EXHIBIT 8.1
[LETTERHEAD OF GIBSON, DUNN & CRUTCHER LLP]
May 11, 2001
(214) 698-3100 39334-00031
D.R. Horton, Inc.
1901 Ascension Blvd., Suite 100
Arlington, TX 76006
Re: Zero Coupon Convertible Senior Notes Due 2021
Ladies and Gentlemen:
We have acted as tax counsel to D.R. Horton, Inc., a Delaware corporation
("D.R. Horton"), in connection with the issuance of $381,113,000 principal
amount of Zero Coupon Convertible Senior Notes Due 2021 (the "Notes").
In formulating our opinion, we have reviewed such documents as we deemed
necessary or appropriate, including (i) the Registration Statement (the
"Registration Statement") of D.R. Horton (File No. 333-57388) on Form S-3 filed
with the U.S. Securities and Exchange Commission (the "Commission") pursuant to
the Securities Act of 1933 (the "Act"); (ii) the Prospectus of D.R. Horton that
was included in the Registration Statement on Form S-3, as declared effective by
the Commission on April 20, 2001 (the " Prospectus"); (iii) the Supplement to
the Prospectus, dated May 4, 2001, and forming a part of the Registration
Statement (the "Prospectus Supplement"); (iv) the Indenture, dated as of June 9,
1997, as supplemented, among D.R. Horton, certain subsidiaries of D.R. Horton,
and American Stock Transfer and Trust Company, as trustee (the "Trustee"); and
(v) the Eleventh Supplemental Indenture, dated as of May 11, 2001, among D.R.
Horton, certain subsidiaries of D.R. Horton, and the Trustee.
In addition, we have made such other factual and legal inquiries as we have
considered necessary or appropriate.
D.R. Horton, Inc.
May 11, 2001
Page 2
Our opinion set forth below assumes (i) the initial and continuing accuracy
of the statements and facts concerning the Notes set forth in the Registration
Statement, the Prospectus, the Prospectus Supplement and certain other
documents; (ii) the conformity of the Notes to the terms set forth in the
Registration Statement, the Prospectus and the Prospectus Supplement; (iii) the
accuracy of representations made to us by D.R. Horton, which are set forth in
the certificate delivered to us by D.R. Horton, dated May 11, 2001 (the
"Certificate"); and (iv) the genuineness of all signatures, the legal capacity
of natural persons, the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents submitted
to us as photocopies. We also have assumed that the transactions related to the
issuance of the Notes will be consummated in the manner contemplated by the
Registration Statement, the Prospectus and the Prospectus Supplement.
Based upon the foregoing and in reliance thereon, including (a) the
representation of D.R. Horton contained in the Certificate that, as of the issue
date, the likelihood that the contingent payments will be made during the term
of the Notes is not remote, (b) the representation of D.R. Horton contained in
the Certificate that, as of the issue date, the likelihood that the contingent
payments will not be made during the term of the Notes is not remote, (c) the
representation of D.R. Horton contained in the Certificate that, as of the issue
date, the likelihood that D.R. Horton will distribute cash dividends on its
common stock during the term of the Notes is not remote, and (d) the
representation of D.R. Horton contained in the Certificate that, as of the issue
date, the likelihood that D.R. Horton will not distribute cash dividends on its
common stock during the term of the Notes is not remote, and based on certain
estimates made by D.R. Horton and Salomon Smith Barney, Inc., subject to the
qualifications, exceptions, assumptions and limitations herein contained, we are
of the opinion that:
(1) the Notes will be treated as indebtedness of D.R. Horton for U.S.
federal income tax purposes; and
(2) the Notes should be subject to the regulations governing contingent
payment debt instruments contained in Section 1.1275-4(b) of the Treasury
Regulations promulgated under the Internal Revenue Code of 1986, as amended
(the "Code").
Our view is that the structure of the Notes is consistent with the purpose
of Section 163(e) and Sections 1271-1275 of the Code, which is to reflect the
issuer's economic cost of borrowing. However, there is no authority directly on
point regarding the federal income tax consequences of instruments structured as
the Notes, and we draw your attention to Treasury Regulation Section
1.1275-2(g), which provides that if a principal purpose in structuring a debt
instrument is to achieve a result that is unreasonable in light of the purposes
of Section 163(e) and Sections 1271-1275 of the Code, the Internal Revenue
Service (the "Service") can apply or depart from the Treasury Regulations
promulgated thereunder as necessary or appropriate to achieve a reasonable
result. In the case of a debt instrument that provides for a contingent payment
and is structured with such a principal purpose, the Service can treat the
contingency as if it were a separate position. Accordingly, the
D.R. Horton, Inc.
May 11, 2001
Page 3
Service has the authority to treat the Notes, if it determines that the Notes
were structured with such a principal purpose, as if they were not contingent
payment debt instruments.
Treasury Regulation Section 1.1275-4 requires the calculation of a
"comparable yield," but does not define clearly the comparable yield on a note
having terms such as those contained in the Notes. We note that you intend to
take the position that the comparable yield on the Notes is the annual yield you
believe you would pay, as of the initial issue date of the Notes, on a fixed-
rate cash pay nonconvertible debt security with no contingent payments, but with
terms and conditions otherwise comparable to the Notes. The applicable
regulations can be read to support this interpretation; however, because the
regulations provide no specific guidance, another interpretation could result in
calculating the comparable yield on the Notes based on a convertible debt
security, but in any event with the comparable yield equaling at least the
applicable federal rate. We also note that, even if the conversion feature is
not taken into account, depending on the identity of the persons to whom the
Notes are marketed or sold, there may be a presumption that the comparable yield
is the applicable federal rate. This presumption may be overcome only with clear
and convincing evidence that the comparable yield should be some yield other
than the applicable federal rate. Furthermore, the Service could assert that the
comparable yield on the Notes as determined is unreasonable.
We express no opinion concerning any tax consequences associated with the
Notes other than those specifically set forth herein.
Our opinion is based on current provisions of the Code, Treasury
Regulations promulgated thereunder, published pronouncements of the Service, and
case law, any of which may be changed at any time with retroactive effect. Any
change in applicable law or the facts and circumstances surrounding the Notes,
or any inaccuracy in the statements, facts, assumptions, and representations on
which we relied, may affect the continuing validity of the opinion set forth
herein. We assume no responsibility to inform you of any such changes or
inaccuracies that may occur or come to our attention.
This opinion is furnished to you solely for your benefit in connection with
the offering of the Notes and is not to be used, circulated, quoted or otherwise
referred to for any other purpose or relied upon by any other person without our
prior written consent. We consent to the use of our name under the heading
"Material U.S. Federal Income Tax Consequences" in the Prospectus Supplement. We
hereby consent to the filing of this opinion with the Commission as Exhibit 8.1
to the Registration Statement. In giving these consents, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Commission promulgated thereunder.
Very truly yours,
GIBSON, DUNN & CRUTCHER LLP