D.R. Horton America's Builder
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News Release

D.R. Horton, Inc., America's Builder, Reports Fourth Quarter and Fiscal 2009 Results and Declares Quarterly Dividend

FORT WORTH, Texas--(BUSINESS WIRE)--Nov. 20, 2009-- D.R. Horton, Inc. (NYSE:DHI), America’s Builder, today reported a net loss for its fourth fiscal quarter ended September 30, 2009 of $231.9 million, or $0.73 per diluted share. The quarterly results included $192.6 million in pre-tax charges to cost of sales for inventory impairments and write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue. The net loss for the same quarter of fiscal 2008 was $799.9 million, or $2.53 per diluted share, which included $1.1 billion in pre-tax charges to cost of sales for impairments of owned inventory and land and lots that were sold during the quarter and for write-offs of deposits and pre-acquisition costs related to land option contracts.

Homebuilding revenue for the fourth quarter of fiscal 2009 totaled $1.0 billion, compared to $1.8 billion in the same quarter of fiscal 2008. Homes closed totaled 4,810, compared to 6,961 homes closed in the same quarter of fiscal 2008.

For the fiscal year ended September 30, 2009, the Company reported a net loss of $545.3 million, or $1.72 per diluted share. The fiscal year results included pre-tax charges to cost of sales of $407.7 million for inventory impairments and write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue. The net loss for fiscal 2008 was $2.6 billion, or $8.34 per diluted share, which included $2.5 billion in pre-tax charges to cost of sales for impairments of owned inventory and land and lots that were sold during the year and for write-offs of deposits and pre-acquisition costs related to land option contracts.

Homebuilding revenue for fiscal 2009 totaled $3.6 billion, compared to $6.5 billion for fiscal 2008. Homes closed in fiscal 2009 totaled 16,703 homes, compared to 26,396 homes closed in fiscal 2008.

The Company’s sales backlog of homes under contract at September 30, 2009 was 5,628 homes ($1.1 billion), compared to 5,297 homes ($1.2 billion) at September 30, 2008. Net sales orders for the fourth quarter ended September 30, 2009 totaled 5,008 homes ($1.0 billion), compared to 3,977 homes ($852.3 million) for the same quarter of fiscal 2008. The Company’s cancellation rate (cancelled sales orders divided by gross sales orders) for the fourth quarter of fiscal 2009 was 27%. Net sales orders for fiscal 2009 were 17,034 homes ($3.5 billion), compared to 21,251 homes ($4.7 billion) for fiscal 2008.

The Company’s homebuilding cash balance at September 30, 2009 was $1.9 billion. Net cash provided by operating activities for fiscal 2009 was $1.1 billion, compared to $1.9 billion in fiscal 2008.

In the fourth quarter, the Company repurchased a total of $72.0 million principal amount of its outstanding notes for a total purchase price of $72.4 million, plus accrued interest. For the fiscal year, the Company repurchased a total of $380.3 million principal amount of its outstanding notes for a total purchase price of $368.0 million, plus accrued interest.

The Company has declared a quarterly cash dividend of $0.0375 per share. The dividend is payable on December 15, 2009 to stockholders of record on December 4, 2009.

Donald R. Horton, Chairman of the Board, said, “Our net sales orders in the September quarter reflected a 26% increase compared to the prior year quarter. However, market conditions in the homebuilding industry are still challenging, characterized by rising foreclosures, high inventory levels of available homes, increasing unemployment, tight credit for homebuyers and weak consumer confidence. We have continued to adjust our business to the current homebuilding environment by reducing our owned lot position and completed specs, controlling costs and strengthening our balance sheet.

“We have generated positive cash flow from operations in each of the past thirteen quarters, and our unrestricted homebuilding cash balance was $1.9 billion at September 30, 2009. Our net homebuilding debt to total capitalization was 36.3% at the end of the fiscal year, and we will continue to focus on maintaining our strong liquidity position and balance sheet.”

The Company will host a conference call today (Friday, November 20th) at 10:00 a.m. Eastern time. The dial-in number is 800-374-9096, and the call will also be webcast from www.drhorton.com on the “Investor Relations” page.

D.R. Horton, Inc., America’s Builder, is one of the largest homebuilders in the United States, delivering more than 16,000 homes in its fiscal year ended September 30, 2009. Founded in 1978 in Fort Worth, Texas, D.R. Horton has operations in 75 markets in 27 states in the East, Midwest, Southeast, South Central, Southwest and West regions of the United States. The Company is engaged in the construction and sale of high quality homes with sales prices ranging from $90,000 to over $700,000. D.R. Horton also provides mortgage financing and title services for homebuyers through its mortgage and title subsidiaries.

Portions of this document may constitute “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to D.R. Horton on the date this release was issued. D.R. Horton does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements in this release include our continued focus on maintaining our strong liquidity position and balance sheet. Factors that may cause the actual results to be materially different from the future results expressed by the forward-looking statements include, but are not limited to: the continuing downturn in the homebuilding industry, including further deterioration in industry or broader economic conditions, such as increasing unemployment and worsening of consumer confidence; the continuing constriction of the credit markets, which could limit our ability to access capital and increase our costs of capital; the reduction in availability of mortgage financing and potential increases in mortgage interest rates; the limited success of our strategies in responding to adverse conditions in the industry; a return of an inflationary environment; changes in general economic, real estate, construction and other business conditions; the risks associated with our inventory ownership position in changing market conditions; supply risks for land, materials and labor; changes in the costs of owning a home; the effects of governmental regulations and environmental matters on our homebuilding operations; the effects of governmental regulations on our financial services operations; the uncertainties inherent in home warranty and construction defect claims matters; our substantial debt and our ability to comply with related debt covenants, restrictions and limitations; competitive conditions within our industry; our ability to effect any future growth strategies successfully; our ability to realize our deferred tax asset; and our utilization of our tax losses could be substantially limited if we experienced an ownership change as defined in the Internal Revenue Code. Additional information about issues that could lead to material changes in performance is contained in D.R. Horton’s annual report on Form 10-K and most recent quarterly report on Form 10-Q, which are filed with the Securities and Exchange Commission.

WEBSITE ADDRESS: www.drhorton.com

D.R. HORTON, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
     
September 30, September 30,
2009 2008
ASSETS (In millions)
Homebuilding:
Cash and cash equivalents $ 1,922.8 $ 1,355.6
Restricted cash 55.2 2.0
Inventories:
Construction in progress and finished homes 1,444.9 1,681.6
Residential land and lots - developed and under development 1,641.3 2,409.6
Land held for development 562.5 531.7
Land inventory not owned   14.3     60.3  
3,663.0 4,683.2
Income taxes receivable 293.1 676.2

Deferred income taxes, net of valuation allowance of $1,124.4 million and $961.3 million at September 30, 2009 and 2008, respectively

- 213.5
Property and equipment, net 57.8 65.9
Other assets 436.5 486.5
Goodwill   15.9     15.9  
  6,444.3     7,498.8  
Financial Services:
Cash and cash equivalents 34.5 31.7
Mortgage loans held for sale 220.8 352.1
Other assets   57.0     68.0  
  312.3     451.8  
$ 6,756.6   $ 7,950.6  
LIABILITIES
Homebuilding:
Accounts payable $ 216.8 $ 254.0
Accrued expenses and other liabilities 932.0 1,055.9
Notes payable   3,208.6     3,544.9  
  4,357.4     4,854.8  
Financial Services:
Accounts payable and other liabilities 62.1 27.5
Mortgage repurchase facility   68.7     203.5  
  130.8     231.0  
  4,488.2     5,085.8  
 
Minority interests   8.8     30.5  
STOCKHOLDERS' EQUITY
Common stock 3.2 3.2
Additional capital 1,734.4 1,716.3
Retained earnings 617.7 1,210.5
Treasury stock, at cost   (95.7 )   (95.7 )
  2,259.6     2,834.3  
$ 6,756.6   $ 7,950.6  
 
D.R. HORTON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
               
Three Months Ended Fiscal Year Ended
September 30, September 30,
2009 2008 2009 2008
(In millions, except per share data)
Homebuilding:
Revenues:
Home sales $ 1,010.6 $ 1,544.5 $ 3,563.6 $ 6,164.3
Land/lot sales   3.7     209.2     40.3     354.3  
 
  1,014.3     1,753.7     3,603.9     6,518.6  
Cost of sales:
Home sales 884.6 1,376.0 3,096.1 5,473.1
Land/lot sales 2.3 206.1 34.9 324.2
Inventory impairments and land option cost write-offs   192.6     1,074.6     407.7     2,484.5  
 
  1,079.5     2,656.7     3,538.7     8,281.8  
Gross profit (loss):
Home sales 126.0 168.5 467.5 691.2
Land/lot sales 1.4 3.1 5.4 30.1
Inventory impairments and land option cost write-offs   (192.6 )   (1,074.6 )   (407.7 )   (2,484.5 )
 
  (65.2 )   (903.0 )   65.2     (1,763.2 )
 
Selling, general and administrative expense 134.8 175.7 523.0 791.8
Goodwill impairment - 79.4 - 79.4
Interest expense 26.8 16.1 95.7 39.0
Loss (gain) on early retirement of debt 0.5 - (3.9 ) 2.6
Other (income)   (4.1 )   (2.1 )   (12.8 )   (9.1 )
 
Operating loss from Homebuilding   (223.2 )   (1,172.1 )   (536.8 )   (2,666.9 )
 
Financial Services:
Revenues, net of recourse expense and reinsurance expense 14.6 28.7 53.7 127.5
General and administrative expense 19.6 23.7 78.1 100.1
Interest expense 0.3 1.0 1.5 3.7
Interest and other income   (2.4 )   (2.9 )   (10.4 )   (11.4 )
 
Operating income (loss) from Financial Services   (2.9 )   6.9     (15.5 )   35.1  
 
Loss before income taxes (226.1 ) (1,165.2 ) (552.3 ) (2,631.8 )
Provision for (benefit from) income taxes   5.8     (365.3 )   (7.0 )   1.8  
 
Net loss $ (231.9 ) $ (799.9 ) $ (545.3 ) $ (2,633.6 )
 
Basic and Diluted:
Net loss per share $ (0.73 ) $ (2.53 ) $ (1.72 ) $ (8.34 )
Weighted average number of common shares   317.2     316.6     316.9     315.7  
 
Other Consolidated Financial Data:
 
Interest amortized to home and land/lot cost of sales $ 33.7   $ 49.8   $ 122.8   $ 227.9  
Depreciation and amortization $ 5.1   $ 11.1   $ 25.7   $ 53.2  
Interest incurred $ 47.3   $ 59.8   $ 198.3   $ 240.4  
 
D.R. HORTON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
     
 
Fiscal Year Ended
September 30,
2009 2008
(In millions)
Operating Activities
Net loss $ (545.3 ) $ (2,633.6 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 25.7 53.2
Amortization of debt discounts and fees 6.4 7.2
Stock option compensation expense 13.7 13.5
Deferred income taxes 213.5 650.3
(Gain) loss on early retirement of debt (3.9 ) 2.6
Inventory impairments and land option cost write-offs 407.7 2,484.5
Goodwill impairment - 79.4
Changes in operating assets and liabilities:
Decrease in construction in progress and finished homes 180.0 1,304.6

Decrease in residential land and lots — developed, under development, and held for development

397.0 835.1
Decrease (increase) in other assets 34.1 (248.8 )
Decrease (increase) in income taxes receivable 383.1 (676.2 )
Decrease in mortgage loans held for sale 131.3 171.4
Decrease in accounts payable, accrued expenses and other liabilities   (102.1 )   (166.7 )
Net cash provided by operating activities   1,141.2     1,876.5  
Investing Activities
Purchases of property and equipment (6.2 ) (6.6 )
(Increase) decrease in restricted cash   (53.2 )   3.4  
Net cash used in investing activities   (59.4 )   (3.2 )
Financing Activities
Proceeds from notes payable 487.5 321.5
Repayment of notes payable (956.2 ) (944.6 )
Proceeds from stock associated with certain employee benefit plans 4.4 9.5
Cash dividends paid   (47.5 )   (142.0 )
Net cash used in financing activities   (511.8 )   (755.6 )
Increase in Cash and Cash Equivalents 570.0 1,117.7
Cash and cash equivalents at beginning of year   1,387.3     269.6  
Cash and cash equivalents at end of year $ 1,957.3   $ 1,387.3  
 

 

D.R. HORTON, INC.

 

($'s in millions)

                               

 

NET SALES ORDERS

 
Three Months Ended September 30, Fiscal Year Ended September 30,
2009 2008 2009 2008
Homes Value Homes Value Homes Value Homes Value
 
East 495 $ 114.3 377 $ 80.6 1,519 $ 353.7 1,602 $ 396.3
Midwest 356 96.5 488 93.7 1,198 323.5 1,633 425.3
Southeast 1,020 181.7 649 129.2 3,107 560.8 3,235 637.6
South Central 1,755 298.2 1,370 245.1 6,074 1,045.9 7,266 1,293.3
Southwest 394 66.0 129 25.9 1,849 314.9 2,982 551.6
West 988   270.5 964   277.8 3,287   899.6 4,533   1,373.1
 
5,008 $ 1,027.2 3,977 $ 852.3 17,034 $ 3,498.4 21,251 $ 4,677.2
 
 

 

HOMES CLOSED

 
Three Months Ended September 30, Fiscal Year Ended September 30,
2009 2008 2009 2008
Homes Value Homes Value Homes Value Homes Value
 
East 435 $ 105.3 572 $ 139.0 1,447 $ 345.3 2,309 $ 584.8
Midwest 394 103.5 603 134.0 1,137 310.0 1,905 525.8
Southeast 862 153.9 875 181.0 2,921 547.5 3,650 781.6
South Central 1,514 262.7 2,103 378.2 5,745 1,007.7 7,960 1,430.1
Southwest 511 89.8 1,260 235.3 2,135 394.2 5,309 1,066.5
West 1,094   295.4 1,548   477.0 3,318   958.9 5,263   1,775.5
 
4,810 $ 1,010.6 6,961 $ 1,544.5 16,703 $ 3,563.6 26,396 $ 6,164.3
 

 

 

SALES ORDER BACKLOG

 
As of September 30,
2009 2008
Homes Value Homes Value
 
East 559 $ 126.6 487 $ 118.2
Midwest 389 105.0 328 91.6
Southeast 969 179.0 783 165.7
South Central 2,328 397.5 1,999 359.4
Southwest 526 91.4 812 170.6
West 857   242.5 888   301.9
 
5,628 $ 1,142.0 5,297 $ 1,207.4

Source: D.R. Horton, Inc.

D.R. Horton, Inc.
Stacey Dwyer, EVP, 817-390-8200

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding D.R. Horton's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.