EXHIBIT 99.1
| | | |
| | | Stacey Dwyer, EVP |
| | | 301 Commerce Street, Ste. 500, Fort Worth, Texas 76102 |
| | | 817-390-8200 |
| | | August 5, 2008 |
D.R. HORTON, INC., AMERICA’S BUILDER, REPORTS FISCAL 2008 THIRD QUARTER RESULTS AND DECLARES QUARTERLY DIVIDEND
FORT WORTH, TEXAS— 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 | |
| | | (In millions) | |
ASSETS | | | | | | | | |
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, | | | Nine Months Ended June 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | Homes | | | Value | | | Homes | | | Value | | | Homes | | | Value | | | Homes | | | Value | |
| Northeast | | | 372 | | | $ | 95.4 | | | | 717 | | | $ | 191.7 | | | | 1,225 | | | $ | 315.8 | | | | 2,527 | | | $ | 669.1 | |
| Midwest | | | 406 | | | | 121.1 | | | | 711 | | | | 213.8 | | | | 1,145 | | | | 331.5 | | | | 2,584 | | | | 745.8 | |
| Southeast | | | 841 | | | | 172.3 | | | | 1,500 | | | | 323.7 | | | | 2,586 | | | | 508.4 | | | | 4,301 | | | | 961.1 | |
| South Central | | | 1,904 | | | | 344.5 | | | | 2,541 | | | | 443.5 | | | | 5,896 | | | | 1,048.2 | | | | 7,198 | | | | 1,282.2 | |
| Southwest | | | 864 | | | | 164.7 | | | | 1,614 | | | | 312.0 | | | | 2,962 | | | | 557.5 | | | | 5,120 | | | | 1,010.7 | |
| California | | | 636 | | | | 194.3 | | | | 804 | | | | 307.1 | | | | 2,127 | | | | 655.3 | | | | 3,247 | | | | 1,413.2 | |
| West | | | 478 | | | | 144.5 | | | | 672 | | | | 237.0 | | | | 1,333 | | | | 408.3 | | | | 2,336 | | | | 838.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 5,501 | | | $ | 1,236.8 | | | | 8,559 | | | $ | 2,028.8 | | | | 17,274 | | | $ | 3,825.0 | | | | 27,313 | | | $ | 6,921.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
HOMES CLOSED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Nine Months Ended June 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | Homes | | | Value | | | Homes | | | Value | | | Homes | | | Value | | | Homes | | | Value | |
| Northeast | | | 540 | | | $ | 134.7 | | | | 919 | | | $ | 247.1 | | | | 1,737 | | | $ | 445.8 | | | | 2,949 | | | $ | 771.3 | |
| Midwest | | | 357 | | | | 107.8 | | | | 774 | | | | 235.7 | | | | 1,302 | | | | 391.8 | | | | 2,519 | | | | 745.0 | |
| Southeast | | | 890 | | | | 186.2 | | | | 1,575 | | | | 367.6 | | | | 2,775 | | | | 600.5 | | | | 4,497 | | | | 1,076.3 | |
| South Central | | | 1,894 | | | | 344.5 | | | | 2,746 | | | | 490.7 | | | | 5,857 | | | | 1,051.9 | | | | 7,936 | | | | 1,418.7 | |
| Southwest | | | 1,322 | | | | 259.9 | | | | 2,009 | | | | 450.0 | | | | 4,146 | | | | 861.6 | | | | 5,951 | | | | 1,349.1 | |
| California | | | 711 | | | | 237.3 | | | | 913 | | | | 425.1 | | | | 2,207 | | | | 806.8 | | | | 3,534 | | | | 1,597.4 | |
| West | | | 453 | | | | 144.6 | | | | 707 | | | | 254.3 | | | | 1,411 | | | | 461.4 | | | | 2,251 | | | | 795.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 6,167 | | | $ | 1,415.0 | | | | 9,643 | | | $ | 2,470.5 | | | | 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 | |
| | | | | | | | | | | | | |
