Letter to Pulte Homes Shareholders, Customers, Associates and Business Partners:

No one could have predicted the speed at which last year’s economic downturn spiraled into the worst recession on record since the Great Depression. Two short years following an extended period of excess, the global economy is working overtime to correct itself—a painful, far-reaching process from which no sector is immune.

From record foreclosures to scarce mortgage availability, the homebuilding industry faces some of its toughest challenges in decades. Yet amid these turbulent headwinds, Pulte Homes made signifi cant strides in key near-term initiatives as we responded to the rapid unwinding of the global economy.

2008 Results
Pulte Homes reported a net loss of $5.81 per share in 2008, compared with $8.94 net loss per share for the prior year. Revenues for 2008 totaled $6.3 billion compared with 2007 revenues of $9.3 billion. The 2008 loss was largely attributable to impairments and landrelated charges totaling $1.5 billion.

These financial results came during a year of unprecedented pressure on the housing sector. The seasonally adjusted annual sales rate for new single family homes was 344,000 at the end of 2008, a far cry from the peak of approximately 1.2 million sold just three years earlier.

National statistics for housing starts and permits also established record lows. Sales prices for new and existing homes plummeted, and the months’ supply of unsold new homes continued to climb. Refl ecting the trend in these national housing-related statistics, Pulte’s home closings declined 24 percent in 2008 to 21,022 homes.

The year was tough, to be sure, but we entered 2008 with one of the strongest balance sheets in the industry, and since then have reinforced several short-term measures that will not only fortify us now, but that also support our long-term strategic vision.

We ended 2008 with $1.66 billion in cash and no debt outstanding under our revolving credit facility. We reduced our long-term debt during the year, repurchasing $313 million of our senior notes in 2008. With no significant debt maturities for the next two years, our liquidity position will allow us to take advantage of opportunities once the market rebounds.

In addition, we reduced our land pipeline by 23 percent to 121,000 owned and optioned lots. We exercised proper restraint regarding expenditures on house and land inventory, reducing the dollars deployed to acquire or develop these assets. We also modestly reduced our speculative inventory to 3,500 units at year-end and continue to focus on maintaining low speculative inventory levels at each of our communities. We are not, however, racing to purge our entire land inventory. Unlike many of our competitors, we are maintaining our presence in key housing markets and increasing our market share as a result.

We continue to adjust our organizational infrastructure and lowered our homebuilding SG&A costs by $284 million in 2008. We reduced our headcount by 37 percent in 2008, and while these reductions are never easy, they are unavoidable in such a challenging environment. Pulte will continue to react responsibly regarding overhead spending; our entire organization understands the importance of returning to profitability, no matter how tough the environment.

From our strong liquidity position to our prudent inventory management to our lean overhead structure, Pulte is poised to weather a lengthier downturn or respond quickly once the industry shows signs of stabilization.

Looking to the Future
We’ve seen tough times more than once during our 59-year history. While we expect a challenging and volatile 2009, the housing market will eventually turn around. Though our sights are currently trained on short-term goals like cash fl ow and returning to profitability, our long-term strategy hasn’t changed. We remain vigilant to ensure our actions today stay in alignment with our longer-term vision.

Through economic highs and lows, building quality homes remains a cornerstone of our business. Since 2000, we’ve earned more top-three finishes in the annual J.D. Power and Associates study than any other builder. In 2008, Pulte operations ranked No. 1 in 11 markets and secured 20 top-three finishes. From lower customer acquisition costs to reduced service and warranty expenses, our continued focus on customer delight pays off.

Under our Del Webb brand, Pulte is the nation’s largest builder of active adult communities for people age 55 and older. In 2008, active adult buyers made up 45 percent of our business, with a geographic footprint spanning 20 states. Our leadership position in this segment is a key competitive advantage both short- and long-term.

As the housing downturn lingers, investors and customers will scrutinize companies to determine which will not only survive the downturn, but subsequently thrive. There is no question that the depth and breadth of today’s economic crisis is unmatched, but we have the liquidity to navigate through this storm. Our short-term focus on cash generation will help sustain us, and our long-term vision remains consistent to help preserve our future.

Through a proper balance of shortand long-term strategy, we are managing responsibly to deliver results on behalf of our employees, customers and shareholders. When the clouds of recession finally part to reveal better times ahead, Pulte Homes will be wellpositioned to emerge in the lead.

Sincerely,
Richard J. Dugas, Jr.
President and Chief Executive Officer
William J. Pulte
Chairman of the Board and Company Founder

Visit Pulte Homes Inc. 2008 Annual Report Download Page

Read Pulte Homes Inc. 2008 Annual Report online, or you can download the entire report in PDF format.

Pulte Homes, Inc.
100 Bloomfield Hills Parkway
Bloomfield Hills, Michigan 48304
www.pulte.com :: www.delwebb.com :: www.divosta.com

Pulte Homes, Inc. (Pulte Homes) is a holding company whose subsidiaries engage in the homebuilding and financial services businesses.

The Company’s direct subsidiaries include Pulte Diversified Companies, Inc., Del Webb Corporation (Del Webb), and other subsidiaries engaged in the homebuilding business. Pulte Diversified Companies, Inc.’s operating subsidiaries include Pulte Home Corporation, Pulte International Corporation (International), and other subsidiaries engaged in the homebuilding business.

It also has a mortgage banking company, Pulte Mortgage LLC (Pulte Mortgage), which is a subsidiary of Pulte Home Corporation. Homebuilding, the Company’s 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 first-time, first and second move-up, and active adult home buyers

Delivering on a Responsible Strategy

At Pulte Homes, we believe that a responsible strategy is one that aims to do what’s best for not only the Company and its employees, customers and shareholders, but for our communities, our cities and our planet.

A company culture of “doing the right thing” is at the core of our responsible business model—a core that is encircled by commitments to environmental, economic and social responsibility. While “green building” practices and initiatives are best exemplified in the homes we build, sustainability touches far more than just the products we use or the methods we employ. It shapes the way we look at each segment of our Company strategy, and challenges us to continually seek out innovation, conservation, reduction and education in all parts of our business.

A Strategy for the Long Term
Pulte Homes continues to weather the turbulent homebuilding environment by remaining dedicated to the tenets of a responsible Company strategy that considers both near-term challenges and the long-term success toward which we are building. While current challenges garner the bulk of our immediate attention, we remain committed to the long-term priorities that will sustain our Company in the years to come.

Our long-term strategy is centered on:
• Quality—We strive to not only build great homes, but to cultivate great customer relationships through the efforts of the industry’s most talented and dedicated employee team. Our ultimate goal remains the creation of “Homeowners for Life.”

• Operational Excellence—To continually improve our operations is not a short-term assignment, but an ongoing journey that unveils incremental opportunities to make our business better. Whether looking for ways to lower costs or improve revenues, Pulte is building a “lean” framework for implementing continuous improvement. We continue to draw on our best practices and processes, and work to standardize the way we approach certain business functions to create repeatable, measurable successes that can drive efficiency across the organization.

• Financial Performance—Despite the tough environment we face today, returning to profi tability remains key for all stakeholders of Pulte—our employees, customers and shareholders. While returning our income statement to health, we must also follow a long-term approach to our balance sheet. Pulte has always operated with a conservative capital structure that enables us to stay disciplined and preserve fl exibility in tough times, as evidenced by our excellent progress on cash fl ow generation during this downturn.

• People Development—Having the right people with the right capabilities in the right positions is an integral part of our strategy for success. We seek to clearly link our employees’ goals and development opportunities to the Company’s overall vision, and to provide them with career planning, measurement and development tools that will benefi t both their personal growth and Pulte Homes’ ongoing strategy.

As we look back on our fi rst six decades as a homebuilding company, we believe that what is necessary to sustain us through both upswings and downturns is our ability to execute against our strategy while staying true to the values and philosophy that defi ne Pulte Homes.

This long-term view goes beyond market share and fi nancial results and extends to our broader role in society. In light of this portion of our overall strategy, this year’s annual report delves deeper into Pulte’s views surrounding sustainability as it relates to our environmental, economic and social responsibilities.

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