entities totaled $205.4 million at June 30, 2004 and $69.4 million at December 31, 2003. All of these investments are accounted for under the equity method.

During the second quarter of 2004, the Company invested approximately $77.5 million in two joint ventures. These joint ventures develop and/or sell land within the United States. The Company has not guaranteed the indebtedness of the joint ventures.

During January 2004, the Company invested $35.0 million for a 50% ownership interest in an entity that supplies and installs basic building components and operating systems, with an option to purchase the remaining 50% interest in the entity in July 2006 or earlier under certain circumstances. The Company has certain commitments to the entity under operating and supply agreements, including: funding additional working capital, as determined by the entity’s operating committee on which the Company has 50% representation; and utilization of products and services of this entity for new homes built within certain markets in the western United States. This entity currently has no outstanding indebtedness.

For the six months ended June 30, 2004, we made additional capital contributions to our investments in unconsolidated entities totaling approximately $29.8 million and received cash distributions from these entities totaling approximately $29.8 million.

5. Senior notes and subordinated notes

Subsequent to June 30, 2004, the Company sold $400 million of 4.875% senior notes, which mature on July 15, 2009 and are guaranteed by Pulte Homes, Inc. and certain of its 100%-owned subsidiaries. These notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness. Proceeds from this offering will be used for the repayment of expiring notes due on August 15, 2004 of approximately $112 million, the reduction of short-term borrowings under our unsecured revolving credit facility and for general corporate purposes.

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

5. Senior notes and subordinated notes (continued)

In January 2004, the Company sold $500 million of 5.25% unsecured senior notes, which mature on January 15, 2014 and are guaranteed by Pulte Homes, Inc. and certain of its 100%-owned subsidiaries. These notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness. Proceeds from the sale were used to retire the $77 million outstanding Del Webb 10.25% senior subordinated notes and for general corporate purposes, including continued investment in our business.

In December 2003, under the terms of Del Webb’s $150 million 10.25% senior subordinated notes due 2010, the Company exercised its optional right to call for the redemption of the remaining outstanding principal balance of approximately $77 million. The notes were redeemed in February 2004 at a price equal to 105.125% of the principal amount.

6. Shareholders’ equity

On December 11, 2003 the Company announced a two-for-one stock split effected in the form of a 100 percent stock dividend. The distribution was made on January 2, 2004. All share and per share amounts have been restated to retroactively reflect the stock split.

In October 2002, the Company’s Board of Directors authorized the repurchase of $100 million of Pulte Homes, Inc. common stock in open-market transactions or otherwise. As of June 30, 2004, we have repurchased a total of 990,000 shares for a total of $22.5 million. No repurchases occurred during the six months ended June 30, 2004.

Accumulated other comprehensive income (loss)

The accumulated balances related to each component of other comprehensive income (loss) are as follows ($000’s omitted):


	June 30,			December 31,
	2004			2003
Foreign currency translation adjustments:
Argentina	$	(25,010	)	$	(24,982	)
Mexico		(15,751	)		(13,962	)
Change in fair value of derivatives, net of income taxes of $263 in 2004 and $122 in 2003		(428	)		(198	)

	$	(41,189	)	$	(39,142	)

7. Supplemental Guarantor information

At June 30, 2004, Pulte Homes, Inc. had the following outstanding senior note obligations: (1) $112 million, 8.375%, due 2004, (2) $125 million, 7.3%, due 2005, (3) $200 million, 8.125%, due 2011, (4) $499 million, 7.875%, due 2011, (5) $300 million, 6.25%, due 2013, (6) $500 million, 5.25%, due 2014, (7) $150 million, 7.625%, due 2017, (8) $300 million, 7.875%, due 2032, and (9) $400 million, 6.375%, due 2033. Such obligations to pay principal, premium, if any, and interest are guaranteed jointly and severally on a senior basis by Pulte Homes, Inc.’s 100%-owned Domestic Homebuilding subsidiaries (collectively, the Guarantors). Such guarantees are full and unconditional.

Supplemental consolidating financial information of the Company, specifically including such information for the Guarantors, is presented below. Investments in subsidiaries are presented using the equity method of accounting. Separate financial statements of the Guarantors are not provided as the consolidating financial information contained herein provides a more meaningful disclosure to allow investors to determine the nature of the assets held by and the operations of the combined groups.

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONDENSED CONSOLIDATING BALANCE SHEET
June 30, 2004
($000’s omitted)


	Unconsolidated
	Pulte		Guarantor			Non-Guarantor			Eliminating			Consolidated
	Homes, Inc.		Subsidiaries			Subsidiaries			Entries			Pulte Homes, Inc.
ASSETS
Cash and equivalents	$	—	$	69,086		$	21,232		$	—		$	90,318
Unfunded settlements		—		96,809			(16,023	)		—			80,786
House and land inventory		—		6,616,415			184,141			—			6,800,556
Land held for sale		—		222,995			645			—			223,640
Land, not owned, under option agreements		—		124,618			—			—			124,618
Residential mortgage loans available-for-sale		—		—			335,480			—			335,480
Goodwill		—		306,993			700			—			307,693
Intangible assets, net		—		139,579			—			—			139,579
Other assets		31,733		714,903			95,382			—			842,018
Investment in subsidiaries		7,095,904		71,802			1,454,312			(8,622,018	)		—

	$	7,127,637	$	8,363,200		$	2,075,869		$	(8,622,018	)	$	8,944,688

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable, accrued and other liabilities	$	150,738	$	1,647,297		$	209,244		$	—		$	2,007,279
Unsecured short-term borrowing		127,000		—			—			—			127,000
Collateralized short-term debt, recourse solely to applicable non-guarantor subsidiary assets		—		—			290,219			—			290,219
Income taxes		110,177		—			(1,014	)		—			109,163
Deferred income tax liability		14,348		—			11,405			—			25,753
Senior notes		2,573,925		—			—			—			2,573,925
Advances (receivable) payable - subsidiaries		340,101		(445,457	)		105,356			—			—

Total liabilities		3,316,289		1,201,840			615,210			—			5,133,339
Shareholders’ equity		3,811,348		7,161,360			1,460,659			(8,622,018	)		3,811,349

	$	7,127,637	$	8,363,200		$	2,075,869		$	(8,622,018	)	$	8,944,688

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2003
($000’s omitted)


	Unconsolidated
	Pulte			Guarantor			Non-Guarantor			Eliminating			Consolidated
	Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Pulte Homes, Inc.
ASSETS
Cash and equivalents	$	2,949		$	305,356		$	95,787		$	—		$	404,092
Unfunded settlements		—			140,431			(18,131	)		—			122,300
House and land inventory		—			5,354,460			173,950			—			5,528,410
Land held for sale		—			251,237			—			—			251,237
Land, not owned, under option agreements		—			73,256			—			—			73,256
Residential mortgage loans available-for-sale		—			—			541,126			—			541,126
Goodwill		—			306,993			700			—			307,693
Intangible assets, net		—			143,704			—			—			143,704
Other assets		81,145			501,052			109,337			—			691,534
Investment in subsidiaries		6,618,888			74,738			1,352,274			(8,045,900	)		—

	$	6,702,982		$	7,151,227		$	2,255,043		$	(8,045,900	)	$	8,063,352

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable, accrued and other liabilities	$	149,572		$	1,547,241		$	200,892		$	—		$	1,897,705
Collateralized short-term debt, recourse solely to applicable non-guarantor subsidiary assets		—			—			479,287			—			479,287
Income taxes		79,391			—			—			—			79,391
Deferred income tax liability		(8,799	)		—			16,673			—			7,874
Senior notes and subordinated debentures		2,073,689			77,283			—			—			2,150,972
Advances (receivable) payable - subsidiaries		961,006			(1,124,437	)		163,431			—			—

Total liabilities		3,254,859			500,087			860,283			—			4,615,229
Shareholders’ equity		3,448,123			6,651,140			1,394,760			(8,045,900	)		3,448,123

	$	6,702,982		$	7,151,227		$	2,255,043		$	(8,045,900	)	$	8,063,352

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended June 30, 2004
($000’s omitted)


	Unconsolidated											Consolidated
	Pulte			Guarantor		Non-Guarantor			Eliminating			Pulte
	Homes, Inc.			Subsidiaries		Subsidiaries			Entries			Homes, Inc.
Revenues:
Homebuilding	$	—		$	2,450,473	$	44,011		$	—		$	2,494,484
Financial services		—			4,523		19,351			—			23,874
Corporate		89			301		172			—			562

Total revenues		89			2,455,297		63,534			—			2,518,920

Expenses:
Homebuilding:
Cost of sales		—			1,907,839		35,465			—			1,943,304
Selling, general and administrative and other expense		3,761			222,822		16,123			—			242,706
Financial services		245			1,364		14,522			—			16,131
Corporate, net		23,134			1,377		(81	)		—			24,430

Total expenses		27,140			2,133,402		66,029			—			2,226,571

Other Income:
Equity income		—			8,346		2,037			—			10,383

Income (loss) from continuing operations before income taxes and equity in income of subsidiaries		(27,051	)		330,241		(458	)		—			302,732
Income taxes (benefit)		(20,359	)		135,678		(296	)		—			115,023

Income (loss) from continuing operations before equity in income of subsidiaries		(6,692	)		194,563		(162	)		—			187,709
Loss from discontinued operations		(106	)		—		—			—			(106	)

Income (loss) before equity in income of subsidiaries		(6,798	)		194,563		(162	)		—			187,603

Equity in income of subsidiaries:
Continuing operations		194,401			3,144		59,880			(257,425	)		—
Discontinued operations		—			—		—			—			—

		194,401			3,144		59,880			(257,425	)		—

Net income	$	187,603		$	197,707	$	59,718		$	(257,425	)	$	187,603

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF OPERATIONS
For the six months ended June 30, 2004
($000’s omitted)


	Unconsolidated											Consolidated
	Pulte			Guarantor		Non-Guarantor			Eliminating			Pulte
	Homes, Inc.			Subsidiaries		Subsidiaries			Entries			Homes, Inc.
Revenues:
Homebuilding	$	—		$	4,416,155	$	91,608		$	—		$	4,507,763
Financial services		—			8,771		39,675			—			48,446
Corporate		89			1,078		292			—			1,459

Total revenues		89			4,426,004		131,575			—			4,557,668

Expenses:
Homebuilding:
Cost of sales		—			3,443,775		74,095			—			3,517,870
Selling, general and administrative and other expense		7,586			431,310		25,883			—			464,779
Financial services		497			2,595		28,622			—			31,714
Corporate, net		42,899			2,741		(85	)		—			45,555

Total expenses		50,982			3,880,421		128,515			—			4,059,918

Other Income:
Equity income		—			13,927		3,679			—			17,606

Income (loss) from continuing operations before income taxes and equity in income of subsidiaries		(50,893	)		559,510		6,739			—			515,356
Income taxes (benefit)		(40,133	)		233,193		2,750			—			195,810

Income (loss) from continuing operations before equity in income of subsidiaries		(10,760	)		326,317		3,989			—			319,546
Loss from discontinued operations		(314	)		—		—			—			(314	)

Income (loss) before equity in income of subsidiaries		(11,074	)		326,317		3,989			—			319,232

Equity in income of subsidiaries:
Continuing operations		330,306			7,515		110,153			(447,974	)		—
Discontinued operations		—			—		—			—			—

		330,306			7,515		110,153			(447,974	)		—

Net income	$	319,232		$	333,832	$	114,142		$	(447,974	)	$	319,232

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended June 30, 2003
($000’s omitted)


	Unconsolidated												Consolidated
	Pulte			Guarantor			Non-Guarantor			Eliminating			Pulte
	Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Homes, Inc.
Revenues:
Homebuilding	$	—		$	1,876,777		$	48,934		$	—		$	1,925,711
Financial services		—			3,633			28,141			—			31,774
Corporate		22			537			141			—			700

Total revenues		22			1,880,947			77,216			—			1,958,185

Expenses:
Homebuilding:
Cost of sales		—			1,483,286			38,297			—			1,521,583
Selling, general and administrative and other expense		2,447			195,926			10,637			—			209,010
Financial services		—			1,160			11,328			—			12,488
Corporate, net		25,852			(2,191	)		(915	)		—			22,746

Total expenses		28,299			1,678,181			59,347			—			1,765,827

Other Income:
Equity income		—			2,695			1,780			—			4,475

Income (loss) from continuing operations before income taxes and equity in income of subsidiaries		(28,277	)		205,461			19,649						196,833
Income taxes (benefit)		(11,300	)		78,899			7,234			—			74,833

Income (loss) from continuing operations before equity in income of subsidiaries		(16,977	)		126,562			12,415			—			122,000
Loss from discontinued operations		(282	)		—			(1	)		—			(283	)

Income (loss) before equity in income of subsidiaries		(17,259	)		126,562			12,414			—			121,717

Equity in income of subsidiaries:
Continuing operations		138,977			11,449			74,031			(224,457	)		—
Discontinued operations		(1	)		—			—			1			—

		138,976			11,449			74,031			(224,456	)		—

Net income	$	121,717		$	138,011		$	86,445		$	(224,456	)	$	121,717

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF OPERATIONS
For the six months ended June 30, 2003
($000’s omitted)


	Unconsolidated												Consolidated
	Pulte			Guarantor			Non-Guarantor			Eliminating			Pulte
	Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Homes, Inc.
Revenues:
Homebuilding	$	—		$	3,356,884		$	92,266		$	—		$	3,449,150
Financial services		—			6,799			52,571			—			59,370
Corporate		22			1,921			312			—			2,255

Total revenues		22			3,365,604			145,149			—			3,510,775

Expenses:
Homebuilding:
Cost of sales		—			2,662,571			73,981			—			2,736,552
Selling, general and administrative and other expense		4,294			362,797			20,380			—			387,471
Financial services		—			2,257			21,968			—			24,225
Corporate, net		41,994			(949	)		(1,375	)		—			39,670

Total expenses		46,288			3,026,676			114,954			—			3,187,918

Other Income:
Equity income		—			9,070			4,065			—			13,135

Income (loss) from continuing operations before income taxes and equity in income of subsidiaries		(46,266	)		347,998			34,260						335,992
Income taxes (benefit)		(18,596	)		133,198			13,089			—			127,691

Income (loss) from continuing operations before equity in income of subsidiaries		(27,670	)		214,800			21,171			—			208,301
Loss from discontinued operations		(447	)		—			—			—			(447	)

Income (loss) before equity in income of subsidiaries		(28,117	)		214,800			21,171			—			207,854

Equity in income of subsidiaries:
Continuing operations		235,971			20,627			131,357			(387,955	)		—
Discontinued operations		—			—			—			—			—

		235,971			20,627			131,357			(387,955	)		—

Net income	$	207,854		$	235,427		$	152,528		$	(387,955	)	$	207,854

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2004
($000’s omitted)


	Unconsolidated												Consolidated
	Pulte			Guarantor			Non-Guarantor			Eliminating			Pulte
	Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Homes, Inc.
Cash flows from operating activities:
Net income	$	319,232		$	333,832		$	114,142		$	(447,974	)	$	319,232
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Equity in income of subsidiaries		(330,306	)		(7,515	)		(110,153	)		447,974			—
Amortization and depreciation		—			18,939			3,087			—			22,026
Stock-based compensation expense		11,270			—			—			—			11,270
Deferred income taxes		23,146			—			(5,267	)		—			17,879
Other, net		580			(13,716	)		(3,495	)		—			(16,631	)
Increase (decrease) in cash due to:
Inventory		—			(1,295,263	)		(12,686	)		—			(1,307,949	)
Residential mortgage loans available-for-sale		—			—			205,646			—			205,646
Other assets		49,411			15,585			19,391			—			84,387
Accounts payable, accrued and other liabilities		1,170			119,160			(2,713	)		—			117,617
Income taxes		(82,849	)		135,678			4,051			—			56,880

Net cash provided by (used in) operating activities		(8,346	)		(693,300	)		212,003			—			(489,643	)

Cash flows from investing activities:
Dividends received from subsidiaries		8,526			11,000			—			(19,526	)		—
Investment in subsidiary		(103,000	)		(836	)		(128,274	)		232,110			—
Distributions from unconsolidated subsidiaries		—			27,558			2,288			—			29,846
Investments in unconsolidated subsidiaries		—			(141,889	)		(401	)		—			(142,290	)
Proceeds from sales of property and equipment		—			5,109			50			—			5,159
Capital expenditures		—			(31,042	)		(7,544	)		—			(38,586	)
Other, net		—			—			503			—			503

Net cash provided by (used in) investing activities		(94,474	)		(130,100	)		(133,378	)		212,584			(145,368	)

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF CASH FLOWS (continued)
For the six months ended June 30, 2004
($000’s omitted)


	Unconsolidated												Consolidated
	Pulte			Guarantor			Non-Guarantor			Eliminating			Pulte
	Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Homes, Inc.
Cash flows from financing activities:
Proceeds from borrowings		626,655			—			3,092			—			629,747
Repayment of borrowings		—			(133,518	)		(189,226	)		—			(322,744	)
Capital contributions from parent		—			128,273			103,837			(232,110	)		—
Advances (to) from affiliates		(540,050	)		600,901			(60,851	)		—			—
Issuance of common stock		25,945			—			—			—			25,945
Dividends paid		(12,679	)		(8,526	)		(11,000	)		19,526			(12,679	)

Net cash provided by (used in) financing activities		99,871			587,130			(154,148	)		(212,584	)		320,269

Net decrease in cash and equivalents		(2,949	)		(236,270	)		(75,523	)		—			(314,742	)
Effect of exchange rate changes on cash and equivalents		—			—			968			—			968

Cash and equivalents at beginning of period		2,949			305,356			95,787			—			404,092

Cash and equivalents at end of period	$	—		$	69,086		$	21,232		$	—		$	90,318

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2003
($000’s omitted)


	Unconsolidated												Consolidated
	Pulte			Guarantor			Non-Guarantor			Eliminating			Pulte
	Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Homes, Inc.
Cash flows from operating activities:
Net income	$	207,854		$	235,427		$	152,528		$	(387,955	)	$	207,854
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Equity in income of subsidiaries		(235,971	)		(20,627	)		(131,357	)		387,955			—
Amortization and depreciation		—			17,263			1,779			—			19,042
Stock-based compensation expense		9,158			—			—			—			9,158
Deferred income taxes		13,017			—			(5,925	)		—			7,092
Other, net		564			(2,154	)		(422	)		—			(2,012	)
Increase (decrease) in cash due to:
Inventory		—			(759,041	)		(24,948	)		—			(783,989	)
Residential mortgage loans available-for-sale		—			—			156,678			—			156,678
Other assets		(17,462	)		(30,210	)		26,604			—			(21,068	)
Accounts payable, accrued and other liabilities		15,390			62,340			30,855			—			108,585
Income taxes		(86,230	)		54,240			6,796			—			(25,194	)

Net cash provided by (used in) operating activities		(93,680	)		(442,762	)		212,588			—			(323,854	)

Cash flows from investing activities:
Dividends received from subsidiaries		—			13,000			—			(13,000	)		—
Investment in subsidiary		(451,538	)		(871	)		(1,000	)		453,409			—
Distributions from unconsolidated subsidiaries		—			10,334			—			—			10,334
Investments in unconsolidated subsidiaries		—			(2,084	)		(3,679	)		—			(5,763	)
Proceeds from sales of property and equipment		—			640			—			—			640
Capital expenditures		—			(11,443	)		(5,619	)		—			(17,062	)
Other, net		—			—			—			—			—

Net cash provided by (used in) investing activities		(451,538	)		9,576			(10,298	)		440,409			(11,851	)

PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

7. Supplemental Guarantor information (continued)

CONSOLIDATING STATEMENT OF CASH FLOWS (continued)
For the six months ended June 30, 2003
($000’s omitted)


	Unconsolidated												Consolidated
	Pulte			Guarantor			Non-Guarantor			Eliminating			Pulte
	Homes, Inc.			Subsidiaries			Subsidiaries			Entries			Homes, Inc.
Cash flows from financing activities:
Proceeds from borrowings		694,937			—			1,009			—			695,946
Repayment of borrowings		(175,000	)		(220,583	)		(180,646	)		—			(576,229	)
Capital contributions from parent		—			451,538			1,871			(453,409	)		—
Advances (to) from affiliates		32,138			(24,730	)		(7,408	)		—			—
Issuance of common stock		16,332			—			—			—			16,332
Common stock repurchases		(18,304	)		—			—			—			(18,304	)
Dividends paid		(4,885	)		—			(13,000	)		13,000			(4,885	)

Net cash provided by (used in) financing activities		545,218			206,225			(198,174	)		(440,409	)		112,860

Net increase (decrease) in cash and equivalents		—			(226,961	)		4,116			—			(222,845	)

Effect of exchange rate changes on cash and equivalents		—			—			764			—			764

Cash and equivalents at beginning of period		—			541,095			72,073			—			613,168

Cash and equivalents at end of period	$	—		$	314,134		$	76,953		$	—		$	391,087

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview:

A summary of our operating results by business segment for the three-month and six-month periods ended June 30, 2004 and 2003 is as follows ($000’s omitted):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Pre-tax income (loss):
Homebuilding operations	$	318,231		$	198,021		$	540,994		$	335,433
Financial services operations		8,369			20,858			18,458			37,974
Corporate		(23,868	)		(22,046	)		(44,096	)		(37,415	)

Pre-tax income from continuing operations		302,732			196,833			515,356			335,992
Income taxes		(115,023	)		(74,833	)		(195,810	)		(127,691	)

Income from continuing operations		187,709			122,000			319,546			208,301
Loss from discontinued operations		(106	)		(283	)		(314	)		(447	)

Net income	$	187,603		$	121,717		$	319,232		$	207,854

Per share data – assuming dilution:
Income from continuing operations	$	1.45		$	.98		$	2.48		$	1.67
Loss from discontinued operations		—			—			—			—

Net income	$	1.45		$	.97		$	2.48		$	1.67

Key financial highlights for the three-month and six-month periods ended June 30, 2004 and 2003 are as follows:

• Continued strong demand for new homes in many of our markets, geographic and product mix shifts, average unit selling price increases and benefits from the ongoing initiatives to leverage construction costs throughout the operations drove pre-tax income of our homebuilding business segment to increase 61% for both periods. Domestic average unit selling prices increased 9% for both periods. Such factors combined to drive domestic homebuilding settlement gross margin percentages up approximately 130 basis points to 22.1% for the three-month period and 150 basis points to 22.0% for the six-month period ended June 30, 2004. We experienced a significant increase in unit backlog as of June 30, 2004 compared with June 30, 2003 attributed to continued strong demand for new homes in many of our markets, most notably in the western half of the United States.

• Pre-tax income of our financial services business segment declined 60% and 51% for the three and six-month periods ended June 30, 2004 compared with June 30, 2003. The decrease in pre-tax income performance over both periods is attributed to a shift in our product mix toward adjustable rate mortgages (“ARMs”) versus fixed rate mortgages as a result of changes in customer mortgage product preference. This shift in product mix toward ARMs during 2004 has led to decreasing profitability per loan compared with the prior year. In addition, increased operating expenses were incurred during 2004 versus 2003 in anticipation of the continued growth of the business projected for the balance of 2004, mainly in the areas of staffing, recruiting, training, systems and facility costs.

• The increase in pre-tax loss at the Corporate segment is primarily due to increased interest resulting from higher debt levels necessary to support our growth.

Homebuilding Operations:

Our Homebuilding segment consists of the following operations:

• Domestic Homebuilding – We conduct our Domestic Homebuilding operations in 44 markets located throughout 27 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 – We conduct our International Homebuilding operations through subsidiaries of Pulte International Corporation (“International”) in Mexico, Puerto Rico and Argentina. International Homebuilding product offerings focus on the demand of first-time buyers and middle-to-upper income consumer groups. We continue to evaluate various long-term strategic alternatives with regard to our International operations.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2004		2003		2004		2003
Homebuilding settlement revenues:
Domestic	$	2,394,778	$	1,845,461	$	4,337,319	$	3,292,659
International		44,011		48,934		91,608		92,266

Total		2,438,789		1,894,395		4,428,927		3,384,925

Homebuilding settlements units:
Domestic		8,480		7,112		15,519		12,897
International		1,557		1,468		3,158		2,659

Total		10,037		8,580		18,677		15,556

Note: Homebuilding settlement revenues of affiliates, not included in the table above, for the three month and six month periods ended June 30, 2004 were $21,616 and $30,166, compared with $8,016 and $16,537 for the three and six months ended June 30, 2003. Homebuilding unit settlements of affiliates, not included in the table above, for the three and six month periods ended June 30, 2004 were 78 and 114, compared with 37 and 85 for the three and six months ended June 30, 2003.

Domestic Homebuilding

The Domestic Homebuilding business unit represents our core business. Our operations are conducted in 44 markets located throughout 27 states, presented geographically as follows:


Northeast:		Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia

Southeast:		Florida, Georgia, North Carolina, South Carolina, Tennessee

Midwest:		Illinois, Indiana, Kansas, Michigan, Minnesota, Ohio

Central:		Colorado, New Mexico, Texas

West:		Arizona, California, Nevada

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2004		2003		2004		2003
Unit settlements:
Northeast		695		553		1,214		979
Southeast		2,058		1,759		3,763		3,508
Midwest		1,163		1,041		1,936		1,883
Central		1,214		1,133		2,188		1,867
West		3,350		2,626		6,418		4,660

		8,480		7,112		15,519		12,897

Net new orders – units*:
Northeast		856		909		1,570		1,645
Southeast		2,426		2,441		5,195		4,704
Midwest		1,449		1,422		2,936		2,540
Central		1,605		1,317		3,181		2,502
West		4,440		3,102		8,645		6,033

		10,776		9,191		21,527		17,424

Net new orders – dollars* ($000’s omitted)	$	3,303,000	$	2,466,000	$	6,456,000	$	4,620,000

Unit backlog:
Northeast						1,891		1,795
Southeast						5,158		4,135
Midwest						2,401		2,258
Central						2,149		1,540
West						8,361		5,471

						19,960		15,199

Backlog at June 30 – dollars ($000’s omitted)					$	6,266,000	$	4,244,000

* Unit net new orders for the three and six months ended June 30, 2003 do not include 67 units of backlog acquired and the related dollars.

Continued strong demand for new homes, particularly in the West, was the primary driver for increases in net new orders, unit settlements and unit backlog.

Net new orders increased 17%, to a record 10,776 units, for the three months ended June 30, 2004. Net new orders for the six months ended June 30, 2004 increased 24% to 21,527 units.

Unit settlements also set a record for the three and six-month periods at 8,480 units and 15,519 units, respectively, representing increases of 19% and 20%, respectively, over the same periods in 2003. The average selling price for homes closed increased 9% to $282,000 for the three months ended June 30, 2004, and 9% to $279,000 for the six months then ended. Changes in average unit selling price reflect a number of factors, including changes in market selling prices, primarily in the West, and geographic and product mix.

Unit backlog increased as of June 30, 2004 compared with the prior year. Ending backlog, which represents orders for homes that have not yet closed, grew to a record 19,960 units. The dollar value of our backlog was up 48% to $6.3 billion at June 30, 2004 compared with $4.2 billion at June 30, 2003. Our most significant increases occurred in the Southeast, Central and West, which had increases of 25%, 40% and 53%, respectively.

The West contributed a significant portion of the activity in the Domestic Homebuilding business unit, representing 41.2% of unit net new orders and 39.5% of unit settlements for the three months ended June 30, 2004 and 40.2% of unit net new orders and 41.4% of unit settlements for the six months ended June 30, 2004 and 41.9% of the total Domestic Homebuilding backlog at June 30, 2004.

For 2004, the greater Phoenix market represented 17.9% of Domestic Homebuilding unit net new orders, 15.6% of unit settlements and 13.1% of Domestic Homebuilding settlement revenues for the three months ended June 30. The Las Vegas market represented 10.2% of unit settlements and 13.3% of Domestic Homebuilding settlement revenues for the three months ended June 30. The greater Phoenix market represented 16.2% of Domestic Homebuilding unit net new orders, 16.1% of unit settlements and 13.2% of Domestic Homebuilding

settlement revenues for the six months ended June 30. The Las Vegas market represented 10.7% of unit settlements and 13.9% of settlement revenues for the same period.

For 2003, the greater Phoenix market represented 12.0% of unit net new orders, 11.9% of unit settlements and 10.6% of Domestic Homebuilding settlement revenues for the three-month period ended June 30. For the six-month period of 2003, our metropolitan Phoenix operations represented 12.1% of unit new net orders and 11.1% of unit settlements.

No other individual market represented more than 10.0% of total Domestic Homebuilding unit net new orders, unit settlements or revenues for the three and six-month periods ended June 30, 2004 or 2003.

The following table presents a summary of pre-tax income for our Domestic Homebuilding operations for the three and six months ended June 30, 2004 and 2003 ($000’s omitted):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Home sale revenue (settlements)		2,394,778		$	1,845,461		$	4,337,319		$	3,292,659
Land sale revenue		55,695			31,316			78,836			64,225
Home cost of sales (a)		(1,865,771	)		(1,461,111	)		(3,382,095	)		(2,616,336	)
Land cost of sales		(42,068	)		(22,175	)		(61,680	)		(46,235	)
Selling, general and administrative expense		(223,651	)		(189,861	)		(429,252	)		(356,961	)
Equity income		7,908			2,177			13,212			8,535
Other income (expense), net		(8,809	)		(8,166	)		(15,733	)		(9,808	)

Pre-tax income	$	318,082		$	197,641		$	540,607		$	336,079

Average sales price	$	282		$	259		$	279		$	255

(a) Domestic homebuilding interest expense, which represents the amortization of capitalized interest, has been included as part of homebuilding cost of sales.

Homebuilding gross profit margins from home settlements increased to 22.1% and 22.0% for the three and six months ended June 30, 2004, compared with 20.8% and 20.5%, respectively, for the same periods in the prior year. This increase is primarily attributable to favorable home pricing and product and geographic mix.

We consider land acquisition one of our core competencies. We acquire land primarily for the construction of our homes for sale to homebuyers. We will often sell select parcels of land within or adjacent to our communities to retail and commercial establishments. We also will, on occasion, sell lots within our communities to other homebuilders. Contributions from land sales for the quarter increased 49% to $13.6 million when compared with the prior year period. Revenues and their related gains/losses may vary significantly between periods, depending on the timing of land sales. We continue to evaluate our existing land positions to ensure the most effective use of capital.

Selling, general and administrative expenses as a percentage of home settlement revenues declined by approximately 100 basis points to 9.3% for the three months ended and 90 basis points to 9.9% for the six months ended June 30, 2004. This improvement can be attributed to greater leverage as a result of volume increases and the favorable pricing environment for our homes, combined with a reduced level of additional weather-related community start-up expenses during 2004 as compared with expenses incurred during the first quarter of 2003 in the Northeast and Midwest.

The increase in equity income for both periods was attributable to our 50% investment in the joint venture that supplies and installs basic building components and operating systems.

Other income (expense), net, which includes several miscellaneous items, increased for the three and six-month periods, primarily as a result of insurance-related expenses and settlements.

At June 30, 2004 and December 31, 2003, our Domestic Homebuilding operations controlled approximately 312,700 and 256,900 lots, respectively. Approximately 135,200 and 120,400 lots were owned, and approximately 97,900 and 66,000 lots were under option agreements approved for purchase at June 30, 2004 and December 31, 2003, respectively. In addition, there were approximately 79,600 and 70,500 lots under option agreements, pending approval, at June 30, 2004 and December 31, 2003, respectively.

The total purchase price applicable to land under option approved for use by our homebuilding operations at future dates approximated $3.7 billion at June 30, 2004, compared with $2.6 billion at December 31, 2003. In addition, total purchase price applicable to land under option pending approval was valued at $2.8 billion at June 30, 2004 compared with $2.1 billion at December 31, 2003. Land option agreements, which may be cancelled at our discretion, may extend over several years and are secured by cash deposits totaling $160.1 million, which are generally non-refundable.

International Homebuilding:

Our International Homebuilding operations are primarily conducted through subsidiaries of International in Mexico, Puerto Rico and Argentina. We continue to evaluate various long-term strategic alternatives with regard to our International operations.

The following table presents selected financial data for our International Homebuilding operations for the three and six months ended June 30, 2004 and 2003 ($000’s omitted):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Revenues	$	44,011		$	48,934		$	91,608		$	92,266
Cost of sales		(35,465	)		(38,297	)		(74,095	)		(73,981	)
Selling, general and administrative expense		(8,838	)		(10,127	)		(17,191	)		(20,590	)
Other income (expense), net		(1,144	)		(702	)		(1,942	)		(1,093	)
Minority interest		(264	)		(154	)		(661	)		981
Equity in income of joint ventures		1,849			726			2,668			1,771

Pre-tax income (loss)	$	149		$	380		$	387		$	(646	)

Unit settlements		1,557			1,468			3,158			2,659

Note: Homebuilding unit settlements of affiliates, not included in the table above, for the three months ended June 30, 2004 and 2003 were 78 and 37, respectively. For the six months ended June 30, 2004 and 2003, homebuilding units of affiliates, not included in the table above, were 114 and 85, respectively.

International unit settlements for the three and six months ended June 30, 2004, increased 6% and 19% respectively. The increase in unit settlements is attributable to our operations in Mexico, where unit settlements increased to 1,519 from 1,403 for the three months ended June 30, 2004 and to 3,051 from 2,510 for the six months ended June 30, 2004. International revenues for the three and six months ended June 30, 2004 decreased 10% and 1%, respectively, over the prior year periods. The decrease in International revenues is the result of a shift in product mix to the lower priced units in Mexico from the higher priced units in Argentina.

Product mix shifts also had a negative impact on gross margins. Gross margins decreased approximately 230 basis points to 19.4% for the three months ended June 30, 2004 and 70 basis points to 19.1% for the six months ended June 30, 2004. Selling, general and administrative expenses as a percent of revenues declined to 20.1% from 20.7% for the three-month period and to 18.8% from 22.3% for the six-month period as Mexico began to see the benefits of restructuring actions taken during 2003.

At June 30, 2004, our investments in Puerto Rico approximated $33.1 million. Our operations in Argentina and Mexico are affected by fluctuations in currency rates for those countries. Transaction gains and losses for the three and six months ended June 30, 2004 and 2003, included in other income (expense), net, were not significant. At June 30, 2004, our investments in Argentina and Mexico, net of accumulated foreign currency translation adjustments, approximated $12.2 million and $67.4 million, respectively.

Financial Services Operations:

We conduct our financial services business, which includes mortgage and title insurance operations, through Pulte Mortgage and other subsidiaries.

The following table presents mortgage origination data for our Financial Services operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2004		2003		2004		2003
Total originations:
Loans		7,957		6,776		14,070		11,938

Principal ($000’s omitted)	$	1,495,800	$	1,161,000	$	2,648,500	$	2,028,200

Originations for Pulte customers:
Loans		7,037		5,411		12,472		9,554

Principal ($000’s omitted)	$	1,348,400	$	923,400	$	2,393,000	$	1,614,100

Pre-tax income of our financial services operations for the three and six months ended June 30, 2004 was $8.4 and $18.5 million, respectively, compared with $20.9 and $38.0 million for the prior year periods. The decrease in pre-tax income can be attributed to a shift in our product mix to ARMs, which generally have a lower profit per loan than fixed rate products. The shift in product mix is attributable to customer mortgage product preference.

ARMs represented 42.2% of total funded origination dollars and 40.3% of total funded origination units for the three months ended June 30, 2004, compared with 18.3% and 17.1%, respectively, in the prior year three-month period. ARMs represented 37.1% of total funded origination dollars and 35.3% of total funded origination units for the six months ended June 30, 2004, compared with 17.5% and 16.1%, respectively, in the prior year six-month period. Refinancings approximated 3.4% and 3.7% of total unit originations for the three and six-month periods ended June 30, 2004, compared with 11.3% for both prior year periods.

Mortgage origination unit and principal volume for the three months ended June 30, 2004 increased 17% and 29%, respectively, and 18% and 31% for the six-month period, respectively. The growth is attributable to an increase in the capture rate from 83.2% to 88.4% for the three-month period and 82.0% to 87.4% for the six-month period combined with the volume increases experienced in our homebuilding business and an increase in the average loan size. Our Domestic Homebuilding customers continue to represent the majority of total loan production, representing 88.4% and 88.6% of total Pulte Mortgage unit production for the three and six months ended June 30, 2004, respectively, compared with 79.3% and 79.8%, respectively, for the same periods in the prior year.

At June 30, 2004, loan application backlog increased to $3.8 billion as compared with $2.4 billion at June 30, 2003.

Income from our title insurance operations increased to $3.5 million for the three months ended June 30, 2004, from $3.0 million in 2003, and to $6.8 million for the six months ended, from $5.1 million in 2003. Our minority interest in Su Casita, a Mexican mortgage banking company, contributed income of $0.2 million for the three months ended June 30, 2004, compared with $1.1 million in 2003, and $1.0 million for the six months ended June 30, 2004 compared with $2.3 million in 2003.

We hedge portions of our forecasted cash flow from sales of closed mortgage loans with derivative financial instruments to minimize the impact of changes in interest rates. We do not use derivative financial instruments for trading purposes.

Corporate:

The following table presents results of operations for this segment for the three and six months ended June 30, 2004 and 2003 ($000’s omitted):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2004		2003		2004		2003
Net interest expense	$	12,111	$	9,464	$	23,746	$	18,480
Other corporate expenses, net		11,757		12,582		20,350		18,935

Loss before income taxes	$	23,868	$	22,046	$	44,096	$	37,415

Interest expense, net of interest capitalized into inventory, increased $2.6 and $5.3 million in the three and six months ended June 30, 2004. This is a result of the continued increase in debt levels necessary to support our growth. Interest incurred for the three and six months ended June 30, 2004, excluding interest incurred by our Financial Services operations, was approximately $50.4 and $99.2 million, respectively.

The changes in other corporate expenses, net for the three and six months ended June 30, 2004 resulted from increased charitable contributions expense, offset by decreased compensation-related expense, compared with the prior year. Additionally, during the second quarter of 2003, we recognized income from the sale and adjustment to fair value of various non-operating parcels of commercial land held for sale.

Interest capitalized into inventory is charged to home cost of sales based on the cyclical timing of our unit settlements over a period that approximates the average life cycle of our communities. Interest in inventory has increased primarily as a result of higher levels of indebtedness to support the growth of the business and the addition of the Del Webb properties, which have a longer life cycle. Information related to Corporate interest capitalized into inventory is as follows ($000’s omitted):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Interest in inventory at beginning of period	$	215,253		$	165,221		$	200,584		$	142,984
Interest capitalized		37,737			32,849			74,018			66,495
Interest expensed		(29,508	)		(17,103	)		(51,120	)		(28,512	)

Interest in inventory at end of period	$	223,482		$	180,967		$	223,482		$	180,967

Liquidity and Capital Resources:

Our net cash used in operating activities amounted to $489.6 million compared with net cash used in operating activities of $323.9 million in the prior year period. This change was primarily driven by an increase in inventories. Cash used in investing activities was $145.4 million for the six months ended June 30, 2004, compared with $11.9 million in the prior year. The change in net cash used in investing activities can be attributed to additional investments in unconsolidated entities. Net cash provided by financing activities of $320.3 million for the six months ended June 30, 2004 primarily represents proceeds from our $500 million senior notes issued in January 2004 and borrowings of $127.0 million under the unsecured revolving credit facility during the second quarter of 2004, largely offset by the repayment of Pulte Mortgage’s revolving credit facilities and redemption of the remaining Del Webb 10.25% senior subordinated notes.

We finance our homebuilding land acquisitions, development and construction activities from internally generated funds and existing credit agreements. We had outstanding borrowings of $127.0 million under our $850 million unsecured revolving credit facility at June 30, 2004.

Pulte Mortgage provides mortgage financing for many of our home sales and uses its own funds and borrowings made available pursuant to various committed and uncommitted credit arrangements. At June 30, 2004, Pulte Mortgage had committed credit arrangements of $905 million comprised of a $355 million bank revolving credit facility and a $550 million annual asset-backed commercial paper program. Subsequent to June 30, 2004, we expanded the capacity on the bank revolving credit facility from $355 million to $390 million. There were approximately $290.2 million of borrowings outstanding under existing Pulte Mortgage arrangements at June 30, 2004. Mortgage loans originated by Pulte Mortgage are subsequently sold to outside investors. We anticipate that there will be adequate mortgage financing available for purchasers of our homes.

Subsequent to June 30, 2004, we sold $400 million of 4.875% senior notes, which mature on July 15, 2009 and are guaranteed by Pulte Homes, Inc. and certain of its 100%-owned subsidiaries. These notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness. Proceeds from this offering will be used for the repayment of expiring notes due on August 15, 2004 of approximately $112 million, the reduction of short-term borrowings under our unsecured revolving credit facility and for general corporate purposes.

In January 2004, we sold $500 million of 5.25% unsecured senior notes, which mature on January 15, 2014 and are guaranteed by Pulte Homes, Inc. and certain of its 100%-owned subsidiaries. These notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness. Proceeds from the sale were used to retire the $77 million outstanding Del Webb 10.25% senior subordinated notes and for general corporate purposes, including continued investment in our business.

At June 30, 2004, we had remaining authorization to purchase common stock aggregating $77.5 million, pursuant to our $100 million share repurchase program.

Our effective tax rate at June 30, 2004 was 38%. We anticipate that our effective tax rate for 2004 will approximate 38%, the same as our 2003 effective tax rate.

At June 30, 2004, we had cash and equivalents of $90.3 million and $2.6 billion of senior notes. Other financing included limited recourse collateralized financing totaling $128.6 million. Sources of our working capital include our cash and equivalents, our $850 million committed unsecured revolving credit facility and Pulte Mortgage’s $905 million committed credit arrangements.

Our debt-to-total capitalization, excluding our collateralized debt, was approximately 41.5% at June 30, 2004, and approximately 40.7% net of cash and equivalents. We expect to maintain our net debt-to-total capitalization at approximately the 40% level. We routinely monitor current operational requirements and financial market conditions to evaluate the use of available financing sources, including securities offerings.

At June 30, 2004, we had $1.0 billion remaining under our current mixed security shelf registration. As a result of our $400 million debt issue subsequent to June 30, 2004, our capacity under our shelf registration has been reduced to $600 million as of the date of this quarterly filing.

Inflation

We, and the homebuilding industry in general, may be adversely affected during periods of high inflation because of higher land and construction costs. Inflation also increases our financing, labor and material costs. In addition, higher mortgage interest rates significantly affect the affordability of permanent mortgage financing to prospective homebuyers. We attempt to pass to our customers any increases in our costs through increased sales prices. To date, inflation has not had a material adverse effect on our results of operations. However, there is no assurance that inflation will not have a material adverse impact on our future results of operations.

New Accounting Pronouncements:

In March 2004, the Securities and Exchange Commission (“SEC”) released SEC Staff Accounting Bulletin (“SAB”) 105, Application of Accounting Principles to Loan Commitments. SAB 105 provides the SEC staff position regarding the application of accounting principles generally accepted in the United States to loan commitments that relate to the origination of mortgage loans held for resale. SAB 105 contains specific guidance on the inputs to a valuation-recognition model to measure loan commitments accounted for at fair value. Current accounting guidance requires the commitment to be recognized on the balance sheet at fair value from its inception through its expiration or funding. SAB 105 requires that fair-value measurement include only differences between the guaranteed interest rate in the loan commitment and a market interest rate, excluding any expected future cash flows related to the customer relationship or loan servicing. In addition, SAB 105 requires the disclosure of both the accounting policy for loan commitments including the methods and assumptions used to estimate the fair value of loan commitments and any associated hedging strategies. SAB 105 is effective for all loan commitments accounted for as derivatives and entered into subsequent to March 31, 2004. The issuance of SAB 105 had an insignificant impact on our results of operations, financial condition and cash flows.

Critical Accounting Policies and Estimates:

There have been no significant changes to our critical accounting policies and estimates during the six months ended June 30, 2004 compared with those disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the year ended December 31, 2003.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Quantitative disclosure:

We are subject to interest rate risk on our rate-sensitive financing to the extent long-term rates decline. The following table sets forth, as of June 30, 2004, our rate-sensitive financing obligations, principal cash flows by scheduled maturity, weighted-average interest rates and estimated fair market values ($000’s omitted).


	As of June 30, 2004 for the
	years ended December 31,
																						Fair
	2004			2005			2006			2007			2008			Thereafter			Total			Value
Rate sensitive liabilities:
Fixed interest rate debt:
Senior notes	$	112,000		$	125,000		$	—		$	—		$	—		$	2,348,563		$	2,585,563		$	2,853,468
Average interest rate		8.38	%		7.3	%		0	%		0	%		0	%		6.86	%		6.95	%
Limited recourse collateralized financing	$	44,765		$	43,108		$	24,443		$	12,289		$	2,773		$	1,234		$	128,612		$	128,612
Average interest rate		1.02	%		1.37	%		.86	%		.98	%		4.45	%		2.34	%		1.22	%

Qualitative disclosure:

This information can be found in Item 7A., Quantitative and Qualitative Disclosures about Market Risk, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and is incorporated herein by reference.

Special Notes Concerning Forward-Looking Statements

As a cautionary note, except for the historical information contained herein, certain matters discussed in Item 2., Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 3., Quantitative and Qualitative Disclosures About Market Risk, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes and the availability of mortgage financing; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used in our homebuilding operations; (6) the availability and cost of insurance covering risks associated with our business; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) slow growth initiatives and/or local building moratoria; (10) governmental regulation, including the interpretation of tax, labor and environmental laws; (11) changes in consumer confidence and preferences; (12) required accounting changes; (13) terrorist acts and other acts of war; and (14) other factors over which we have little or no control.

Item 4. Controls and Procedures

Management, including our President & Chief Executive Officer and Executive Vice President & Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2004. Based upon, and as of the date of that evaluation, our President & Chief Executive Officer and Executive Vice President & Chief Financial Officer concluded that the disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required.

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

Our Annual Meeting of Shareholders was held on May 13, 2004. The following matters were considered and acted upon, with the results indicated below.


			Shares
	Shares		Voted		Shares		Shares
	Voted For		Against		Abstaining		Withheld
Election of Directors
Nominees to Serve a Three Year Term Expiring at the 2007 Annual Meeting:
Richard J. Dugas, Jr.		115,446,166		—		—		1,910,402
David N. McCammon		113,483,976		—		—		3,872,591
William J. Pulte		114,498,654		—		—		2,857,913
Francis J. Sehn		115,757,573		—		—		1,598,994
Nominee to Serve a Two Year Term Expiring at the 2006 Annual Meeting:
Michael E. Rossi		114,266,806		—		—		3,089,761
Proposal to adopt the Pulte Homes, Inc. Stock Incentive Plan		82,540,273		16,222,237		797,281		17,796,777
Ratification of the appointment of the Company’s independent accountants by shareholders		44,696,422		54,175,455		687,915		17,796,776

On July 27, 2004, we filed a Current Report on Form 8-K, reporting the information required by Item 12 in connection with our press release dated July 26, 2004, announcing our earnings for the three-month and six-month periods ended June 30, 2004. No financial statements were filed, although we furnished the financial information included in the press release with the Form 8-K.


	Page No.
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets at June 30, 2004 and December 31, 2003		3
Consolidated Statements of Operations for the three and six months ended June 30, 2004 and 2003		4
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the six months ended June 30, 2004 and 2003		5
Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003		6
Notes to Condensed Consolidated Financial Statements		7
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3 Quantitative and Qualitative Disclosures About Market Risk		31
Item 4 Controls and Procedures		32
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders		33
Item 6 Exhibits and Reports on Form 8-K		34
SIGNATURES		35
Fifth Amended and Restated Revolving Credit Agreement
Rule 13a-14(a) Certification by Richard J. Dugas, Jr., P. and C.E.O.
Rule 13a-14(a) Certification by Roger A. Cregg, E.V.P. and C.F.O.
Certification Pursuant to 18 U.S.C. Section 1350
Certification Pursuant to 18 U.S.C. Section 1350


10.1		Fifth Amended and Restated Revolving Credit Agreement by and among Pulte Mortgage LLC, The Lenders Party Hereto, and Bank One, NA, As Administrative Agent And Banc One Capital Markets, Inc. As Lead Arranger and Sole Book Runner And LaSalle Bank National Association, As Collateral Agent dated as of June 30, 2004

31(a)		Rule 13a-14(a) Certification by Richard J. Dugas, Jr., President and Chief Executive Officer

31(b)		Rule 13a-14(a) Certification by Roger A. Cregg, Executive Vice President and Chief Financial Officer

32(a)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32(b)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


		PULTE HOMES, INC.

		/s/ Roger A. Cregg

		Roger A. Cregg
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

		/s/ Vincent J. Frees

		Vincent J. Frees
		Vice President and Controller
		(Principal Accounting Officer)

		Date: August 4, 2004


Exhibit Number		Description
	10.1	Fifth Amended and Restated Revolving Credit Agreement by and among Pulte Mortgage LLC, The Lenders Party Hereto, and Bank One, NA, As Administrative Agent And Banc One Capital Markets, Inc. As Lead Arranger and Sole Book Runner And LaSalle Bank National Association, As Collateral Agent dated as of June 30, 2004

	31(a)	Rule 13a-14(a) Certification by Richard J. Dugas, Jr., President and Chief Executive Officer

	31(b)	Rule 13a-14(a) Certification by Roger A. Cregg, Executive Vice President and Chief Financial Officer

	32(a)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32(b)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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•		Domestic Homebuilding, our core business, is engaged in the acquisition and development of land principally for residential purposes within the continental United States and the construction of homes 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 principally for residential purposes, and the construction of homes on such land in Mexico, Puerto Rico and Argentina.

•		Continued strong demand for new homes in many of our markets, geographic and product mix shifts, average unit selling price increases and benefits from the ongoing initiatives to leverage construction costs throughout the operations drove pre-tax income of our homebuilding business segment to increase 61% for both periods. Domestic average unit selling prices increased 9% for both periods. Such factors combined to drive domestic homebuilding settlement gross margin percentages up approximately 130 basis points to 22.1% for the three-month period and 150 basis points to 22.0% for the six-month period ended June 30, 2004. We experienced a significant increase in unit backlog as of June 30, 2004 compared with June 30, 2003 attributed to continued strong demand for new homes in many of our markets, most notably in the western half of the United States.

•		Pre-tax income of our financial services business segment declined 60% and 51% for the three and six-month periods ended June 30, 2004 compared with June 30, 2003. The decrease in pre-tax income performance over both periods is attributed to a shift in our product mix toward adjustable rate mortgages (“ARMs”) versus fixed rate mortgages as a result of changes in customer mortgage product preference. This shift in product mix toward ARMs during 2004 has led to decreasing profitability per loan compared with the prior year. In addition, increased operating expenses were incurred during 2004 versus 2003 in anticipation of the continued growth of the business projected for the balance of 2004, mainly in the areas of staffing, recruiting, training, systems and facility costs.

•		The increase in pre-tax loss at the Corporate segment is primarily due to increased interest resulting from higher debt levels necessary to support our growth.

•		Domestic Homebuilding – We conduct our Domestic Homebuilding operations in 44 markets located throughout 27 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 – We conduct our International Homebuilding operations through subsidiaries of Pulte International Corporation (“International”) in Mexico, Puerto Rico and Argentina. International Homebuilding product offerings focus on the demand of first-time buyers and middle-to-upper income consumer groups. We continue to evaluate various long-term strategic alternatives with regard to our International operations.