D.R. Horton, Inc., America's Builder, Reports Fiscal 2008 Third Quarter Results and Declares Quarterly Dividend

August 05, 2008

FORT WORTH, Texas--(BUSINESS WIRE)--Aug. 5, 2008--D.R. Horton, Inc. (NYSE:DHI), America's Builder, today reported a net loss for its third fiscal quarter ended June 30, 2008 of $399.3 million or $1.26 per diluted share. The quarterly results included $330.4 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, and an after-tax valuation allowance primarily for deferred tax assets created during the quarter of $168.7 million. The net loss for the same quarter of fiscal 2007 was $823.8 million or $2.62 per diluted share. Homebuilding revenue for the third quarter of fiscal 2008 totaled $1.4 billion, compared to $2.5 billion in the same quarter of fiscal 2007. Homes closed in the current quarter totaled 6,167, compared to 9,643 homes closed in the year ago quarter.

For the nine months ended June 30, 2008, the Company reported a net loss totaling $1.8 billion, or $5.81 per diluted share. The nine-month results included pre-tax charges to cost of sales of $1.4 billion of inventory impairments and write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue, and an after-tax valuation allowance of $883.0 million to the deferred tax asset. The net loss for the nine months ended June 30, 2007 was $662.3 million or $2.11 per diluted share. Homebuilding revenue for the nine months ended June 30, 2008 totaled $4.8 billion, compared to $8.0 billion for the same period of fiscal 2007. Homes closed in the nine-month period totaled 19,435, compared to 29,637 homes closed in the same period of fiscal 2007.

The Company's sales backlog of homes under contract at June 30, 2008 was 8,281 homes ($1.9 billion), compared to 15,801 homes ($4.4 billion) at June 30, 2007. Net sales orders for the third quarter ended June 30, 2008 totaled 5,501 homes ($1.2 billion), compared to 8,559 homes ($2.0 billion) for the same quarter of fiscal 2007. The Company's cancellation rate (cancelled sales orders divided by gross sales orders) for the third quarter of fiscal 2008 was 39%. Net sales orders for the first nine months of fiscal 2008 were 17,274 homes ($3.8 billion), compared to 27,313 homes ($6.9 billion) for the same period of fiscal 2007.

Donald R. Horton, Chairman of the Board, said, "Although market conditions in the homebuilding industry remain challenging, we continue to focus on reducing our inventory and generating cash flow from operations. We generated approximately $390 million of cash flow from operations this quarter, bringing the year-to-date total to $1.4 billion and increasing our homebuilding cash balance to $819 million. We also maintained our focus on controlling our costs, reducing our homebuilding SG&A expenses by approximately $73 million in our quarter ended June 30, 2008, compared to the year ago quarter."

The Company will host a conference call today (Tuesday, August 5th) 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.

The Company has declared a quarterly cash dividend of seven and one-half cents ($0.075) per share. The dividend is payable on August 28, 2008 to stockholders of record on August 18, 2008.

D.R. Horton, Inc., America's Builder, is the largest homebuilder in the United States, delivering more than 41,000 homes in its fiscal year ended September 30, 2007. Founded in 1978 in Fort Worth, Texas, D.R. Horton has operations in 80 markets in 27 states in the Northeast, Midwest, Southeast, South Central, Southwest, California 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 $900,000. 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 reducing inventory, generating cash flow from operations, maintaining our focus on controlling costs and paying the declared dividend. 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: further deterioration in industry conditions; the reduction of liquidity in the financial markets; limitations on our strategies in responding to adverse conditions in the industry; changes in general economic, real estate, construction and other business conditions; changes in interest rates, the availability of mortgage financing or other costs of owning a home; the effects of governmental regulations and environmental matters; our substantial debt; failure to comply with certain financial tests or meet ratios contained in our revolving credit facility; competitive conditions within our industry; the availability of capital; our ability to effect any future growth strategies successfully; our ability to realize our deferred income tax asset; and the uncertainties inherent in home warranty and construction defect claims matters. 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 STATEMENTS OF OPERATIONS
                             (UNAUDITED)

                             Three months ended    Nine months ended
                                  June 30,             June 30,
                            -------------------- ---------------------
                              2008       2007       2008       2007
                            --------- ---------- ---------- ----------
                               (In millions, except per share data)
Homebuilding:
   Revenues:
      Home sales            $1,415.0  $ 2,470.5  $ 4,619.8  $ 7,753.1
      Land/lot sales            18.3       77.6      145.1      212.7
                            --------- ---------- ---------- ----------

                             1,433.3    2,548.1    4,764.9    7,965.8
                            --------- ---------- ---------- ----------
   Cost of sales:
      Home sales             1,271.7    2,058.8    4,097.1    6,380.2
      Land/lot sales            14.2       65.6      118.0      187.6
      Inventory impairments
       and land option cost
       write-offs              330.4      852.0    1,410.0    1,010.8
                            --------- ---------- ---------- ----------

                             1,616.3    2,976.4    5,625.1    7,578.6
                            --------- ---------- ---------- ----------
   Gross profit (loss):
      Home sales               143.3      411.7      522.7    1,372.9
      Land/lot sales             4.1       12.0       27.1       25.1
      Inventory impairments
       and land option cost
       write-offs             (330.4)    (852.0)  (1,410.0)  (1,010.8)
                            --------- ---------- ---------- ----------

                              (183.0)    (428.3)    (860.2)     387.2
                            --------- ---------- ---------- ----------

   Selling, general and
    administrative expense     194.7      267.5      616.1      858.9
   Goodwill impairment             -      425.6          -      425.6
   Interest expense             11.7          -       22.9          -
   Loss on early retirement
    of debt                      2.6       12.1        2.6       12.1
   Other income                 (3.5)      (3.9)      (7.0)      (5.7)
                            --------- ---------- ---------- ----------

   Operating loss from
    Homebuilding              (388.5)  (1,129.6)  (1,494.8)    (903.7)
                            --------- ---------- ---------- ----------

Financial Services:
   Revenues                     30.9       50.0       98.8      158.3
   General and
    administrative expense      23.1       36.0       76.4      119.3
   Interest expense              0.6        4.1        2.7       20.5
   Interest and other
    income                      (2.2)      (8.3)      (8.5)     (34.2)
                            --------- ---------- ---------- ----------

   Operating income from
    Financial Services           9.4       18.2       28.2       52.7
                            --------- ---------- ---------- ----------

Loss before income taxes      (379.1)  (1,111.4)  (1,466.6)    (851.0)
Provision for (benefit
 from) income taxes             20.2     (287.6)     367.2     (188.7)
                            --------- ---------- ---------- ----------

Net loss                    $ (399.3) $  (823.8) $(1,833.8) $  (662.3)
                            ========= ========== ========== ==========

Basic and Diluted:
   Net loss per share       $  (1.26) $   (2.62) $   (5.81) $   (2.11)
                            ========= ========== ========== ==========
   Weighted average number
    of common shares           316.0      314.3      315.5      313.9
                            ========= ========== ========== ==========

Other Consolidated
 Financial Data:

   Interest amortized to
    home and land/lot cost
    of sales                $   44.9  $    60.8  $   178.1  $   171.5
                            ========= ========== ========== ==========
   Depreciation and
    amortization            $   13.0  $    16.4  $    42.1  $    48.3
                            ========= ========== ========== ==========
   Interest incurred        $   59.1  $    80.1  $   180.6  $   253.0
                            ========= ========== ========== ==========
                          D.R. HORTON, INC.
                     CONSOLIDATED BALANCE SHEETS
                             (UNAUDITED)

                                               June 30,  September 30,
                                                 2008        2007
                                               --------- -------------
                    ASSETS                          (In millions)
Homebuilding:
Cash and cash equivalents                      $  819.4  $      228.3
Inventories:
   Construction in progress and finished homes  2,064.1       3,346.8
   Residential land and lots - developed and
    under development                           3,505.3       5,334.7
   Land held for development                      735.4         540.1
   Land inventory not owned                        91.9         121.9
                                               --------- -------------
                                                6,396.7       9,343.5
Property and equipment, net                        78.9         110.2
Deferred income taxes, net                        518.7         863.8
Earnest money deposits and other assets           230.8         291.2
Goodwill                                           95.3          95.3
                                               --------- -------------
                                                8,139.8      10,932.3
                                               --------- -------------
Financial Services:
Cash and cash equivalents                          31.8          41.3
Mortgage loans held for sale                      246.4         523.5
Other assets                                       46.5          59.2
                                               --------- -------------
                                                  324.7         624.0
                                               --------- -------------
                                               $8,464.5  $   11,556.3
                                               ========= =============
                 LIABILITIES
Homebuilding:
Accounts payable                               $  285.2  $      566.2
Accrued expenses and other liabilities            803.7         933.3
Notes payable                                   3,581.6       3,989.0
                                               --------- -------------
                                                4,670.5       5,488.5
                                               --------- -------------
Financial Services:
Accounts payable and other liabilities             17.2          24.7
Notes payable                                      86.5         387.8
                                               --------- -------------
                                                  103.7         412.5
                                               --------- -------------
                                                4,774.2       5,901.0
                                               --------- -------------

Minority interests                                 32.5          68.4
                                               --------- -------------
             STOCKHOLDERS' EQUITY
Common stock                                        3.2           3.2
Additional capital                              1,716.2       1,693.3
Retained earnings                               2,034.1       3,986.1
Treasury stock, at cost                           (95.7)        (95.7)
                                               --------- -------------
                                                3,657.8       5,586.9
                                               --------- -------------
                                               $8,464.5  $   11,556.3
                                               ========= =============
                          D.R. HORTON, INC.
                 CONSOLIDATED STATEMENT OF CASH FLOWS
                             (UNAUDITED)

                                                     Nine Months Ended
                                                       June 30, 2008
                                                     -----------------
                                                       (In millions)
Operating Activities
Net loss                                             $       (1,833.8)
Adjustments to reconcile net loss to net cash
 provided by operating activities:
   Depreciation and amortization                                 42.1
   Amortization of debt discounts and fees                        5.3
   Stock option compensation expense                              9.6
   Income tax benefit from stock option exercises                (2.7)
   Deferred income taxes                                        345.1
   Loss on early retirement of debt                               2.6
   Inventory impairments and land option cost write-
    offs                                                      1,410.0
Changes in operating assets and liabilities:
   Decrease in construction in progress and finished
    homes                                                       991.2
   Decrease in residential land and lots --
    developed, under development, and held for
    development                                                 518.8
   Decrease in earnest money deposits and other
    assets                                                       58.6
   Decrease in mortgage loans held for sale                     277.1
   Decrease in accounts payable, accrued expenses
    and other liabilities                                      (423.5)
                                                     -----------------
Net cash provided by operating activities                     1,400.4
                                                     -----------------
Investing Activities
   Purchases of property and equipment                           (9.1)
                                                     -----------------
Net cash used in investing activities                            (9.1)
                                                     -----------------
Financing Activities
   Proceeds from notes payable                                  204.4
   Repayment of notes payable                                  (907.8)
   Proceeds from stock associated with certain
    employee benefit plans                                        9.2
   Income tax benefit from stock option exercises                 2.7
   Cash dividends paid                                         (118.2)
                                                     -----------------
Net cash used in financing activities                          (809.7)
                                                     -----------------
Increase in Cash and Cash Equivalents                           581.6
   Cash and cash equivalents at beginning of period             269.6
                                                     -----------------
   Cash and cash equivalents at end of period        $          851.2
                                                     =================
                           D.R. HORTON, INC.
                           ($'s in millions)

                            NET SALES ORDERS


                                        Three Months Ended June 30,
                                      --------------------------------
                                            2008            2007
                                      ---------------- ---------------
                                       Homes   Value   Homes   Value
                                      ------- -------- ------ --------

Northeast                                 372 $   95.4    717 $  191.7
Midwest                                   406    121.1    711    213.8
Southeast                                 841    172.3  1,500    323.7
South Central                           1,904    344.5  2,541    443.5
Southwest                                 864    164.7  1,614    312.0
California                                636    194.3    804    307.1
West                                      478    144.5    672    237.0
                                      ------- -------- ------ --------

                                        5,501 $1,236.8  8,559 $2,028.8
                                      ======= ======== ====== ========

                                         Nine Months Ended June 30,
                                       -------------------------------
                                            2008            2007
                                       --------------- ---------------
                                       Homes   Value   Homes   Value
                                       ------ -------- ------ --------

Northeast                               1,225 $  315.8  2,527 $  669.1
Midwest                                 1,145    331.5  2,584    745.8
Southeast                               2,586    508.4  4,301    961.1
South Central                           5,896  1,048.2  7,198  1,282.2
Southwest                               2,962    557.5  5,120  1,010.7
California                              2,127    655.3  3,247  1,413.2
West                                    1,333    408.3  2,336    838.9
                                       ------ -------- ------ --------

                                       17,274 $3,825.0 27,313 $6,921.0
                                       ====== ======== ====== ========
                              HOMES CLOSED


                                         Three Months Ended June 30,
                                        -----------------------------
                                             2008           2007
                                        -------------- --------------
                                        Homes  Value   Homes  Value
                                        ----- -------- ----- --------

Northeast                                 540 $  134.7   919 $  247.1
Midwest                                   357    107.8   774    235.7
Southeast                                 890    186.2 1,575    367.6
South Central                           1,894    344.5 2,746    490.7
Southwest                               1,322    259.9 2,009    450.0
California                                711    237.3   913    425.1
West                                      453    144.6   707    254.3
                                        ----- -------- ----- --------

                                        6,167 $1,415.0 9,643 $2,470.5
                                        ===== ======== ===== ========

                                         Nine Months Ended June 30,
                                       -------------------------------
                                            2008            2007
                                       --------------- ---------------
                                       Homes   Value   Homes   Value
                                       ------ -------- ------ --------

Northeast                               1,737 $  445.8  2,949 $  771.3
Midwest                                 1,302    391.8  2,519    745.0
Southeast                               2,775    600.5  4,497  1,076.3
South Central                           5,857  1,051.9  7,936  1,418.7
Southwest                               4,146    861.6  5,951  1,349.1
California                              2,207    806.8  3,534  1,597.4
West                                    1,411    461.4  2,251    795.3
                                       ------ -------- ------ --------

                                       19,435 $4,619.8 29,637 $7,753.1
                                       ====== ======== ====== ========
                                              SALES ORDER BACKLOG

                                               As of June 30,
                                      --------------------------------
                                            2008            2007
                                      ---------------- ---------------
                                       Homes   Value   Homes   Value
                                      ------- -------- ------ --------

Northeast                                 682 $  176.6  1,806 $  485.0
Midwest                                   443    131.8  1,102    343.0
Southeast                               1,009    217.5  1,952    518.6
South Central                           2,732    492.5  3,475    641.3
Southwest                               2,014    402.4  4,560  1,079.2
California                                861    279.4  1,801    857.6
West                                      540    199.4  1,105    428.3
                                      ------- -------- ------ --------

                                        8,281 $1,899.6 15,801 $4,353.0
                                      ======= ======== ====== ========

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

SOURCE:
D.R. Horton, Inc.

"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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