D.R. Horton, Inc., America's Builder, Reports Fourth Quarter and Fiscal Year 2006 Results

November 14, 2006

FORT WORTH, Texas--(BUSINESS WIRE)--Nov. 14, 2006--D.R. Horton, Inc. (NYSE:DHI), America's Builder, the largest homebuilder in the United States, Tuesday (November 14, 2006), reported net income for the fourth quarter ended September 30, 2006 of $277.7 million ($0.88 per diluted share), which included pre-tax charges to cost of sales of $142.0 million ($0.28 per diluted share) of inventory impairments and $57.2 million ($0.11 per diluted share) of write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue. Earnings for the same quarter of fiscal year 2005 were $563.8 million ($1.77 per diluted share). Fourth quarter consolidated revenue totaled $4.9 billion, compared to $5.1 billion in the fourth quarter of fiscal year 2005. Homes closed totaled 17,261 homes, compared to 18,622 homes in the year ago quarter.

For the fiscal year ended September 30, 2006, net income totaled $1.2 billion ($3.90 per diluted share), which included pre-tax charges to cost of sales of $146.2 million ($0.29 per diluted share) of inventory impairments and $124.7 million ($0.24 per diluted share) of write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue. Earnings for fiscal year 2005 were $1.5 billion ($4.62 per diluted share). Consolidated revenue for the year totaled $15.1 billion, compared to $13.9 billion for fiscal year 2005. Homes closed totaled 53,099 homes, compared to 51,172 homes in fiscal year 2005.

The Company's sales order backlog of homes under contract at September 30, 2006 was 18,125 homes ($5.2 billion), compared to 19,244 homes ($5.8 billion) at September 30, 2005. As previously reported, net sales orders for the fourth quarter totaled 10,430 homes ($2.5 billion), compared to 13,950 homes ($3.8 billion) for the same quarter of fiscal year 2005. Net sales orders for fiscal year 2006 totaled 51,980 homes ($13.9 billion), compared to 53,232 homes ($14.6 billion) for fiscal year 2005.

The Company will host a conference call Tuesday, November 14th at 10:00 a.m. EST. The dial-in number is 800-374-9096. The call will also be webcast from www.drhorton.com on the "Investor Relations" page.

Donald R. Horton, Chairman of the Board, said, "Our people produced greater than $1.2 billion in net income and closed more than 53,000 homes. Our employees continue to work very hard during a time when market conditions are challenging in the homebuilding industry.

"We continue to focus on maintaining our strong balance sheet and reducing our inventory. In the September quarter, we reduced our total homebuilding inventory by $662 million, and we reduced our number of homes under construction by approximately 11,000 homes (a 27% reduction), resulting in significant positive cash flows from operations during the quarter. Our shareholders' equity grew 20% during fiscal year 2006 to $6.5 billion, contributing to our net homebuilding debt to total capitalization of 40.7% at September 30, 2006."

The Company has expanded its reporting segment disclosures to include six homebuilding reporting regions. The new regions are:

  • Northeast: Delaware, Georgia (Savannah only), Illinois, Maryland, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Virginia and Wisconsin
  • Southeast: Alabama, Florida, and Georgia
  • South Central: Louisiana, Oklahoma and Texas
  • Southwest: Arizona, Colorado, New Mexico, Texas (Lubbock only) and Utah
  • California: California and Nevada (Reno only)
  • West: Hawaii, Idaho, Nevada, Oregon and Washington

This reporting segment expansion has no effect on the Company's consolidated financial position, results of operations or cash flows for the periods presented.

D.R. Horton, Inc., America's Builder, is the largest homebuilder in the United States, delivering more than 53,000 homes in its fiscal year ended September 30, 2006. Founded in 1978 in Fort Worth, Texas, D.R. Horton has expanded its presence to include 84 markets in 27 states. The Company is engaged in the construction and sale of high quality homes with sales prices ranging from $90,000 to over $900,000. D.R. Horton also provides mortgage financing and title services for homebuyers through its mortgage and title subsidiaries.

WEBSITE ADDRESS: www.drhorton.com


                          D.R. HORTON, INC.
                     CONSOLIDATED BALANCE SHEETS
                             (UNAUDITED)

                                                  As of September 30,
                                                 ---------------------
                                                    2005       2006
                                                 ---------- ----------
                                                     (In millions)
                     ASSETS
Homebuilding:
Cash and cash equivalents                         $1,111.6     $457.8
Inventories:
   Construction in progress and finished homes     3,105.9    4,322.8
   Residential land and lots - developed and
    under development                              5,174.3    6,737.0
   Land held for development                           6.2      182.9
   Consolidated land inventory not owned             200.4      100.4
                                                 ---------- ----------
                                                   8,486.8   11,343.1
Property and equipment (net)                         107.2      131.4
Earnest money deposits and other assets              756.0      816.4
Goodwill                                             578.9      578.9
                                                 ---------- ----------

                                                  11,040.5   13,327.6
                                                 ---------- ----------
Financial Services:
Cash and cash equivalents                             38.2      129.8
Restricted cash                                          -      248.3
Mortgage loans held for sale                       1,358.7    1,022.9
Other assets                                          77.4       92.1
                                                 ---------- ----------

                                                   1,474.3    1,493.1
                                                 ---------- ----------
Total assets                                     $12,514.8  $14,820.7
                                                 ========== ==========
                   LIABILITIES
Homebuilding:
Accounts payable                                    $820.7     $982.3
Accrued expenses and other liabilities             1,196.9    1,143.0
Notes payable                                      3,660.1    4,886.9
                                                 ---------- ----------
                                                   5,677.7    7,012.2
                                                 ---------- ----------
Financial Services:
Accounts payable and other liabilities                24.0       58.8
Notes payable                                      1,249.5    1,191.7
                                                 ---------- ----------

                                                   1,273.5    1,250.5
                                                 ---------- ----------

                                                   6,951.2    8,262.7
                                                 ---------- ----------

Minority interests                                   203.2      105.1
                                                 ---------- ----------
              STOCKHOLDERS' EQUITY
Common stock                                           3.2        3.2
Additional capital                                 1,624.8    1,658.4
Retained earnings                                  3,791.3    4,887.0
Treasury stock (at cost)                             (58.9)     (95.7)
                                                 ---------- ----------
                                                   5,360.4    6,452.9
                                                 ---------- ----------

Total liabilities and stockholders' equity       $12,514.8  $14,820.7
                                                 ========== ==========


                          D.R. HORTON, INC.
                  CONSOLIDATED STATEMENTS OF INCOME
                             (UNAUDITED)

                             Three Months Ended    Fiscal Year Ended
                               September 30,         September 30,
                           --------------------- ---------------------
                              2005       2006       2005       2006
                           ---------- ---------- ---------- ----------
                             (In millions, except per share amounts)
Homebuilding:
  Revenues:
    Home sales             $ 4,943.7  $ 4,702.7  $13,376.6  $14,545.4
    Land/lot sales              74.4       95.9      252.0      215.1
                            ---------  ---------  ---------  ---------

                             5,018.1    4,798.6   13,628.6   14,760.5
                            ---------  ---------  ---------  ---------
  Cost of sales:
    Home sales               3,688.7    3,718.9    9,960.6   11,047.8
    Land/lot sales              57.2       53.4      162.6       99.6
    Inventory impairments
     and land option
     write-offs                  9.2      199.2       17.1      270.9
                            ---------  ---------  ---------  ---------

                             3,755.1    3,971.5   10,140.3   11,418.3
                            ---------  ---------  ---------  ---------
  Gross profit:
    Home sales               1,255.0      983.8    3,416.0    3,497.6
    Land/lot sales              17.2       42.5       89.4      115.5
    Inventory impairments
     and land option
     write-offs                 (9.2)    (199.2)     (17.1)    (270.9)
                            ---------  ---------  ---------  ---------

                             1,263.0      827.1    3,488.3    3,342.2
                            ---------  ---------  ---------  ---------

  Selling, general and
   administrative expense      399.8      409.7    1,226.6    1,456.6
  Interest expense               4.4        2.8        4.4       17.9
  Other (income)/expense        (4.3)       2.5      (15.7)     (11.0)
                            ---------  ---------  ---------  ---------

  Operating income from
   Homebuilding                863.1      412.1    2,273.0    1,878.7
                            ---------  ---------  ---------  ---------

Financial Services:
  Revenues                      78.6       84.1      235.1      290.8
  General and
   administrative expense       42.5       54.5      147.6      202.2
  Interest expense               7.7       12.5       16.8       37.1
  Other (income)               (12.9)     (16.6)     (34.9)     (56.9)
                            ---------  ---------  ---------  ---------

  Operating income from
   Financial Services           41.3       33.7      105.6      108.4
                            ---------  ---------  ---------  ---------

Income before income taxes     904.4      445.8    2,378.6    1,987.1
Provision for income taxes     340.6      168.1      908.1      753.8
                            ---------  ---------  ---------  ---------

Net income                 $   563.8  $   277.7  $ 1,470.5  $ 1,233.3
                            =========  =========  =========  =========
Basic:
  Net income per share     $    1.80  $    0.89  $    4.71  $    3.94
                            =========  =========  =========  =========
  Weighted average number
   of common shares            312.8      313.1      312.2      312.8
                            =========  =========  =========  =========

Diluted:
  Net income per share     $    1.77  $    0.88  $    4.62  $    3.90
                            =========  =========  =========  =========
  Weighted average number
   of common shares            318.9      314.8      318.1      316.2
                            =========  =========  =========  =========

Other Consolidated
 Financial Data:

  Interest amortized to
   home and land/lot cost
   of sales                $    66.3  $    72.6  $   225.0  $   237.1
                            =========  =========  =========  =========
  Depreciation and
   amortization            $    13.5  $    15.8  $    52.8  $    56.5
                            =========  =========  =========  =========
  Interest incurred        $    80.2  $   104.7  $   294.1  $   380.4
                            =========  =========  =========  =========


                          D.R. HORTON, INC.
                          ($'s in millions)



                        NET SALES ORDERS

                         Three Months Ended September 30,
                    -------------------------------------------
                            2005                  2006
                    --------------------- ---------------------
                      Homes       $'s       Homes       $'s
                    ---------- ---------- ---------- ----------

Northeast               2,191     $563.8      1,487     $366.1
Southeast               2,065      542.4      1,237      264.7
South Central           3,861      633.1      3,504      615.6
Southwest               3,115      868.7      2,444      536.3
California              1,657      767.5      1,013      484.5
West                    1,061      378.7        745      265.0
                    ---------- ---------- ---------- ----------

                       13,950   $3,754.2     10,430   $2,532.2
                    ========== ========== ========== ==========




                       NET SALES ORDERS

                          Fiscal Year Ended September 30,
                    -------------------------------------------
                            2005                  2006
                    --------------------- ---------------------
                      Homes       $'s       Homes       $'s
                    ---------- ---------- ---------- ----------

Northeast               8,296   $2,187.9      7,150   $1,844.1
Southeast               8,050    2,012.6      7,082    1,753.8
South Central          12,391    2,068.2     14,682    2,536.4
Southwest              12,391    3,135.3     11,921    3,071.5
California              8,171    3,862.9      7,050    3,238.6
West                    3,933    1,376.5      4,095    1,450.8
                    ---------- ---------- ---------- ----------

                       53,232  $14,643.4     51,980  $13,895.2
                    ========== ========== ========== ==========




                          HOMES CLOSED

                         Three Months Ended September 30,
                    -------------------------------------------
                            2005                  2006
                    --------------------- ---------------------
                      Homes       $'s       Homes       $'s
                    ---------- ---------- ---------- ----------

Northeast               2,847     $745.8      2,701     $718.3
Southeast               2,936      676.6      2,432      612.9
South Central           4,581      747.9      4,252      731.2
Southwest               3,793      922.3      3,845      948.9
California              3,044    1,375.2      2,615    1,206.7
West                    1,421      475.9      1,416      484.7
                    ---------- ---------- ---------- ----------

                       18,622   $4,943.7     17,261   $4,702.7
                    ========== ========== ========== ==========




                         HOMES CLOSED

                          Fiscal Year Ended September 30,
                    -------------------------------------------
                            2005                  2006
                    --------------------- ---------------------
                      Homes       $'s       Homes       $'s
                    ---------- ---------- ---------- ----------

Northeast               7,010   $1,802.3      8,142   $2,196.2
Southeast               7,911    1,800.2      8,053    2,029.4
South Central          12,737    2,103.9     13,444    2,282.9
Southwest              11,602    2,672.1     11,235    2,904.0
California              7,671    3,533.5      7,884    3,600.8
West                    4,241    1,464.6      4,341    1,532.1
                    ---------- ---------- ---------- ----------

                       51,172  $13,376.6     53,099  $14,545.4
                    ========== ========== ========== ==========


                                          SALES ORDER BACKLOG

                                          As of September 30,
                                 -------------------------------------
                                       2005               2006
                                 ------------------ ------------------
                                  Homes      $'s     Homes      $'s
                                 -------- --------- -------- ---------

      Northeast                    3,894  $1,148.9    2,902    $796.8
      Southeast                    3,119     909.4    2,148     633.8
      South Central                2,975     524.2    4,213     777.8
      Southwest                    5,068   1,382.8    5,754   1,550.2
      California                   2,922   1,403.8    2,088   1,041.7
      West                         1,266     466.1    1,020     384.8
                                 -------- --------- -------- ---------

                                  19,244  $5,835.2   18,125  $5,185.1
                                 ======== ========= ======== =========

  The Company's homebuilding reporting segments consist of operations
   in the following states:
    Northeast: Delaware, Georgia (Savannah only), Illinois, Maryland,
     Minnesota, New Jersey, New York, North Carolina, Pennsylvania,
     South Carolina, Virginia and Wisconsin
    Southeast: Alabama, Florida and Georgia
    South Central: Louisiana, Oklahoma and Texas
    Southwest: Arizona, Colorado, New Mexico, Texas (Lubbock only) and
     Utah
    California: California and Nevada (Reno only)
    West: Hawaii, Idaho, Nevada, Oregon and Washington

CONTACT: 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.

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