Delaware (State or other jurisdiction of incorporation or organization) | 75-2386963 (I.R.S. Employer Identification No.) | |
1341 Horton Circle, Arlington, Texas (Address of principal executive offices) | 76011 (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, par value $.01 per share | New York Stock Exchange | |
5.750% Senior Notes due 2023 | New York Stock Exchange |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o |
Page | ||
ITEM 1. | BUSINESS |
State | Reporting Region/Market | State | Reporting Region/Market | |||
East Region | South Central Region | |||||
Delaware | Central Delaware | Louisiana | Baton Rouge | |||
Northern Delaware | Lafayette | |||||
Georgia | Savannah | Oklahoma | Oklahoma City | |||
Maryland | Baltimore | Texas | Austin | |||
Suburban Washington, D.C. | Dallas | |||||
New Jersey | Northern New Jersey | Fort Worth | ||||
Southern New Jersey | Houston | |||||
North Carolina | Charlotte | Killeen/Temple/Waco | ||||
Greensboro/Winston-Salem | Midland/Odessa | |||||
Raleigh/Durham | New Braunfels/San Marcos | |||||
Wilmington | San Antonio | |||||
Pennsylvania | Philadelphia | |||||
South Carolina | Charleston | Southwest Region | ||||
Columbia | Arizona | Phoenix | ||||
Greenville/Spartanburg | Tucson | |||||
Hilton Head | New Mexico | Albuquerque | ||||
Myrtle Beach | ||||||
Virginia | Northern Virginia | West Region | ||||
Southern Virginia | California | Bakersfield | ||||
Bay Area | ||||||
Midwest Region | Fresno | |||||
Colorado | Denver | Los Angeles County | ||||
Fort Collins | Orange County | |||||
Illinois | Chicago | Riverside County | ||||
Indiana | Indianapolis | Sacramento | ||||
Minnesota | Minneapolis/St. Paul | San Bernardino County | ||||
San Diego County | ||||||
Southeast Region | Ventura County | |||||
Alabama | Birmingham | Hawaii | Hawaii | |||
Huntsville | Kauai | |||||
Mobile/Baldwin County | Maui | |||||
Montgomery | Oahu | |||||
Tuscaloosa | Nevada | Las Vegas | ||||
Florida | Fort Myers/Naples | Reno | ||||
Jacksonville | Oregon | Portland/Salem | ||||
Lakeland | Utah | Salt Lake City | ||||
Melbourne/Vero Beach | Washington | Seattle/Tacoma/Everett | ||||
Miami/Fort Lauderdale | Spokane | |||||
Ocala | Vancouver | |||||
Orlando | ||||||
Pensacola/Panama City | ||||||
Port St. Lucie | ||||||
Tampa/Sarasota | ||||||
Volusia County | ||||||
West Palm Beach | ||||||
Georgia | Atlanta | |||||
Augusta | ||||||
Mississippi | Gulf Coast | |||||
Tennessee | Knoxville | |||||
Nashville |
• | Economic conditions; |
• | Employment levels and job growth; |
• | Income level of potential homebuyers; |
• | Local housing affordability and typical mortgage products utilized; |
• | Market for homes at our targeted price points; |
• | Availability of land and lots in desirable locations on acceptable terms; |
• | Land entitlement and development processes; |
• | Availability of qualified subcontractors; |
• | New and secondary home sales activity; |
• | Competition; and |
• | Prevailing housing products, features, cost and pricing. |
• | Greater access to and lower cost of capital, due to our balance sheet strength and our lending and capital markets relationships; |
• | Volume discounts and rebates from national, regional and local materials suppliers and lower labor rates from certain subcontractors; and |
• | Enhanced leverage of our general and administrative activities, which allows us flexibility to adjust to changes in market conditions and compete effectively across our markets. |
• | Site selection, which involves |
• | Negotiating lot option, land acquisition and related contracts; |
• | Obtaining all necessary land development and home construction approvals; |
• | Selecting land development subcontractors and ensuring their work meets our contracted scopes; |
• | Selecting building and architectural plans; |
• | Selecting construction subcontractors and ensuring their work meets our contracted scopes; |
• | Planning and managing home construction schedules; |
• | Determining the pricing for each house plan and options in a given community; |
• | Developing and implementing local marketing and sales plans; |
• | Coordinating all interactions with customers and real estate brokers during the sales, construction and home closing processes; and |
• | Ensuring the quality and timeliness of post-closing service and warranty repairs provided to customers. |
• | Review and approval of division business plans and budgets; |
• | Review and approval of all land and lot acquisition contracts; |
• | Review of all business and financial analysis for potential land and lot inventory investments; |
• | Oversight of land and home inventory levels; |
• | Monitoring division financial and operating performance; and |
• | Review of major personnel decisions and division incentive compensation plans. |
• | Financing; |
• | Cash management; |
• | Allocation of capital; |
• | Issuance and monitoring of inventory investment guidelines; |
• | Approval and funding of land and lot acquisitions; |
• | Monitoring and analysis of profitability, returns, costs and inventory levels; |
• | Risk and litigation management; |
• | Environmental assessments of land and lot acquisitions; |
• | Technology systems to support management of operations, marketing and information; |
• | Accounting and management reporting; |
• | Income taxes; |
• | Internal audit; |
• | Public reporting and investor and media relations; |
• | Administration of payroll and employee benefits; |
• | Negotiation of national purchasing contracts; |
• | Administration, reporting and monitoring of customer satisfaction surveys and resolutions of issues; and |
• | Approval of major personnel decisions and management incentive compensation plans. |
• | Managing our supply of land/lots controlled (owned and optioned) in each market based on anticipated future home closing levels; |
• | Monitoring local market and demographic trends, housing preferences and related economic developments, including the identification of desirable housing submarkets based on the quality of local schools, new job opportunities, local growth initiatives and personal income trends; |
• | Utilizing land/lot option contracts, where possible; |
• | Seeking to acquire developed lots which are substantially ready for home construction, where possible; |
• | Controlling our levels of investment in land acquisition, land development and housing inventory to match the expected housing demand in each of our operating markets; and |
• | Monitoring and managing the number of speculative homes (homes under construction without an executed sales contract) built in each subdivision. |
Percentage of Home Closings | Percentage of Home Sales Revenue | ||||||
D.R. Horton | 58 | % | 62 | % | |||
Emerald | 3 | % | 6 | % | |||
Express | 37 | % | 30 | % | |||
Freedom | 2 | % | 2 | % | |||
Total | 100 | % | 100 | % |
ITEM 1A. | RISK FACTORS |
• | employment levels; |
• | consumer confidence and spending; |
• | housing demand; |
• | availability of financing for homebuyers; |
• | interest rates; |
• | availability and prices of new homes for sale and alternatives to new homes, including foreclosed homes, homes held for sale by investors and speculators, other existing homes and rental properties; and |
• | demographic trends. |
• | difficulty in acquiring land suitable for residential building at affordable prices in locations where our potential customers want to live; |
• | shortages of qualified subcontractors; |
• | reliance on local subcontractors, manufacturers, distributors and land developers who may be inadequately capitalized; |
• | shortages of materials; and |
• | volatile increases in the cost of materials, particularly increases in the price of lumber, drywall and cement, which are significant components of home construction costs. |
• | require us to dedicate a substantial portion of our cash flow from operations to payment of our debt and reduce our ability to use our cash flow for other operating or investing purposes; |
• | limit our flexibility to adjust to changes in our business or economic conditions; and |
• | limit our ability to obtain future financing for working capital, capital expenditures, acquisitions, debt service requirements or other requirements. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (1) (In millions) | ||||||||||
July 1, 2018 - July 31, 2018 | 640,000 | $ | 43.94 | 640,000 | $ | — | |||||||
August 1, 2018 - August 31, 2018 | 560,000 | 43.78 | 560,000 | 375.5 | |||||||||
September 1, 2018 - September 30, 2018 | — | — | — | 375.5 | |||||||||
Total | 1,200,000 | $ | 43.87 | 1,200,000 | $ | 375.5 |
(1) | Shares purchased in July 2018 for $28.1 million were part of a $200 million common stock repurchase authorization that expired July 31, 2018. The dollar value of shares that could be purchased following these transactions was $97.0 million up to expiration of this authorization. Effective August 1, 2018, our Board of Directors authorized the repurchase of up to $400 million of our common stock effective through September 30, 2019. During August 2018, we purchased 560,000 shares of our common stock for $24.5 million, resulting in a remaining authorization of $375.5 million at September 30, 2018. |
Year Ended September 30, | |||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||||
D.R. Horton, Inc. | $ | 100.00 | $ | 106.24 | $ | 153.42 | $ | 159.48 | $ | 213.53 | $ | 228.09 | |||||||||||
S&P 500 Index | 100.00 | 119.73 | 119.00 | 137.36 | 162.92 | 192.10 | |||||||||||||||||
S&P 1500 Homebuilding Index | 100.00 | 102.99 | 125.11 | 124.37 | 172.15 | 162.82 |
ITEM 6. | SELECTED FINANCIAL DATA |
Year Ended September 30, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
(In millions, except per share data) | |||||||||||||||||||
Consolidated Operating Data: | |||||||||||||||||||
Revenues | $ | 16,068.0 | $ | 14,091.0 | $ | 12,157.4 | $ | 10,824.0 | $ | 8,024.9 | |||||||||
Cost of sales | 12,398.1 | 11,042.8 | 9,502.6 | 8,535.7 | 6,268.6 | ||||||||||||||
Selling, general and administrative expense | 1,676.8 | 1,471.6 | 1,320.3 | 1,186.0 | 965.4 | ||||||||||||||
Income before income taxes | 2,060.0 | 1,602.1 | 1,353.5 | 1,123.4 | 814.2 | ||||||||||||||
Income tax expense | 597.7 | 563.7 | 467.2 | 372.7 | 280.7 | ||||||||||||||
Net income | 1,462.3 | 1,038.4 | 886.3 | 750.7 | 533.5 | ||||||||||||||
Net income attributable to noncontrolling interests | 2.0 | — | — | — | — | ||||||||||||||
Net income attributable to D.R. Horton, Inc. | 1,460.3 | 1,038.4 | 886.3 | 750.7 | 533.5 | ||||||||||||||
Net income per common share attributable to D.R. Horton, Inc.: | |||||||||||||||||||
Basic | 3.88 | 2.77 | 2.39 | 2.05 | 1.57 | ||||||||||||||
Diluted | 3.81 | 2.74 | 2.36 | 2.03 | 1.50 | ||||||||||||||
Cash dividends declared per common share | 0.50 | 0.40 | 0.32 | 0.25 | 0.1375 |
September 30, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
(In millions) | |||||||||||||||||||
Consolidated Balance Sheet Data: | |||||||||||||||||||
Cash and cash equivalents | $ | 1,473.1 | $ | 1,007.8 | $ | 1,303.2 | $ | 1,383.8 | $ | 661.8 | |||||||||
Inventories | 10,395.0 | 9,237.1 | 8,340.9 | 7,807.0 | 7,700.5 | ||||||||||||||
Total assets | 14,114.6 | 12,184.6 | 11,558.9 | 11,151.0 | 10,185.4 | ||||||||||||||
Notes payable | 3,203.5 | 2,871.6 | 3,271.3 | 3,811.5 | 3,665.7 | ||||||||||||||
Stockholders’ equity | 8,984.4 | 7,747.1 | 6,792.5 | 5,894.3 | 5,115.8 | ||||||||||||||
Total equity | 9,158.9 | 7,747.6 | 6,793.0 | 5,895.4 | 5,119.7 |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Maintaining a strong cash balance and overall liquidity position and controlling our level of debt. |
• | Allocating and actively managing our inventory investments across our operating markets to diversify our geographic risk. |
• | Offering new home communities that appeal to a broad range of entry-level, move-up, active adult and luxury homebuyers based on consumer demand in each market. |
• | Modifying product offerings, sales pace, home prices and sales incentives as necessary in each of our markets to meet consumer demand and maintain affordability. |
• | Delivering high quality homes to our customers and a positive experience both during and after the sale. |
• | Managing our inventory of homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory. |
• | Investing in land and land development in desirable markets, while controlling the level of land and lots we own in each of our markets relative to the local new home demand. |
• | Increasing the amount of land and finished lots controlled through option purchase contracts by expanding relationships with land developers across the country and growing our majority-owned Forestar lot development operations. |
• | Pursuing acquisitions of companies to enhance and improve the returns of our homebuilding and other operations. |
• | Controlling the cost of goods purchased from both vendors and subcontractors. |
• | Improving the efficiency of our land development, construction, sales and other key operational activities. |
• | Controlling our selling, general and administrative (SG&A) expense infrastructure to match production levels. |
• | Homebuilding revenues increased 14% to $15.6 billion. |
• | Homes closed increased 13% to 51,857 homes, and the average closing price of those homes was $298,900. |
• | Net sales orders increased 13% to 52,740 homes, and the value of net sales orders increased 13% to $15.8 billion. |
• | Sales order backlog increased 8% to 13,371 homes, and the value of sales order backlog increased 8% to $4.0 billion. |
• | Home sales gross margin increased 130 basis points to 21.3%. |
• | Homebuilding SG&A expenses as a percentage of homebuilding revenues decreased by 30 basis points to 8.6%. |
• | Homebuilding pre-tax income increased 31% to $2.0 billion compared to $1.5 billion. |
• | Homebuilding pre-tax income as a percentage of homebuilding revenues improved to 12.5% compared to 10.8%. |
• | Homebuilding return on inventory improved 360 basis points to 20.2%. |
• | Net cash provided by homebuilding operations increased to $1.0 billion compared to $303.7 million. |
• | Homebuilding cash and cash equivalents totaled $1.1 billion compared to $973.0 million. |
• | Homebuilding inventories totaled $9.9 billion compared to $9.2 billion. |
• | Homes in inventory totaled 29,700 compared to 26,200. |
• | Owned lots totaled 124,300 compared to 125,000, and lots controlled through option purchase contracts totaled 164,200 compared to 124,000. |
• | Homebuilding debt was $2.4 billion compared to $2.5 billion. |
• | Homebuilding debt to total capital improved to 21.4% from 24.0%. |
• | Forestar’s revenues were $109.2 million, which included $39.1 million of revenues from land and lot sales to our homebuilding segment. |
• | Forestar’s pre-tax income was $48.7 million, which included gross profit of $9.0 million from land and lot sales to our homebuilding segment. |
• | Owned and controlled lots totaled 20,100. Of these lots, 13,600 were under contract to sell to or subject to a right of first offer with D.R. Horton. |
• | Forestar’s cash and cash equivalents totaled $318.8 million. |
• | Forestar’s inventories totaled $498.0 million. |
• | Financial services revenues increased 7% to $375.3 million. |
• | Financial services pre-tax income was $117.8 million compared to $124.5 million. |
• | Financial services pre-tax income as a percentage of financial services revenues was 31.4% compared to 35.6%. |
• | Consolidated pre-tax income increased 29% to $2.1 billion compared to $1.6 billion. |
• | Consolidated pre-tax income as a percentage of consolidated revenues was 12.8% compared to 11.4%. |
• | Income tax expense was $597.7 million, which included a charge of $108.7 million as a result of the Tax Cuts and Jobs Act, compared to $563.7 million. |
• | Net income attributable to D.R. Horton increased 41% to $1.5 billion compared to $1.0 billion. |
• | Diluted earnings per common share attributable to D.R. Horton increased 39% to $3.81 compared to $2.74. |
• | Net cash provided by operations was $545.2 million compared to $440.2 million. |
• | Stockholders’ equity was $9.0 billion compared to $7.7 billion. |
• | Book value per common share increased 16% to $23.88 compared to $20.66. |
• | Debt to total capital improved to 26.3% from 27.0%. |
East: | Delaware, Georgia (Savannah only), Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina and Virginia | ||
Midwest: | Colorado, Illinois, Indiana and Minnesota | ||
Southeast: | Alabama, Florida, Georgia, Mississippi and Tennessee | ||
South Central: | Louisiana, Oklahoma and Texas | ||
Southwest: | Arizona and New Mexico | ||
West: | California, Hawaii, Nevada, Oregon, Utah and Washington |
Net Sales Orders (1) | Net Homes Sold | |||||||||||||||||
Fiscal Year Ended September 30, | % Change | |||||||||||||||||
2018 | 2017 | 2016 | 2018 vs 2017 | 2017 vs 2016 | ||||||||||||||
East | 6,994 | 6,039 | 4,944 | 16 | % | 22 | % | |||||||||||
Midwest | 2,209 | 1,841 | 1,766 | 20 | % | 4 | % | |||||||||||
Southeast | 17,380 | 15,575 | 13,616 | 12 | % | 14 | % | |||||||||||
South Central | 15,317 | 13,374 | 12,433 | 15 | % | 8 | % | |||||||||||
Southwest | 3,179 | 2,693 | 1,761 | 18 | % | 53 | % | |||||||||||
West | 7,661 | 7,083 | 6,294 | 8 | % | 13 | % | |||||||||||
52,740 | 46,605 | 40,814 | 13 | % | 14 | % | ||||||||||||
Value (In millions) | ||||||||||||||||||
East | $ | 1,988.8 | $ | 1,708.9 | $ | 1,388.5 | 16 | % | 23 | % | ||||||||
Midwest | 864.3 | 722.6 | 669.2 | 20 | % | 8 | % | |||||||||||
Southeast | 4,640.7 | 4,068.9 | 3,547.3 | 14 | % | 15 | % | |||||||||||
South Central | 3,849.8 | 3,339.1 | 3,045.4 | 15 | % | 10 | % | |||||||||||
Southwest | 784.4 | 620.5 | 409.0 | 26 | % | 52 | % | |||||||||||
West | 3,632.7 | 3,481.2 | 2,940.8 | 4 | % | 18 | % | |||||||||||
$ | 15,760.7 | $ | 13,941.2 | $ | 12,000.2 | 13 | % | 16 | % | |||||||||
Average Selling Price | ||||||||||||||||||
East | $ | 284,400 | $ | 283,000 | $ | 280,800 | — | % | 1 | % | ||||||||
Midwest | 391,300 | 392,500 | 378,900 | — | % | 4 | % | |||||||||||
Southeast | 267,000 | 261,200 | 260,500 | 2 | % | — | % | |||||||||||
South Central | 251,300 | 249,700 | 244,900 | 1 | % | 2 | % | |||||||||||
Southwest | 246,700 | 230,400 | 232,300 | 7 | % | (1 | )% | |||||||||||
West | 474,200 | 491,500 | 467,200 | (4 | )% | 5 | % | |||||||||||
$ | 298,800 | $ | 299,100 | $ | 294,000 | — | % | 2 | % |
(1) | Net sales orders represent the number and dollar value of new sales contracts executed with customers (gross sales orders), net of cancelled sales orders. |
Sales Order Cancellations | |||||||||||||||||||||||||||
Fiscal Year Ended September 30, | |||||||||||||||||||||||||||
Cancelled Sales Orders | Value (In millions) | Cancellation Rate (1) | |||||||||||||||||||||||||
2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |||||||||||||||||||
East | 2,031 | 1,818 | 1,582 | $ | 570.0 | $ | 500.3 | $ | 425.4 | 23 | % | 23 | % | 24 | % | ||||||||||||
Midwest | 299 | 260 | 241 | 115.1 | 103.6 | 91.6 | 12 | % | 12 | % | 12 | % | |||||||||||||||
Southeast | 5,655 | 4,898 | 4,413 | 1,502.5 | 1,252.5 | 1,105.9 | 25 | % | 24 | % | 24 | % | |||||||||||||||
South Central | 4,408 | 3,989 | 3,795 | 1,091.9 | 1,000.8 | 942.5 | 22 | % | 23 | % | 23 | % | |||||||||||||||
Southwest | 1,031 | 864 | 745 | 251.8 | 196.9 | 160.4 | 24 | % | 24 | % | 30 | % | |||||||||||||||
West | 1,378 | 1,221 | 1,119 | 661.3 | 616.9 | 544.7 | 15 | % | 15 | % | 15 | % | |||||||||||||||
14,802 | 13,050 | 11,895 | $ | 4,192.6 | $ | 3,671.0 | $ | 3,270.5 | 22 | % | 22 | % | 23 | % |
(1) | Cancellation rate represents the number of cancelled sales orders divided by gross sales orders. |
Sales Order Backlog | Homes in Backlog | |||||||||||||||||
As of September 30, | % Change | |||||||||||||||||
2018 | 2017 | 2016 | 2018 vs 2017 | 2017 vs 2016 | ||||||||||||||
East | 1,841 | 1,544 | 1,301 | 19 | % | 19 | % | |||||||||||
Midwest | 442 | 419 | 470 | 5 | % | (11 | )% | |||||||||||
Southeast | 4,221 | 4,057 | 4,053 | 4 | % | — | % | |||||||||||
South Central | 4,492 | 3,956 | 3,840 | 14 | % | 3 | % | |||||||||||
Southwest | 928 | 843 | 655 | 10 | % | 29 | % | |||||||||||
West | 1,447 | 1,510 | 1,156 | (4 | )% | 31 | % | |||||||||||
13,371 | 12,329 | 11,475 | 8 | % | 7 | % | ||||||||||||
Value (In millions) | ||||||||||||||||||
East | $ | 548.6 | $ | 452.8 | $ | 383.0 | 21 | % | 18 | % | ||||||||
Midwest | 179.2 | 172.5 | 184.0 | 4 | % | (6 | )% | |||||||||||
Southeast | 1,172.3 | 1,104.9 | 1,121.7 | 6 | % | (1 | )% | |||||||||||
South Central | 1,151.8 | 1,018.1 | 1,018.1 | 13 | % | — | % | |||||||||||
Southwest | 251.7 | 192.7 | 150.7 | 31 | % | 28 | % | |||||||||||
West | 725.3 | 785.0 | 580.5 | (8 | )% | 35 | % | |||||||||||
$ | 4,028.9 | $ | 3,726.0 | $ | 3,438.0 | 8 | % | 8 | % | |||||||||
Average Selling Price | ||||||||||||||||||
East | $ | 298,000 | $ | 293,300 | $ | 294,400 | 2 | % | — | % | ||||||||
Midwest | 405,400 | 411,700 | 391,500 | (2 | )% | 5 | % | |||||||||||
Southeast | 277,700 | 272,300 | 276,800 | 2 | % | (2 | )% | |||||||||||
South Central | 256,400 | 257,400 | 265,100 | — | % | (3 | )% | |||||||||||
Southwest | 271,200 | 228,600 | 230,100 | 19 | % | (1 | )% | |||||||||||
West | 501,200 | 519,900 | 502,200 | (4 | )% | 4 | % | |||||||||||
$ | 301,300 | $ | 302,200 | $ | 299,600 | — | % | 1 | % |
Home Closings and Revenue | Homes Closed | |||||||||||||||||
Fiscal Year Ended September 30, | % Change | |||||||||||||||||
2018 | 2017 | 2016 | 2018 vs 2017 | 2017 vs 2016 | ||||||||||||||
East | 6,697 | 5,796 | 5,126 | 16 | % | 13 | % | |||||||||||
Midwest | 2,186 | 1,892 | 1,708 | 16 | % | 11 | % | |||||||||||
Southeast | 17,216 | 15,571 | 13,303 | 11 | % | 17 | % | |||||||||||
South Central | 14,940 | 13,258 | 12,249 | 13 | % | 8 | % | |||||||||||
Southwest | 3,094 | 2,505 | 1,703 | 24 | % | 47 | % | |||||||||||
West | 7,724 | 6,729 | 6,220 | 15 | % | 8 | % | |||||||||||
51,857 | 45,751 | 40,309 | 13 | % | 14 | % | ||||||||||||
Home Sales Revenue (In millions) | ||||||||||||||||||
East | $ | 1,893.0 | $ | 1,639.1 | $ | 1,431.0 | 15 | % | 15 | % | ||||||||
Midwest | 857.5 | 734.1 | 651.7 | 17 | % | 13 | % | |||||||||||
Southeast | 4,573.3 | 4,085.7 | 3,459.3 | 12 | % | 18 | % | |||||||||||
South Central | 3,760.4 | 3,339.1 | 2,978.5 | 13 | % | 12 | % | |||||||||||
Southwest | 725.4 | 578.5 | 388.1 | 25 | % | 49 | % | |||||||||||
West | 3,692.4 | 3,276.7 | 2,874.5 | 13 | % | 14 | % | |||||||||||
$ | 15,502.0 | $ | 13,653.2 | $ | 11,783.1 | 14 | % | 16 | % | |||||||||
Average Selling Price | ||||||||||||||||||
East | $ | 282,700 | $ | 282,800 | $ | 279,200 | — | % | 1 | % | ||||||||
Midwest | 392,300 | 388,000 | 381,600 | 1 | % | 2 | % | |||||||||||
Southeast | 265,600 | 262,400 | 260,000 | 1 | % | 1 | % | |||||||||||
South Central | 251,700 | 251,900 | 243,200 | — | % | 4 | % | |||||||||||
Southwest | 234,500 | 230,900 | 227,900 | 2 | % | 1 | % | |||||||||||
West | 478,000 | 487,000 | 462,100 | (2 | )% | 5 | % | |||||||||||
$ | 298,900 | $ | 298,400 | $ | 292,300 | — | % | 2 | % |
Percentages of Related Revenues | |||||||||
Fiscal Year Ended September 30, | |||||||||
2018 | 2017 | 2016 | |||||||
Gross profit — home sales | 21.3 | % | 20.0 | % | 20.2 | % | |||
Gross profit — land/lot sales and other | 18.6 | % | 15.3 | % | 13.3 | % | |||
Inventory and land option charges | (0.3 | )% | (0.3 | )% | (0.3 | )% | |||
Gross profit — total homebuilding | 21.0 | % | 19.6 | % | 19.9 | % | |||
Selling, general and administrative expense | 8.6 | % | 8.9 | % | 9.3 | % | |||
Goodwill impairment | — | % | — | % | 0.1 | % | |||
Gain on sale of assets | (0.1 | )% | — | % | — | % | |||
Other (income) expense | — | % | (0.1 | )% | (0.1 | )% | |||
Homebuilding pre-tax income | 12.5 | % | 10.8 | % | 10.7 | % |
Fiscal Year Ended September 30, | |||||||||||||||||||||||||||||||||
Homebuilding Revenues | Homebuilding Pre-tax Income (1) | Pre-tax Income as a Percentage of Homebuilding Revenues | |||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||
East | $ | 1,893.4 | $ | 1,640.1 | $ | 1,446.5 | $ | 217.3 | $ | 153.9 | $ | 138.7 | 11.5 | % | 9.4 | % | 9.6 | % | |||||||||||||||
Midwest | 858.9 | 736.5 | 651.7 | 77.5 | 49.1 | 44.3 | 9.0 | % | 6.7 | % | 6.8 | % | |||||||||||||||||||||
Southeast | 4,578.6 | 4,087.6 | 3,463.5 | 536.0 | 450.3 | 388.4 | 11.7 | % | 11.0 | % | 11.2 | % | |||||||||||||||||||||
South Central | 3,769.9 | 3,383.1 | 2,995.1 | 506.1 | 439.1 | 374.8 | 13.4 | % | 13.0 | % | 12.5 | % | |||||||||||||||||||||
Southwest | 768.7 | 597.5 | 388.1 | 97.4 | 39.6 | 7.3 | 12.7 | % | 6.6 | % | 1.9 | % | |||||||||||||||||||||
West | 3,754.3 | 3,296.7 | 2,916.9 | 522.9 | 357.3 | 310.9 | 13.9 | % | 10.8 | % | 10.7 | % | |||||||||||||||||||||
$ | 15,623.8 | $ | 13,741.5 | $ | 11,861.8 | $ | 1,957.2 | $ | 1,489.3 | $ | 1,264.4 | 12.5 | % | 10.8 | % | 10.7 | % |
(1) | Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating our corporate office. The amortization of capitalized interest and property taxes is allocated to each segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment’s inventory balances. |
September 30, 2018 | |||||||||||||||||||
Construction in Progress and Finished Homes | Residential Land/Lots Developed and Under Development | Land Held for Development | Land Held for Sale | Total Inventory | |||||||||||||||
(In millions) | |||||||||||||||||||
East | $ | 648.6 | $ | 529.5 | $ | 10.1 | $ | 3.8 | $ | 1,192.0 | |||||||||
Midwest | 369.9 | 208.0 | 1.8 | 3.4 | 583.1 | ||||||||||||||
Southeast | 1,388.4 | 1,248.5 | 31.5 | 0.3 | 2,668.7 | ||||||||||||||
South Central | 1,222.5 | 1,216.3 | 0.3 | 0.3 | 2,439.4 | ||||||||||||||
Southwest | 194.8 | 303.2 | 1.7 | — | 499.7 | ||||||||||||||
West | 1,146.5 | 1,076.1 | 14.4 | 31.5 | 2,268.5 | ||||||||||||||
Corporate and unallocated (1) | 113.7 | 107.7 | 1.4 | 0.9 | 223.7 | ||||||||||||||
$ | 5,084.4 | $ | 4,689.3 | $ | 61.2 | $ | 40.2 | $ | 9,875.1 |
September 30, 2017 | |||||||||||||||||||
Construction in Progress and Finished Homes | Residential Land/Lots Developed and Under Development | Land Held for Development | Land Held for Sale | Total Inventory | |||||||||||||||
(In millions) | |||||||||||||||||||
East | $ | 569.3 | $ | 478.1 | $ | 21.0 | $ | 0.5 | $ | 1,068.9 | |||||||||
Midwest | 335.8 | 155.0 | 1.8 | — | 492.6 | ||||||||||||||
Southeast | 1,265.6 | 1,085.0 | 35.9 | 5.8 | 2,392.3 | ||||||||||||||
South Central | 1,050.8 | 1,132.6 | 14.1 | 1.9 | 2,199.4 | ||||||||||||||
Southwest | 203.9 | 299.5 | 2.7 | — | 506.1 | ||||||||||||||
West | 1,070.0 | 1,257.3 | 23.2 | 2.0 | 2,352.5 | ||||||||||||||
Corporate and unallocated (1) | 110.6 | 112.2 | 2.3 | 0.2 | 225.3 | ||||||||||||||
$ | 4,606.0 | $ | 4,519.7 | $ | 101.0 | $ | 10.4 | $ | 9,237.1 |
(1) | Corporate and unallocated inventory consists primarily of capitalized interest and property taxes. |
September 30, 2018 | ||||||||||
Land/Lots Owned (1) | Lots Controlled Under Land and Lot Option Purchase Contracts (2)(3) | Total Land/Lots Owned and Controlled | Homes in Inventory (4) | |||||||
East | 11,900 | 19,400 | 31,300 | 4,000 | ||||||
Midwest | 3,800 | 9,300 | 13,100 | 1,800 | ||||||
Southeast | 37,100 | 70,400 | 107,500 | 9,500 | ||||||
South Central | 42,900 | 45,700 | 88,600 | 8,800 | ||||||
Southwest | 7,600 | 5,000 | 12,600 | 1,500 | ||||||
West | 21,000 | 14,400 | 35,400 | 4,100 | ||||||
124,300 | 164,200 | 288,500 | 29,700 | |||||||
43 | % | 57 | % | 100 | % |
September 30, 2017 | ||||||||||
Land/Lots Owned (1) | Lots Controlled Under Land and Lot Option Purchase Contracts (2)(3) | Total Land/Lots Owned and Controlled | Homes in Inventory (4) | |||||||
East | 13,200 | 17,800 | 31,000 | 3,500 | ||||||
Midwest | 2,600 | 4,400 | 7,000 | 1,500 | ||||||
Southeast | 35,800 | 47,500 | 83,300 | 8,500 | ||||||
South Central | 42,800 | 38,700 | 81,500 | 7,300 | ||||||
Southwest | 8,700 | 2,400 | 11,100 | 1,700 | ||||||
West | 21,900 | 13,200 | 35,100 | 3,700 | ||||||
125,000 | 124,000 | 249,000 | 26,200 | |||||||
50 | % | 50 | % | 100 | % |
(1) | Land/lots owned include approximately 35,100 and 33,200 owned lots that are fully developed and ready for home construction at September 30, 2018 and 2017, respectively. Land/lots owned also include land held for development representing 1,700 and 4,800 lots at September 30, 2018 and 2017, respectively. |
(2) | The total remaining purchase price of lots controlled through land and lot option purchase contracts at September 30, 2018 and 2017 was $6.5 billion and $4.6 billion, respectively, secured by earnest money deposits of $401.1 million and $227.6 million, respectively. The total remaining purchase price of lots controlled at September 30, 2018 included $522.2 million related to lot option contracts with Forestar, secured by $48.0 million of earnest money. |
(3) | Lots controlled at September 30, 2018 include approximately 13,600 lots owned or controlled by Forestar, 5,500 of which our homebuilding divisions have under contract to purchase and 8,100 of which our homebuilding divisions have a right of first offer to purchase. Of these, approximately 5,100 lots were in our Southeast region, 3,700 lots were in our South Central region, 2,600 lots were in our West region, 1,400 lots were in our East region, 400 lots were in our Midwest region and 400 lots were in our Southwest region. |
(4) | Homes in inventory include approximately 1,800 and 1,600 model homes at September 30, 2018 and 2017, respectively. Approximately 16,400 and 13,800 of our homes in inventory were unsold at September 30, 2018 and 2017, respectively. At September 30, 2018, approximately 4,000 of our unsold homes were completed, of which approximately 400 homes had been completed for more than six months. At September 30, 2017, approximately 4,100 of our unsold homes were completed, of which approximately 500 homes had been completed for more than six months. |
For the Period from October 5, 2017 to September 30, 2018 | ||||
(In millions) | ||||
Residential land and lot sales | $ | 100.1 | ||
Commercial lot sales | 9.1 | |||
Total revenues | $ | 109.2 | ||
Cost of sales | 69.0 | |||
Selling, general and administrative expense | 32.8 | |||
Equity in earnings of unconsolidated entities | (12.4 | ) | ||
Gain on sale of assets | (27.7 | ) | ||
Interest expense | 5.8 | |||
Other (income) expense | (7.0 | ) | ||
Income before income taxes | $ | 48.7 |
Fiscal Year Ended September 30, | 2018 vs 2017 | 2017 vs 2016 | |||||||||||||
2018 | 2017 | 2016 | |||||||||||||
Number of first-lien loans originated or brokered by DHI Mortgage for D.R. Horton homebuyers | 29,133 | 25,488 | 21,970 | 14 | % | 16 | % | ||||||||
Number of homes closed by D.R. Horton | 51,857 | 45,751 | 40,309 | 13 | % | 14 | % | ||||||||
Percentage of D.R. Horton homes financed by DHI Mortgage | 56 | % | 56 | % | 55 | % | |||||||||
Number of total loans originated or brokered by DHI Mortgage for D.R. Horton homebuyers | 29,234 | 25,677 | 22,127 | 14 | % | 16 | % | ||||||||
Total number of loans originated or brokered by DHI Mortgage | 30,107 | 27,002 | 23,920 | 11 | % | 13 | % | ||||||||
Captive business percentage | 97 | % | 95 | % | 93 | % | |||||||||
Loans sold by DHI Mortgage to third parties | 29,120 | 27,251 | 23,926 | 7 | % | 14 | % |
Fiscal Year Ended September 30, | 2018 vs 2017 | 2017 vs 2016 | ||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||
(In millions) | ||||||||||||||||||
Loan origination fees | $ | 15.0 | $ | 17.7 | $ | 20.1 | (15 | )% | (12 | )% | ||||||||
Sale of servicing rights and gains from sale of mortgage loans | 265.1 | 251.1 | 207.5 | 6 | % | 21 | % | |||||||||||
Other revenues | 18.7 | 16.5 | 14.6 | 13 | % | 13 | % | |||||||||||
Total mortgage operations revenues | 298.8 | 285.3 | 242.2 | 5 | % | 18 | % | |||||||||||
Title policy premiums | 76.5 | 64.2 | 53.4 | 19 | % | 20 | % | |||||||||||
Total revenues | 375.3 | 349.5 | 295.6 | 7 | % | 18 | % | |||||||||||
General and administrative expense (1) | 272.6 | 239.3 | 211.2 | 14 | % | 13 | % | |||||||||||
Other (income) expense (1) | (15.1 | ) | (14.3 | ) | (13.7 | ) | 6 | % | 4 | % | ||||||||
Financial services pre-tax income | $ | 117.8 | $ | 124.5 | $ | 98.1 | (5 | )% | 27 | % |
Percentages of Financial Services Revenues | |||||||||
Fiscal Year Ended September 30, | |||||||||
2018 | 2017 | 2016 | |||||||
General and administrative expense (1) | 72.6 | % | 68.5 | % | 71.4 | % | |||
Other (income) expense (1) | (4.0 | )% | (4.1 | )% | (4.6 | )% | |||
Financial services pre-tax income | 31.4 | % | 35.6 | % | 33.2 | % |
(1) | General and administrative expense of $11.9 million and $8.8 million, other income of $0.2 million and other expense of $0.2 million related to our other business activities were excluded from the fiscal 2017 and 2016 amounts, respectively, to conform to the current year presentation. |
Payments Due by Period | |||||||||||||||||||
Total | Less Than 1 Year | 1 - 3 Years | > 3 - 5 Years | More Than 5 Years | |||||||||||||||
(In millions) | |||||||||||||||||||
Notes Payable — Principal (1) | $ | 3,211.1 | $ | 1,142.2 | $ | 1,018.9 | $ | 1,050.0 | $ | — | |||||||||
Notes Payable — Interest (1) | 315.0 | 121.4 | 116.2 | 77.4 | — | ||||||||||||||
Operating Leases | 42.3 | 16.8 | 18.8 | 5.9 | 0.8 | ||||||||||||||
Purchase Obligations (2) | 47.4 | 22.2 | 25.2 | — | — | ||||||||||||||
$ | 3,615.8 | $ | 1,302.6 | $ | 1,179.1 | $ | 1,133.3 | $ | 0.8 |
(1) | Notes payable represents principal and interest payments due on our senior notes, our secured notes, our mortgage subsidiary’s repurchase facility and our homebuilding and Forestar revolving credit facilities. Because the balances of our revolving credit facilities were zero at September 30, 2018, we did not assume any principal or interest payments related to these facilities in future periods. The interest obligation associated with our mortgage repurchase facility is based on its annual effective rate of 4.1% and principal balance outstanding at September 30, 2018. |
(2) | Purchase obligations relate to our land and lot option purchase contracts which enable us to control significant lot positions with limited capital investment. Among our land and lot option purchase contracts at September 30, 2018, there were a limited number of contracts, representing $47.4 million of remaining purchase price, subject to specific performance provisions which may require us to purchase the land or lots upon the land sellers meeting their contractual obligations. |
• | the cyclical nature of the homebuilding industry and changes in economic, real estate and other conditions; |
• | constriction of the credit and public capital markets, which could limit our ability to access capital and increase our costs of capital; |
• | reductions in the availability of mortgage financing provided by government agencies, changes in government financing programs, a decrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates; |
• | the risks associated with our land and lot inventory; |
• | our ability to effect our growth strategies, acquisitions or investments successfully; |
• | the impact of an inflationary, deflationary or higher interest rate environment; |
• | home warranty and construction defect claims; |
• | the effects of health and safety incidents; |
• | the effects of negative publicity; |
• | supply shortages and other risks of acquiring land, building materials and skilled labor; |
• | reductions in the availability of performance bonds; |
• | increases in the costs of owning a home; |
• | the effects of governmental regulations and environmental matters on our homebuilding and land development operations; |
• | the effects of governmental regulations on our financial services operations; |
• | our significant debt and our ability to comply with related debt covenants, restrictions and limitations; |
• | competitive conditions within the homebuilding and financial services industries; |
• | the effects of the loss of key personnel; and |
• | information technology failures and data security breaches. |
• | gross margins on homes closed in recent months; |
• | projected gross margins on homes sold but not closed; |
• | projected gross margins based on community budgets; |
• | trends in gross margins, average selling prices or cost of sales; |
• | sales absorption rates; and |
• | performance of other communities in nearby locations. |
• | supply and availability of new and existing homes; |
• | location and desirability of our communities; |
• | variety of product types offered in the area; |
• | pricing and use of incentives by us and our competitors; |
• | alternative uses for our land or communities such as the sale of land, finished lots or home sites to third parties; |
• | amount of land and lots we own or control in a particular market or sub-market; and |
• | local economic and demographic trends. |
• | Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities. |
• | Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. |
• | Level 3 — Valuation is typically derived from model-based techniques in which at least one significant input is unobservable and based on our own estimates about the assumptions that market participants would use to value the asset or liability. |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Fiscal Year Ending September 30, | Fair Value at September 30, 2018 | |||||||||||||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||
Debt: | ||||||||||||||||||||||||||||||||
Fixed rate | $ | 504.5 | $ | 618.9 | $ | 400.0 | $ | 350.0 | $ | 700.0 | $ | — | $ | 2,573.4 | $ | 2,607.1 | ||||||||||||||||
Average interest rate | 3.9 | % | 4.0 | % | 2.8 | % | 4.5 | % | 5.5 | % | — | % | 4.3 | % | ||||||||||||||||||
Variable rate | $ | 637.7 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 637.7 | $ | 637.7 | ||||||||||||||||
Average interest rate | 4.1 | % | — | % | — | % | — | % | — | % | — | % | 4.1 | % |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 1,473.1 | $ | 1,007.8 | |||
Restricted cash | 32.9 | 16.5 | |||||
Inventories: | |||||||
Construction in progress and finished homes | 5,086.3 | 4,606.0 | |||||
Residential land and lots — developed and under development | 5,172.4 | 4,519.7 | |||||
Land held for development | 96.1 | 101.0 | |||||
Land held for sale | 40.2 | 10.4 | |||||
10,395.0 | 9,237.1 | ||||||
Investment in unconsolidated entities | 11.0 | — | |||||
Mortgage loans held for sale | 796.4 | 587.3 | |||||
Deferred income taxes, net of valuation allowance of $17.7 million and $11.2 million at September 30, 2018 and 2017, respectively | 194.0 | 365.0 | |||||
Property and equipment, net | 401.1 | 325.0 | |||||
Other assets | 701.9 | 565.9 | |||||
Goodwill | 109.2 | 80.0 | |||||
Total assets | $ | 14,114.6 | $ | 12,184.6 | |||
LIABILITIES | |||||||
Accounts payable | $ | 624.7 | $ | 580.4 | |||
Accrued expenses and other liabilities | 1,127.5 | 985.0 | |||||
Notes payable | 3,203.5 | 2,871.6 | |||||
Total liabilities | 4,955.7 | 4,437.0 | |||||
Commitments and contingencies (Note K) | |||||||
EQUITY | |||||||
Preferred stock, $.10 par value, 30,000,000 shares authorized, no shares issued | — | — | |||||
Common stock, $.01 par value, 1,000,000,000 shares authorized, 388,120,243 shares issued and 376,261,635 shares outstanding at September 30, 2018 and 384,036,150 shares issued and 374,986,079 shares outstanding at September 30, 2017 | 3.9 | 3.8 | |||||
Additional paid-in capital | 3,085.0 | 2,992.2 | |||||
Retained earnings | 6,217.9 | 4,946.0 | |||||
Treasury stock, 11,858,608 shares and 9,050,071 shares at September 30, 2018 and 2017, respectively, at cost | (322.4 | ) | (194.9 | ) | |||
Stockholders’ equity | 8,984.4 | 7,747.1 | |||||
Noncontrolling interests | 174.5 | 0.5 | |||||
Total equity | 9,158.9 | 7,747.6 | |||||
Total liabilities and equity | $ | 14,114.6 | $ | 12,184.6 |
Year Ended September 30, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In millions, except per share data) | |||||||||||
Revenues | $ | 16,068.0 | $ | 14,091.0 | $ | 12,157.4 | |||||
Cost of sales | 12,398.1 | 11,042.8 | 9,502.6 | ||||||||
Selling, general and administrative expense | 1,676.8 | 1,471.6 | 1,320.3 | ||||||||
Goodwill impairment | — | — | 7.2 | ||||||||
Equity in earnings of unconsolidated entities | (2.8 | ) | — | — | |||||||
Gain on sale of assets | (18.8 | ) | — | (4.5 | ) | ||||||
Other (income) expense | (45.3 | ) | (25.5 | ) | (21.7 | ) | |||||
Income before income taxes | 2,060.0 | 1,602.1 | 1,353.5 | ||||||||
Income tax expense | 597.7 | 563.7 | 467.2 | ||||||||
Net income | 1,462.3 | 1,038.4 | 886.3 | ||||||||
Net income attributable to noncontrolling interests | 2.0 | — | — | ||||||||
Net income attributable to D.R. Horton, Inc. | $ | 1,460.3 | $ | 1,038.4 | $ | 886.3 | |||||
Other comprehensive income, net of income tax: | |||||||||||
Debt securities collateralized by residential real estate: | |||||||||||
Net change in unrealized gain | — | — | 1.2 | ||||||||
Reclassification adjustment for net gain realized in net income | — | — | (2.6 | ) | |||||||
Comprehensive income | 1,462.3 | 1,038.4 | 884.9 | ||||||||
Comprehensive income attributable to noncontrolling interests | 2.0 | — | — | ||||||||
Comprehensive income attributable to D.R. Horton, Inc. | $ | 1,460.3 | $ | 1,038.4 | $ | 884.9 | |||||
Basic net income per common share attributable to D.R. Horton, Inc. | $ | 3.88 | $ | 2.77 | $ | 2.39 | |||||
Weighted average number of common shares | 376.6 | 374.3 | 371.0 | ||||||||
Diluted net income per common share attributable to D.R. Horton, Inc. | $ | 3.81 | $ | 2.74 | $ | 2.36 | |||||
Adjusted weighted average number of common shares | 383.4 | 378.9 | 375.1 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income | Non-controlling Interests | Total Equity | |||||||||||||||||||||
(In millions, except common stock share data) | |||||||||||||||||||||||||||
Balances at September 30, 2015 (368,647,371 shares) | $ | 3.8 | $ | 2,733.8 | $ | 3,289.6 | $ | (134.3 | ) | $ | 1.4 | $ | 1.1 | $ | 5,895.4 | ||||||||||||
Net income | — | — | 886.3 | — | — | — | 886.3 | ||||||||||||||||||||
Issuances under employee benefit plans (89,652 shares) | — | 2.2 | — | — | — | — | 2.2 | ||||||||||||||||||||
Exercise of stock options (3,504,989 shares) | — | 70.1 | — | — | — | — | 70.1 | ||||||||||||||||||||
Tax benefit from employee stock awards | — | 2.7 | — | — | — | — | 2.7 | ||||||||||||||||||||
Stock issued under employee incentive plans (681,175 shares) | — | 13.9 | — | — | — | — | 13.9 | ||||||||||||||||||||
Cash paid for shares withheld for taxes | — | (5.9 | ) | — | — | — | — | (5.9 | ) | ||||||||||||||||||
Stock-based compensation expense | — | 49.0 | — | — | — | — | 49.0 | ||||||||||||||||||||
Cash dividends declared | — | — | (118.7 | ) | — | — | — | (118.7 | ) | ||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | (1.4 | ) | — | (1.4 | ) | ||||||||||||||||||
Noncontrolling interests | — | — | — | — | — | (0.6 | ) | (0.6 | ) | ||||||||||||||||||
Balances at September 30, 2016 (372,923,187 shares) | $ | 3.8 | $ | 2,865.8 | $ | 4,057.2 | $ | (134.3 | ) | $ | — | $ | 0.5 | $ | 6,793.0 | ||||||||||||
Net income | — | — | 1,038.4 | — | — | — | 1,038.4 | ||||||||||||||||||||
Issuances under employee benefit plans (111,527 shares) | — | 2.8 | — | — | — | — | 2.8 | ||||||||||||||||||||
Exercise of stock options (2,770,569 shares) | — | 43.8 | — | — | — | — | 43.8 | ||||||||||||||||||||
Tax benefit from employee stock awards | — | 13.7 | — | — | — | — | 13.7 | ||||||||||||||||||||
Stock issued under employee incentive plans (1,030,796 shares) | — | 12.0 | — | — | — | — | 12.0 | ||||||||||||||||||||
Cash paid for shares withheld for taxes | — | (5.1 | ) | — | — | — | — | (5.1 | ) | ||||||||||||||||||
Stock-based compensation expense | — | 59.2 | — | — | — | — | 59.2 | ||||||||||||||||||||
Cash dividends declared | — | — | (149.6 | ) | — | — | — | (149.6 | ) | ||||||||||||||||||
Repurchases of common stock (1,850,000 shares) | — | — | — | (60.6 | ) | — | — | (60.6 | ) | ||||||||||||||||||
Balances at September 30, 2017 (374,986,079 shares) | $ | 3.8 | $ | 2,992.2 | $ | 4,946.0 | $ | (194.9 | ) | $ | — | $ | 0.5 | $ | 7,747.6 | ||||||||||||
Noncontrolling interests acquired | — | — | — | — | — | 175.2 | 175.2 | ||||||||||||||||||||
Net income | — | — | 1,460.3 | — | — | 2.0 | 1,462.3 | ||||||||||||||||||||
Issuances under employee benefit plans (114,340 shares) | — | 4.0 | — | — | — | — | 4.0 | ||||||||||||||||||||
Exercise of stock options (2,547,139 shares) | 0.1 | 43.3 | — | — | — | — | 43.4 | ||||||||||||||||||||
Stock issued under employee incentive plans (1,422,614 shares) | — | — | — | — | — | — | — | ||||||||||||||||||||
Cash paid for shares withheld for taxes | — | (10.3 | ) | — | — | — | — | (10.3 | ) | ||||||||||||||||||
Stock-based compensation expense | — | 55.8 | — | — | — | — | 55.8 | ||||||||||||||||||||
Cash dividends declared | — | — | (188.4 | ) | — | — | — | (188.4 | ) | ||||||||||||||||||
Repurchases of common stock (2,808,537 shares) | — | — | — | (127.5 | ) | — | — | (127.5 | ) | ||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (3.2 | ) | (3.2 | ) | ||||||||||||||||||
Balances at September 30, 2018 (376,261,635 shares) | $ | 3.9 | $ | 3,085.0 | $ | 6,217.9 | $ | (322.4 | ) | $ | — | $ | 174.5 | $ | 9,158.9 |
Year Ended September 30, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In millions) | |||||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | $ | 1,462.3 | $ | 1,038.4 | $ | 886.3 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 62.4 | 54.7 | 61.0 | ||||||||
Amortization of discounts and fees | 9.9 | 5.0 | 5.4 | ||||||||
Stock-based compensation expense | 55.8 | 59.2 | 49.0 | ||||||||
Equity in earnings of unconsolidated entities | (2.8 | ) | — | — | |||||||
Distributions of earnings of unconsolidated entities | 2.0 | — | — | ||||||||
Excess income tax benefit from employee stock awards | — | (14.3 | ) | (10.0 | ) | ||||||
Deferred income taxes | 170.9 | 110.8 | 75.3 | ||||||||
Inventory and land option charges | 50.4 | 40.2 | 31.4 | ||||||||
Gain on sale of assets | (18.8 | ) | — | (4.5 | ) | ||||||
Goodwill impairment | — | — | 7.2 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Increase in construction in progress and finished homes | (482.8 | ) | (584.4 | ) | (496.2 | ) | |||||
Increase in residential land and lots — developed, under development, held for development and held for sale | (573.8 | ) | (362.3 | ) | (10.3 | ) | |||||
Increase in other assets | (110.6 | ) | (63.7 | ) | (16.3 | ) | |||||
(Increase) decrease in mortgage loans held for sale | (208.8 | ) | 67.6 | (12.4 | ) | ||||||
Increase in accounts payable, accrued expenses and other liabilities | 129.1 | 89.0 | 58.0 | ||||||||
Net cash provided by operating activities | 545.2 | 440.2 | 623.9 | ||||||||
INVESTING ACTIVITIES | |||||||||||
Expenditures for property and equipment | (68.1 | ) | (102.7 | ) | (78.1 | ) | |||||
Proceeds from sale of assets | 292.9 | — | — | ||||||||
Expenditures related to multi-family rental properties | (70.2 | ) | (54.6 | ) | (8.0 | ) | |||||
(Increase) decrease in restricted cash | (16.4 | ) | (7.0 | ) | 0.2 | ||||||
Return of investment in unconsolidated entities | 17.5 | — | — | ||||||||
Net principal (increase) decrease of other mortgage loans and real estate owned | (1.2 | ) | 6.2 | 19.7 | |||||||
Proceeds from (purchases of) debt securities collateralized by residential real estate | 7.3 | (8.8 | ) | 35.8 | |||||||
Payments related to business acquisitions, net of cash acquired | (159.2 | ) | (4.1 | ) | (82.2 | ) | |||||
Net cash provided by (used in) investing activities | 2.6 | (171.0 | ) | (112.6 | ) | ||||||
FINANCING ACTIVITIES | |||||||||||
Proceeds from notes payable | 2,163.5 | 835.0 | — | ||||||||
Repayment of notes payable | (2,181.7 | ) | (1,192.3 | ) | (544.8 | ) | |||||
Advances (payments) on mortgage repurchase facility, net | 217.7 | (53.0 | ) | (4.9 | ) | ||||||
Proceeds from stock associated with certain employee benefit plans | 47.4 | 46.7 | 72.4 | ||||||||
Excess income tax benefit from employee stock awards | — | 14.3 | 10.0 | ||||||||
Cash paid for shares withheld for taxes | (10.3 | ) | (5.1 | ) | (5.9 | ) | |||||
Cash dividends paid | (188.4 | ) | (149.6 | ) | (118.7 | ) | |||||
Repurchases of common stock | (127.5 | ) | (60.6 | ) | — | ||||||
Distributions to noncontrolling interests, net | (3.2 | ) | — | — | |||||||
Net cash used in financing activities | (82.5 | ) | (564.6 | ) | (591.9 | ) | |||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 465.3 | (295.4 | ) | (80.6 | ) | ||||||
Cash and cash equivalents at beginning of year | 1,007.8 | 1,303.2 | 1,383.8 | ||||||||
Cash and cash equivalents at end of year | $ | 1,473.1 | $ | 1,007.8 | $ | 1,303.2 | |||||
Supplemental cash flow information: | |||||||||||
Income taxes paid, net | $ | 387.2 | $ | 446.4 | $ | 389.9 | |||||
Supplemental disclosures of non-cash activities: | |||||||||||
Notes payable issued for inventory | $ | — | $ | 4.5 | $ | 4.2 | |||||
Stock issued under employee incentive plans | $ | 64.0 | $ | 31.9 | $ | 20.1 | |||||
Accrued expenditures for property and equipment | $ | 10.7 | $ | 16.3 | $ | 4.3 | |||||
Accrual for holdback payment related to acquisition | $ | — | $ | — | $ | 9.7 |
September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Buildings and improvements (1) | $ | 292.3 | $ | 219.0 | |||
Multi-family rental properties under construction | 54.1 | 59.2 | |||||
Model home furniture | 127.8 | 120.4 | |||||
Office furniture and equipment | 107.8 | 99.7 | |||||
Land (1) | 63.8 | 52.9 | |||||
Total property and equipment | 645.8 | 551.2 | |||||
Accumulated depreciation | (244.7 | ) | (226.2 | ) | |||
Property and equipment, net | $ | 401.1 | $ | 325.0 |
(1) | At September 30, 2018 and 2017, buildings and improvements included $87.3 million and $15.3 million, respectively, related to completed multi-family rental properties and land included $36.7 million and $25.2 million, respectively, related to the Company’s multi-family rental operations. |
Cash | $ | 401.9 | |
Inventories | 334.6 | ||
Investment in unconsolidated entities | 98.5 | ||
Other assets | 51.6 | ||
Goodwill | 29.2 | ||
Total assets | 915.8 | ||
Accounts payable | 2.8 | ||
Accrued expenses and other liabilities | 49.4 | ||
Notes payable | 130.1 | ||
Total liabilities | 182.3 | ||
Less: Noncontrolling interests | 175.2 | ||
Net assets acquired | $ | 558.3 |
Year Ended September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Revenues | $ | 16,068.0 | $ | 14,239.0 | |||
Net income attributable to D.R. Horton, Inc. | $ | 1,463.6 | $ | 1,124.1 | |||
Diluted net income per common share attributable to D.R. Horton, Inc. | $ | 3.82 | $ | 2.97 |
September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
East | $ | 21.8 | $ | 21.8 | |||
Midwest | — | — | |||||
Southeast | 40.1 | 40.1 | |||||
South Central | 15.9 | 15.9 | |||||
Southwest | — | — | |||||
West | 2.2 | 2.2 | |||||
Forestar | 29.2 | — | |||||
Total goodwill | $ | 109.2 | $ | 80.0 |
East: | Delaware, Georgia (Savannah only), Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina and Virginia | ||
Midwest: | Colorado, Illinois, Indiana and Minnesota | ||
Southeast: | Alabama, Florida, Georgia, Mississippi and Tennessee | ||
South Central: | Louisiana, Oklahoma and Texas | ||
Southwest: | Arizona and New Mexico | ||
West: | California, Hawaii, Nevada, Oregon, Utah and Washington |
September 30, 2018 | ||||||||||||||||||||||||||||
Homebuilding | Forestar (1) | Financial Services | Other (2) | Eliminations (3) | Other Adjustments (4) | Consolidated | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,111.8 | $ | 318.8 | $ | 33.7 | $ | 8.8 | $ | — | $ | — | $ | 1,473.1 | ||||||||||||||
Restricted cash | 8.6 | 16.2 | 8.1 | — | — | — | 32.9 | |||||||||||||||||||||
Inventories: | ||||||||||||||||||||||||||||
Construction in progress and finished homes | 5,084.4 | — | — | — | 1.9 | — | 5,086.3 | |||||||||||||||||||||
Residential land and lots — developed and under development | 4,689.3 | 463.1 | — | — | (7.2 | ) | 27.2 | 5,172.4 | ||||||||||||||||||||
Land held for development | 61.2 | 34.9 | — | — | — | — | 96.1 | |||||||||||||||||||||
Land held for sale | 40.2 | — | — | — | — | — | 40.2 | |||||||||||||||||||||
9,875.1 | 498.0 | — | — | (5.3 | ) | 27.2 | 10,395.0 | |||||||||||||||||||||
Investment in unconsolidated entities | — | 11.7 | — | — | — | (0.7 | ) | 11.0 | ||||||||||||||||||||
Mortgage loans held for sale | — | — | 796.4 | — | — | — | 796.4 | |||||||||||||||||||||
Deferred income taxes, net | 176.5 | 26.9 | — | — | 1.1 | (10.5 | ) | 194.0 | ||||||||||||||||||||
Property and equipment, net | 207.1 | 1.8 | 3.0 | 189.2 | — | — | 401.1 | |||||||||||||||||||||
Other assets | 673.7 | 19.7 | 43.6 | 0.9 | (48.6 | ) | 12.6 | 701.9 | ||||||||||||||||||||
Goodwill | 80.0 | — | — | — | — | 29.2 | 109.2 | |||||||||||||||||||||
$ | 12,132.8 | $ | 893.1 | $ | 884.8 | $ | 198.9 | $ | (52.8 | ) | $ | 57.8 | $ | 14,114.6 | ||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Accounts payable | $ | 612.4 | $ | 11.2 | $ | 0.2 | $ | 4.2 | $ | (3.3 | ) | $ | — | $ | 624.7 | |||||||||||||
Accrued expenses and other liabilities | 1,041.3 | 95.7 | 41.9 | 9.9 | (46.1 | ) | (15.2 | ) | 1,127.5 | |||||||||||||||||||
Notes payable | 2,445.9 | 111.7 | 637.7 | — | — | 8.2 | 3,203.5 | |||||||||||||||||||||
$ | 4,099.6 | $ | 218.6 | $ | 679.8 | $ | 14.1 | $ | (49.4 | ) | $ | (7.0 | ) | $ | 4,955.7 |
(1) | Amounts are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance. All purchase accounting adjustments are included in the Other Adjustments column. |
(2) | Amounts represent the aggregate balances of certain subsidiaries that are immaterial for separate reporting. |
(3) | Amounts represent the elimination of intercompany transactions and the reclassification of $5.8 million of Forestar interest expense to inventory. |
(4) | Amounts represent purchase accounting adjustments related to the Forestar acquisition. |
September 30, 2017 | ||||||||||||||||
Homebuilding | Financial Services | Other (1) | Consolidated | |||||||||||||
(In millions) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 973.0 | $ | 24.1 | $ | 10.7 | $ | 1,007.8 | ||||||||
Restricted cash | 9.3 | 7.2 | — | 16.5 | ||||||||||||
Inventories: | ||||||||||||||||
Construction in progress and finished homes | 4,606.0 | — | — | 4,606.0 | ||||||||||||
Residential land and lots — developed and under development | 4,519.7 | — | — | 4,519.7 | ||||||||||||
Land held for development | 101.0 | — | — | 101.0 | ||||||||||||
Land held for sale | 10.4 | — | — | 10.4 | ||||||||||||
9,237.1 | — | — | 9,237.1 | |||||||||||||
Mortgage loans held for sale | — | 587.3 | — | 587.3 | ||||||||||||
Deferred income taxes, net | 365.0 | — | — | 365.0 | ||||||||||||
Property and equipment, net | 194.4 | 3.0 | 127.6 | 325.0 | ||||||||||||
Other assets | 518.7 | 42.2 | 5.0 | 565.9 | ||||||||||||
Goodwill | 80.0 | — | — | 80.0 | ||||||||||||
$ | 11,377.5 | $ | 663.8 | $ | 143.3 | $ | 12,184.6 | |||||||||
Liabilities | ||||||||||||||||
Accounts payable | $ | 575.6 | $ | 1.5 | $ | 3.3 | $ | 580.4 | ||||||||
Accrued expenses and other liabilities | 933.1 | 35.6 | 16.3 | 985.0 | ||||||||||||
Notes payable | 2,451.6 | 420.0 | — | 2,871.6 | ||||||||||||
$ | 3,960.3 | $ | 457.1 | $ | 19.6 | $ | 4,437.0 |
(1) | Amounts represent the aggregate balances of certain subsidiaries that are immaterial for separate reporting. |
Year Ended September 30, 2018 | ||||||||||||||||||||||||||||
Homebuilding | Forestar (1) | Financial Services | Other (2) | Eliminations (3) | Other Adjustments (4) | Consolidated | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Home sales | $ | 15,502.0 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 15,502.0 | ||||||||||||||
Land/lot sales and other | 121.8 | 109.2 | — | — | (39.1 | ) | (1.2 | ) | 190.7 | |||||||||||||||||||
Financial services | — | — | 375.3 | — | — | — | 375.3 | |||||||||||||||||||||
15,623.8 | 109.2 | 375.3 | — | (39.1 | ) | (1.2 | ) | 16,068.0 | ||||||||||||||||||||
Cost of sales: | ||||||||||||||||||||||||||||
Home sales (5) | 12,195.5 | — | — | — | (1.2 | ) | — | 12,194.3 | ||||||||||||||||||||
Land/lot sales and other | 99.1 | 68.0 | — | — | (30.1 | ) | 16.4 | 153.4 | ||||||||||||||||||||
Inventory and land option charges | 48.8 | 1.0 | — | — | — | 0.6 | 50.4 | |||||||||||||||||||||
12,343.4 | 69.0 | — | — | (31.3 | ) | 17.0 | 12,398.1 | |||||||||||||||||||||
Selling, general and administrative expense | 1,346.2 | 32.8 | 272.6 | 24.7 | — | 0.5 | 1,676.8 | |||||||||||||||||||||
Equity in earnings of unconsolidated entities | — | (12.4 | ) | — | — | 2.5 | 7.1 | (2.8 | ) | |||||||||||||||||||
Gain on sale of assets | (15.8 | ) | (27.7 | ) | — | — | — | 24.7 | (18.8 | ) | ||||||||||||||||||
Interest expense | — | 5.8 | — | — | (5.8 | ) | — | — | ||||||||||||||||||||
Other (income) expense | (7.2 | ) | (7.0 | ) | (15.1 | ) | (17.0 | ) | — | 1.0 | (45.3 | ) | ||||||||||||||||
Income (loss) before income taxes | $ | 1,957.2 | $ | 48.7 | $ | 117.8 | $ | (7.7 | ) | $ | (4.5 | ) | $ | (51.5 | ) | $ | 2,060.0 | |||||||||||
Summary Cash Flow Information: | ||||||||||||||||||||||||||||
Depreciation and amortization | $ | 53.4 | $ | 0.3 | $ | 1.4 | $ | 6.8 | $ | — | $ | 0.5 | $ | 62.4 | ||||||||||||||
Cash provided by (used in) operating activities (6) | $ | 1,001.7 | $ | (320.3 | ) | $ | (116.6 | ) | $ | 0.8 | $ | (10.5 | ) | $ | (9.9 | ) | $ | 545.2 |
(1) | Results are presented from the date of acquisition and on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance. All purchase accounting adjustments are included in the Other Adjustments column. |
(2) | Amounts represent the aggregate results of certain subsidiaries that are immaterial for separate reporting. |
(3) | Amounts represent the elimination of intercompany transactions and the reclassification of Forestar interest expense to inventory. |
(4) | Amounts represent purchase accounting adjustments related to the Forestar acquisition. |
(5) | Amount in the Eliminations column represents the profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is not recognized in the consolidated financial statements until the homebuilding segment closes homes on the lots to homebuyers. |
(6) | Amount in the Eliminations column represents cash flow related to land sales from the Homebuilding segment to the Other segment. |
Year Ended September 30, 2017 | ||||||||||||||||
Homebuilding | Financial Services | Other (1) | Consolidated | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Home sales | $ | 13,653.2 | $ | — | $ | — | $ | 13,653.2 | ||||||||
Land/lot sales and other | 88.3 | — | — | 88.3 | ||||||||||||
Financial services | — | 349.5 | — | 349.5 | ||||||||||||
13,741.5 | 349.5 | — | 14,091.0 | |||||||||||||
Cost of sales: | ||||||||||||||||
Home sales | 10,927.8 | — | — | 10,927.8 | ||||||||||||
Land/lot sales and other | 74.8 | — | — | 74.8 | ||||||||||||
Inventory and land option charges | 40.2 | — | — | 40.2 | ||||||||||||
11,042.8 | — | — | 11,042.8 | |||||||||||||
Selling, general and administrative expense | 1,220.4 | 239.3 | 11.9 | 1,471.6 | ||||||||||||
Other (income) expense | (11.0 | ) | (14.3 | ) | (0.2 | ) | (25.5 | ) | ||||||||
Income (loss) before income taxes | $ | 1,489.3 | $ | 124.5 | $ | (11.7 | ) | $ | 1,602.1 | |||||||
Summary Cash Flow Information: | ||||||||||||||||
Depreciation and amortization | $ | 49.5 | $ | 1.5 | $ | 3.7 | $ | 54.7 | ||||||||
Cash provided by (used in) operating activities | $ | 303.7 | $ | 139.1 | $ | (2.6 | ) | $ | 440.2 |
(1) | Amounts represent the aggregate results of certain subsidiaries that are immaterial for separate reporting. |
Year Ended September 30, 2016 | ||||||||||||||||
Homebuilding | Financial Services | Other (1) | Consolidated | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Home sales | $ | 11,783.1 | $ | — | $ | — | $ | 11,783.1 | ||||||||
Land/lot sales and other | 78.7 | — | — | 78.7 | ||||||||||||
Financial services | — | 295.6 | — | 295.6 | ||||||||||||
11,861.8 | 295.6 | — | 12,157.4 | |||||||||||||
Cost of sales: | ||||||||||||||||
Home sales | 9,403.0 | — | — | 9,403.0 | ||||||||||||
Land/lot sales and other | 68.2 | — | — | 68.2 | ||||||||||||
Inventory and land option charges | 31.4 | — | — | 31.4 | ||||||||||||
9,502.6 | — | — | 9,502.6 | |||||||||||||
Selling, general and administrative expense | 1,100.3 | 211.2 | 8.8 | 1,320.3 | ||||||||||||
Goodwill impairment | 7.2 | — | — | 7.2 | ||||||||||||
Gain on sale of assets | (4.5 | ) | — | — | (4.5 | ) | ||||||||||
Other (income) expense | (8.2 | ) | (13.7 | ) | 0.2 | (21.7 | ) | |||||||||
Income (loss) before income taxes | $ | 1,264.4 | $ | 98.1 | $ | (9.0 | ) | $ | 1,353.5 | |||||||
Summary Cash Flow Information: | ||||||||||||||||
Depreciation and amortization | $ | 58.2 | $ | 1.2 | $ | 1.6 | $ | 61.0 | ||||||||
Cash provided by (used in) operating activities | $ | 580.5 | $ | 44.7 | $ | (1.3 | ) | $ | 623.9 |
(1) | Amounts represent the aggregate results of certain subsidiaries that are immaterial for separate reporting. |
Homebuilding Inventories by Reporting Segment (1) | September 30, | ||||||
2018 | 2017 | ||||||
(In millions) | |||||||
East | $ | 1,192.0 | $ | 1,068.9 | |||
Midwest | 583.1 | 492.6 | |||||
Southeast | 2,668.7 | 2,392.3 | |||||
South Central | 2,439.4 | 2,199.4 | |||||
Southwest | 499.7 | 506.1 | |||||
West | 2,268.5 | 2,352.5 | |||||
Corporate and unallocated (2) | 223.7 | 225.3 | |||||
$ | 9,875.1 | $ | 9,237.1 |
(1) | Homebuilding inventories are the only assets included in the measure of homebuilding segment assets used by the Company’s chief operating decision makers. |
(2) | Corporate and unallocated consists primarily of capitalized interest and property taxes. |
Homebuilding Results by Reporting Segment | Year Ended September 30, | ||||||||||
2018 | 2017 | 2016 | |||||||||
(In millions) | |||||||||||
Revenues | |||||||||||
East | $ | 1,893.4 | $ | 1,640.1 | $ | 1,446.5 | |||||
Midwest | 858.9 | 736.5 | 651.7 | ||||||||
Southeast | 4,578.6 | 4,087.6 | 3,463.5 | ||||||||
South Central | 3,769.9 | 3,383.1 | 2,995.1 | ||||||||
Southwest | 768.7 | 597.5 | 388.1 | ||||||||
West | 3,754.3 | 3,296.7 | 2,916.9 | ||||||||
$ | 15,623.8 | $ | 13,741.5 | $ | 11,861.8 | ||||||
Inventory and Land Option Charges | |||||||||||
East | $ | 2.3 | $ | 13.6 | $ | 13.4 | |||||
Midwest | 5.1 | 1.8 | 1.1 | ||||||||
Southeast | 28.8 | 8.7 | 4.5 | ||||||||
South Central | 4.6 | 4.1 | 3.1 | ||||||||
Southwest | 0.9 | 1.6 | 6.2 | ||||||||
West | 7.1 | 10.4 | 3.1 | ||||||||
$ | 48.8 | $ | 40.2 | $ | 31.4 | ||||||
Income Before Income Taxes (1) | |||||||||||
East | $ | 217.3 | $ | 153.9 | $ | 138.7 | |||||
Midwest | 77.5 | 49.1 | 44.3 | ||||||||
Southeast | 536.0 | 450.3 | 388.4 | ||||||||
South Central | 506.1 | 439.1 | 374.8 | ||||||||
Southwest | 97.4 | 39.6 | 7.3 | ||||||||
West | 522.9 | 357.3 | 310.9 | ||||||||
$ | 1,957.2 | $ | 1,489.3 | $ | 1,264.4 |
(1) | Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating the Company’s corporate office. The amortization of capitalized interest and property taxes is allocated to each homebuilding segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each homebuilding segment based on the segment’s inventory balances. |
September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Homebuilding: | |||||||
Unsecured: | |||||||
Revolving credit facility, maturing 2023 | $ | — | $ | — | |||
3.625% senior notes due 2018 | — | 399.7 | |||||
3.75% senior notes due 2019 | 499.6 | 498.8 | |||||
4.0% senior notes due 2020 | 498.8 | 497.9 | |||||
2.55% senior notes due 2020 | 397.9 | — | |||||
4.375% senior notes due 2022 | 348.4 | 348.1 | |||||
4.75% senior notes due 2023 | 298.7 | 298.4 | |||||
5.75% senior notes due 2023 | 398.0 | 397.6 | |||||
Other secured notes | 4.5 | 11.1 | |||||
2,445.9 | 2,451.6 | ||||||
Forestar: | |||||||
Unsecured: | |||||||
Revolving credit facility, maturing 2021 | — | ||||||
3.75% convertible senior notes due 2020 | 119.9 | ||||||
119.9 | |||||||
Financial Services: | |||||||
Mortgage repurchase facility, maturing 2019 | 637.7 | 420.0 | |||||
$ | 3,203.5 | $ | 2,871.6 |
Notes Payable | Principal Amount | Date Issued | Date Due | Redeemable Prior to Maturity (1) | Effective Interest Rate (2) | |||||
(In millions) | ||||||||||
3.75% senior notes | $500.0 | February 2014 | March 1, 2019 | Yes | 3.9% | |||||
4.0% senior notes | $500.0 | February 2015 | February 15, 2020 | Yes | 4.2% | |||||
2.55% senior notes | $400.0 | December 2017 | December 1, 2020 | Yes | 2.8% | |||||
4.375% senior notes | $350.0 | September 2012 | September 15, 2022 | Yes | 4.5% | |||||
4.75% senior notes | $300.0 | February 2013 | February 15, 2023 | Yes | 4.9% | |||||
5.75% senior notes | $400.0 | August 2013 | August 15, 2023 | Yes | 5.9% |
(1) | The Company may redeem the notes in whole at any time or in part from time to time, at a redemption price equal to the greater of 100% of their principal amount or the present value of the remaining scheduled payments on the redemption date, plus accrued and unpaid interest. |
(2) | Interest is payable semi-annually on each of the series of senior notes. The annual effective interest rate is calculated after giving effect to the amortization of debt issuance costs. |
Year Ended September 30, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In millions) | |||||||||||
Capitalized interest, beginning of year | $ | 167.9 | $ | 191.2 | $ | 208.0 | |||||
Interest incurred (1) | 125.4 | 129.3 | 152.3 | ||||||||
Interest charged to cost of sales | (130.6 | ) | (152.6 | ) | (169.1 | ) | |||||
Capitalized interest, end of year | $ | 162.7 | $ | 167.9 | $ | 191.2 |
(1) | Interest incurred included interest on the Company's mortgage repurchase facility of $12.1 million, $8.5 million and $8.4 million in fiscal 2018, 2017 and 2016, respectively. Also included in the fiscal 2018 amount is interest incurred by Forestar of $3.4 million, net of purchase accounting adjustments, from the acquisition date through September 30, 2018. |
Year Ended September 30, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In millions) | |||||||||||
Current tax expense: | |||||||||||
Federal | $ | 373.2 | $ | 425.6 | $ | 376.0 | |||||
State | 53.6 | 27.3 | 15.9 | ||||||||
426.8 | 452.9 | 391.9 | |||||||||
Deferred tax expense: | |||||||||||
Federal | 158.7 | 87.9 | 47.6 | ||||||||
State | 12.2 | 22.9 | 27.7 | ||||||||
170.9 | 110.8 | 75.3 | |||||||||
Total income tax expense | $ | 597.7 | $ | 563.7 | $ | 467.2 |
Year Ended September 30, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In millions) | |||||||||||
Income taxes at federal statutory rate | $ | 505.0 | $ | 560.7 | $ | 473.7 | |||||
Increase (decrease) in tax resulting from: | |||||||||||
State income taxes, net of federal benefit | 59.4 | 42.3 | 38.6 | ||||||||
Domestic production activities deduction | (36.7 | ) | (39.8 | ) | (36.3 | ) | |||||
Valuation allowance | (7.3 | ) | 0.8 | 0.2 | |||||||
Tax credits | (19.0 | ) | (3.5 | ) | (15.9 | ) | |||||
Excess tax benefit from equity compensation | (21.2 | ) | — | — | |||||||
Tax law change from enactment of Tax Act | 108.7 | — | — | ||||||||
Other | 8.8 | 3.2 | 6.9 | ||||||||
Total income tax expense | $ | 597.7 | $ | 563.7 | $ | 467.2 |
September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Deferred tax assets: | |||||||
Inventory costs | $ | 40.9 | $ | 42.6 | |||
Inventory impairments | 31.8 | 83.9 | |||||
Warranty and construction defect costs | 121.8 | 163.7 | |||||
Net operating loss carryforwards | 38.1 | 26.2 | |||||
Tax credit carryforwards | 4.3 | 2.5 | |||||
Incentive compensation plans | 55.2 | 92.6 | |||||
Deferred income | 1.3 | 1.7 | |||||
Other | 5.8 | 13.9 | |||||
Total deferred tax assets | 299.2 | 427.1 | |||||
Valuation allowance | (17.7 | ) | (11.2 | ) | |||
Total deferred tax assets, net of valuation allowance | 281.5 | 415.9 | |||||
Deferred tax liabilities: | |||||||
Deferral of profit on home sales | 64.9 | 41.6 | |||||
Other | 22.6 | 9.3 | |||||
Total deferred tax liabilities | $ | 87.5 | $ | 50.9 | |||
Deferred income taxes, net | $ | 194.0 | $ | 365.0 |
Year Ended September 30, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In millions) | |||||||||||
Numerator: | |||||||||||
Net income attributable to D.R. Horton, Inc. | $ | 1,460.3 | $ | 1,038.4 | $ | 886.3 | |||||
Denominator: | |||||||||||
Denominator for basic earnings per share — weighted average common shares | 376.6 | 374.3 | 371.0 | ||||||||
Effect of dilutive securities: | |||||||||||
Employee stock awards | 6.8 | 4.6 | 4.1 | ||||||||
Denominator for diluted earnings per share — adjusted weighted average common shares | 383.4 | 378.9 | 375.1 | ||||||||
Basic net income per common share attributable to D.R. Horton, Inc. | $ | 3.88 | $ | 2.77 | $ | 2.39 | |||||
Diluted net income per common share attributable to D.R. Horton, Inc. | $ | 3.81 | $ | 2.74 | $ | 2.36 |
Year Ended September 30, | ||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||
Stock Options | Weighted Average Exercise Price | Stock Options | Weighted Average Exercise Price | Stock Options | Weighted Average Exercise Price | |||||||||||||||
Outstanding at beginning of year | 8,431,348 | $ | 16.92 | 11,395,917 | $ | 16.69 | 15,337,656 | $ | 17.50 | |||||||||||
Exercised | (2,547,139 | ) | 16.10 | (2,770,569 | ) | 15.83 | (3,504,989 | ) | 20.02 | |||||||||||
Cancelled or expired | (27,250 | ) | 22.08 | (194,000 | ) | 18.83 | (436,750 | ) | 18.45 | |||||||||||
Outstanding at end of year | 5,856,959 | $ | 17.25 | 8,431,348 | $ | 16.92 | 11,395,917 | $ | 16.69 | |||||||||||
Exercisable at end of year | 4,955,392 | $ | 17.07 | 5,772,214 | $ | 16.01 | 6,645,967 | $ | 14.99 |
Grant Date | Vesting Date | Target Number of Performance Units | Grant Date Fair Value per Unit | Compensation Expense Year Ended September 30, | ||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
November 2015 | September 2018 | 330,000 | $ | 30.81 | $ | (0.6 | ) | $ | 6.8 | $ | 4.0 | |||||||||
November 2016 | September 2019 | 330,000 | 29.20 | 3.9 | 5.1 | — | ||||||||||||||
November 2017 | September 2020 | 330,000 | 45.79 | 4.8 | — | — | ||||||||||||||
$ | 8.1 | $ | 11.9 | $ | 4.0 |
Year Ended September 30, | ||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||
Number of Restricted Stock Units | Weighted Average Grant Date Fair Value | Number of Restricted Stock Units | Weighted Average Grant Date Fair Value | Number of Restricted Stock Units | Weighted Average Grant Date Fair Value | |||||||||||||||
Outstanding at beginning of year | 4,365,782 | $ | 26.09 | 3,478,233 | $ | 24.12 | 1,978,262 | $ | 25.60 | |||||||||||
Granted | 1,747,870 | 41.82 | 1,868,660 | 28.64 | 2,117,330 | 23.14 | ||||||||||||||
Vested | (1,149,055 | ) | 25.80 | (792,941 | ) | 24.48 | (423,427 | ) | 25.57 | |||||||||||
Cancelled | (166,675 | ) | 29.56 | (188,170 | ) | 25.21 | (193,932 | ) | 25.05 | |||||||||||
Outstanding at end of year | 4,797,922 | $ | 31.77 | 4,365,782 | $ | 26.09 | 3,478,233 | $ | 24.12 |
September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Warranty liability, beginning of year | $ | 143.7 | $ | 104.4 | |||
Warranties issued | 81.6 | 69.7 | |||||
Changes in liability for pre-existing warranties | 49.3 | 30.0 | |||||
Settlements made | (72.6 | ) | (60.4 | ) | |||
Warranty liability, end of year | $ | 202.0 | $ | 143.7 |
September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Reserves for legal claims, beginning of year | $ | 420.6 | $ | 423.5 | |||
Increase in reserves | 46.4 | 91.0 | |||||
Payments | (58.9 | ) | (93.9 | ) | |||
Reserves for legal claims, end of year | $ | 408.1 | $ | 420.6 |
2019 | $ | 16.8 | |
2020 | 12.0 | ||
2021 | 6.8 | ||
2022 | 3.8 | ||
2023 | 2.1 | ||
Thereafter | 0.8 | ||
$ | 42.3 |
September 30, | |||||||
2018 | 2017 (1) | ||||||
(In millions) | |||||||
Earnest money and refundable deposits | $ | 445.2 | $ | 312.2 | |||
Insurance receivables | 54.6 | 74.4 | |||||
Other receivables | 81.7 | 60.0 | |||||
Prepaid assets | 36.9 | 30.8 | |||||
Rental properties | 39.2 | 52.0 | |||||
Other | 44.3 | 36.5 | |||||
$ | 701.9 | $ | 565.9 |
September 30, | |||||||
2018 | 2017 (1) | ||||||
(In millions) | |||||||
Reserves for legal claims | $ | 408.1 | $ | 420.6 | |||
Employee compensation and related liabilities | 252.5 | 208.9 | |||||
Warranty liability | 202.0 | 143.7 | |||||
Accrued interest | 14.8 | 12.7 | |||||
Federal and state income tax liabilities | 35.2 | 20.3 | |||||
Inventory related accruals | 45.5 | 24.8 | |||||
Customer deposits | 58.1 | 51.8 | |||||
Accrued property taxes | 38.0 | 33.9 | |||||
Other | 73.3 | 68.3 | |||||
$ | 1,127.5 | $ | 985.0 |
(1) | To conform to the current year presentation, prior period amounts have been reclassified to reflect the Company’s consolidated balances, rather than the balances of its homebuilding segment that were previously presented. |
• | Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities. The Company does not currently have any assets or liabilities measured at fair value using Level 1 inputs. |
• | Level 2 – Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. The Company’s assets and liabilities measured at fair value using Level 2 inputs on a recurring basis are as follows: |
• | Mortgage loans held for sale - The fair value of these loans is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Closed mortgage loans are typically sold shortly after origination, which limits exposure to nonperformance by loan buyer counterparties to a short time period. In addition, the Company actively monitors the financial strength of its counterparties. |
• | IRLCs - The fair value of IRLCs is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. These valuations do not contain adjustments for expirations as any expired commitments are excluded from the fair value measurement. The Company generally only issues IRLCs for products that meet specific purchaser guidelines. Should any purchaser become insolvent, the Company would not be required to close the transaction based on the terms of the commitment. Since not all IRLCs will become closed loans, the Company adjusts its fair value measurements for the estimated amount of IRLCs that will not close. |
• | Loan sale commitments and hedging instruments - The fair values of best-efforts and mandatory loan sale commitments and derivative instruments such as forward sales of MBS that are utilized as hedging instruments are calculated by reference to quoted prices for similar assets. The Company mitigates exposure to nonperformance risk associated with derivative instruments by limiting the number of counterparties and actively monitoring their financial strength and creditworthiness while requiring them to be well-known institutions with credit ratings equal to or better than AA- or equivalent. Further, the Company’s derivative contracts typically have short-term durations with maturities from one to four months. Accordingly, the Company’s risk of nonperformance relative to its derivative positions is not significant. |
• | Level 3 – Valuation is typically derived from model-based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability. |
• | Inventory held and used - In determining the fair values of its inventory held and used in its impairment evaluations, the Company performs an analysis of the undiscounted cash flows estimated to be generated by those assets. The most significant factors used to estimate undiscounted future cash flows include pricing and incentive levels actually realized by the community, the rate at which the homes are sold and the costs incurred to develop the lots and construct the homes. Inventory held and used measured at fair value represents those communities for which the estimated undiscounted cash flows are less than their carrying amounts and therefore, the Company has recorded impairments during the current period to record the inventory at fair value calculated based on its discounted estimated future cash flows. |
• | Inventory available for sale - The factors considered in determining fair values of the Company’s land held for sale primarily include actual sale contracts and recent offers received from outside third parties, and may also include prices for land in recent comparable sales transactions and other market analysis. If the estimated fair value less the costs to sell an asset is less than the asset’s current carrying value, the asset is written down to its estimated fair value less costs to sell. |
• | Certain mortgage loans held for sale - A limited number of mortgage loans held for sale have some degree of impairment affecting their marketability. For some of these loans, quoted prices in the secondary market are not available and therefore, a cash flow valuation model is used to determine fair value. |
• | Certain other mortgage loans, rental properties and real estate owned - Other mortgage loans include performing and nonperforming mortgage loans, which often become real estate owned through the foreclosure process. The fair values of other mortgage loans, rental properties and real estate owned are determined based on the Company’s assessment of the value of the underlying collateral or the value of the property, as applicable. The Company uses different methods to assess the value of the properties, which may include broker price opinions, appraisals or cash flow valuation models. |
Fair Value at September 30, 2018 | |||||||||||||||||
Balance Sheet Location | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In millions) | |||||||||||||||||
Debt securities collateralized by residential real estate | Other assets | $ | — | $ | — | $ | 3.9 | $ | 3.9 | ||||||||
Mortgage loans held for sale (a) | Mortgage loans held for sale | — | 784.6 | 7.8 | 792.4 | ||||||||||||
Derivatives not designated as hedging instruments (b): | |||||||||||||||||
Interest rate lock commitments | Other assets | — | 10.5 | — | 10.5 | ||||||||||||
Forward sales of MBS | Other assets | — | 3.3 | — | 3.3 | ||||||||||||
Best-efforts and mandatory commitments | Other assets | — | 0.2 | — | 0.2 |
Fair Value at September 30, 2017 | |||||||||||||||||
Balance Sheet Location | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In millions) | |||||||||||||||||
Debt securities collateralized by residential real estate | Other assets | $ | — | $ | — | $ | 8.8 | $ | 8.8 | ||||||||
Mortgage loans held for sale (a) | Mortgage loans held for sale | — | 580.2 | 5.6 | 585.8 | ||||||||||||
Derivatives not designated as hedging instruments (b): | |||||||||||||||||
Interest rate lock commitments | Other assets | — | 9.4 | — | 9.4 | ||||||||||||
Forward sales of MBS | Other assets | — | 1.1 | — | 1.1 | ||||||||||||
Best-efforts and mandatory commitments | Other assets | — | 0.6 | — | 0.6 |
Level 3 Assets at Fair Value for the Year Ended September 30, 2018 | |||||||||||||||||||||||||||
Balance at September 30, 2017 | Net realized and unrealized gains (losses) | Purchases | Sales and Settlements | Principal Reductions | Net transfers to (out of) Level 3 | Balance at September 30, 2018 | |||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||
Debt securities collateralized by residential real estate (c) | $ | 8.8 | $ | — | $ | — | $ | (4.9 | ) | $ | — | $ | — | $ | 3.9 | ||||||||||||
Mortgage loans held for sale (a) | 5.6 | 0.6 | — | (6.8 | ) | — | 8.4 | 7.8 | |||||||||||||||||||
Level 3 Assets at Fair Value for the Year Ended September 30, 2017 | |||||||||||||||||||||||||||
Balance at September 30, 2016 | Net realized and unrealized gains (losses) | Purchases | Sales and Settlements | Principal Reductions | Net transfers to (out of) Level 3 | Balance at September 30, 2017 | |||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||
Debt securities collateralized by residential real estate | $ | — | $ | — | $ | 8.8 | $ | — | $ | — | $ | — | $ | 8.8 | |||||||||||||
Mortgage loans held for sale (a) | 6.8 | 1.3 | — | (13.4 | ) | — | 10.9 | 5.6 |
(a) | The Company typically elects the fair value option upon origination for mortgage loans held for sale. Interest income earned on mortgage loans held for sale is based on contractual interest rates and included in other income. Mortgage loans held for sale valued using Level 3 inputs at September 30, 2018 and 2017 include $7.8 million and $5.6 million, respectively, of loans for which the Company elected the fair value option upon origination and did not sell into the secondary market. Mortgage loans held for sale totaling $8.4 million and $10.9 million were transferred to Level 3 during fiscal 2018 and 2017, respectively, due to significant unobservable inputs used in determining the fair value of these loans. The fair value of these mortgage loans held for sale is generally calculated considering pricing in the secondary market and adjusted for the value of the underlying collateral, including interest rate risk, liquidity risk and prepayment risk. The Company plans to sell these loans as market conditions permit. |
(b) | Fair value measurements of these derivatives represent changes in fair value, as calculated by reference to quoted prices for similar assets, and are reflected in the balance sheet as other assets or accrued expenses and other liabilities. Changes in the fair value of these derivatives are included in revenues in the consolidated statements of operations. |
(c) | In August 2018, the Company sold $4.9 million of its debt securities to a third party for $7.3 million. The resulting gain of $2.4 million on the sale is included in other income in the consolidated statement of operations for fiscal 2018. |
Fair Value at September 30, | |||||||||
Balance Sheet Location | 2018 | 2017 | |||||||
Level 3 | |||||||||
(In millions) | |||||||||
Inventory held and used (a) (b) | Inventories | $ | 4.4 | $ | 33.4 | ||||
Inventory available for sale (a) (c) | Inventories | 1.4 | 1.2 | ||||||
Mortgage loans held for sale (a) (d) | Mortgage loans held for sale | 2.9 | 0.6 | ||||||
Other mortgage loans (a) (e) | Other assets | 1.0 | 1.4 |
(a) | The fair values included in the table above represent only those assets whose carrying values were adjusted to fair value as a result of impairment in the respective period and were held at the end of the period. |
(b) | In performing its impairment analysis of communities, discount rates ranging from 12% to 18% were used in the periods presented. |
(c) | The fair value of inventory available for sale was determined based on recent offers received from outside third parties, comparable sales or actual contracts. |
(d) | These mortgage loans have some degree of impairment affecting their marketability and are valued at the lower of carrying value or fair value. When available, quoted prices in the secondary market are used to determine fair value (Level 2); otherwise, a cash flow valuation model is used to determine fair value (Level 3). |
(e) | The fair values of other mortgage loans was determined based on the value of the underlying collateral. |
Carrying Value | Fair Value at September 30, 2018 | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
(In millions) | |||||||||||||||||||
Cash and cash equivalents (a) | $ | 1,473.1 | $ | 1,473.1 | $ | — | $ | — | $ | 1,473.1 | |||||||||
Restricted cash (a) | 32.9 | 32.9 | — | — | 32.9 | ||||||||||||||
Notes payable (b) (c) | 3,203.5 | — | 2,602.6 | 642.2 | 3,244.8 |
Carrying Value | Fair Value at September 30, 2017 | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
(In millions) | |||||||||||||||||||
Cash and cash equivalents (a) | $ | 1,007.8 | $ | 1,007.8 | $ | — | $ | — | $ | 1,007.8 | |||||||||
Restricted cash (a) | 16.5 | 16.5 | — | — | 16.5 | ||||||||||||||
Notes payable (b) (c) | 2,871.6 | — | 2,584.1 | 431.1 | 3,015.2 |
(a) | The fair values of cash, cash equivalents and restricted cash approximate their carrying values due to their short-term nature and are classified as Level 1 within the fair value hierarchy. |
(b) | The fair value of the senior notes is determined based on quoted prices, which is classified as Level 2 within the fair value hierarchy. |
(c) | The fair values of other secured notes and borrowings on the revolving credit facilities and the mortgage repurchase facility approximate carrying value due to their short-term nature or floating interest rate terms, as applicable, and are classified as Level 3 within the fair value hierarchy. |
Fiscal 2018 | |||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | ||||||||||||
Revenues | $ | 3,332.7 | $ | 3,794.7 | $ | 4,435.3 | $ | 4,505.2 | |||||||
Income before income taxes | 391.2 | 444.8 | 616.2 | 607.7 | |||||||||||
Income tax expense (a) | 202.4 | 94.0 | 162.5 | 138.8 | |||||||||||
Net income | 188.8 | 350.8 | 453.7 | 468.9 | |||||||||||
Net income (loss) attributable to noncontrolling interests | (0.5 | ) | (0.2 | ) | (0.1 | ) | 2.8 | ||||||||
Net income attributable to D.R. Horton, Inc. | 189.3 | 351.0 | 453.8 | 466.1 | |||||||||||
Basic net income per common share attributable to D.R. Horton, Inc. | 0.50 | 0.93 | 1.20 | 1.24 | |||||||||||
Diluted net income per common share attributable to D.R. Horton, Inc. | 0.49 | 0.91 | 1.18 | 1.22 |
Fiscal 2017 | |||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | ||||||||||||
Revenues | $ | 2,904.2 | $ | 3,251.3 | $ | 3,776.4 | $ | 4,159.1 | |||||||
Income before income taxes | 318.1 | 353.9 | 444.5 | 485.5 | |||||||||||
Income tax expense | 111.2 | 124.7 | 155.5 | 172.3 | |||||||||||
Net income attributable to D.R. Horton, Inc. | 206.9 | 229.2 | 289.0 | 313.2 | |||||||||||
Basic net income per common share attributable to D.R. Horton, Inc. | 0.55 | 0.61 | 0.77 | 0.84 | |||||||||||
Diluted net income per common share attributable to D.R. Horton, Inc. | 0.55 | 0.60 | 0.76 | 0.82 |
(a) | Income tax expense in the first quarter of fiscal 2018 includes additional expense of $108.7 million due to remeasurement of the Company’s net deferred tax assets as a result of the Tax Act. |
D.R. Horton, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Cash and cash equivalents | $ | 908.1 | $ | 158.7 | $ | 406.3 | $ | — | $ | 1,473.1 | |||||||||
Restricted cash | 6.6 | 2.0 | 24.3 | — | 32.9 | ||||||||||||||
Investment in subsidiaries | 6,344.9 | — | — | (6,344.9 | ) | — | |||||||||||||
Inventories | 4,037.1 | 5,824.1 | 545.0 | (11.2 | ) | 10,395.0 | |||||||||||||
Investment in unconsolidated entities | — | — | 11.0 | — | 11.0 | ||||||||||||||
Mortgage loans held for sale | — | — | 796.4 | — | 796.4 | ||||||||||||||
Deferred income taxes, net | 69.2 | 105.0 | 17.3 | 2.5 | 194.0 | ||||||||||||||
Property and equipment, net | 111.2 | 66.1 | 230.7 | (6.9 | ) | 401.1 | |||||||||||||
Other assets | 306.6 | 361.3 | 79.2 | (45.2 | ) | 701.9 | |||||||||||||
Goodwill | — | 80.0 | 29.2 | — | 109.2 | ||||||||||||||
Intercompany receivables | 246.2 | 27.3 | — | (273.5 | ) | — | |||||||||||||
Total Assets | $ | 12,029.9 | $ | 6,624.5 | $ | 2,139.4 | $ | (6,679.2 | ) | $ | 14,114.6 | ||||||||
LIABILITIES & EQUITY | |||||||||||||||||||
Accounts payable and other liabilities | $ | 590.8 | $ | 1,000.4 | $ | 210.1 | $ | (49.1 | ) | $ | 1,752.2 | ||||||||
Intercompany payables | — | — | 273.5 | (273.5 | ) | — | |||||||||||||
Notes payable | 2,443.9 | 2.1 | 757.5 | — | 3,203.5 | ||||||||||||||
Total Liabilities | 3,034.7 | 1,002.5 | 1,241.1 | (322.6 | ) | 4,955.7 | |||||||||||||
Stockholders’ equity | 8,995.2 | 5,622.0 | 722.8 | (6,355.6 | ) | 8,984.4 | |||||||||||||
Noncontrolling interests | — | — | 175.5 | (1.0 | ) | 174.5 | |||||||||||||
Total Equity | 8,995.2 | 5,622.0 | 898.3 | (6,356.6 | ) | 9,158.9 | |||||||||||||
Total Liabilities & Equity | $ | 12,029.9 | $ | 6,624.5 | $ | 2,139.4 | $ | (6,679.2 | ) | $ | 14,114.6 |
D.R. Horton, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Cash and cash equivalents | $ | 780.9 | $ | 154.5 | $ | 72.4 | $ | — | $ | 1,007.8 | |||||||||
Restricted cash | 7.8 | 1.5 | 7.2 | — | 16.5 | ||||||||||||||
Investment in subsidiaries | 4,812.6 | — | — | (4,812.6 | ) | — | |||||||||||||
Inventories | 3,540.4 | 5,579.9 | 116.8 | — | 9,237.1 | ||||||||||||||
Mortgage loans held for sale | — | — | 587.3 | — | 587.3 | ||||||||||||||
Deferred income taxes, net | 138.5 | 223.6 | 2.9 | — | 365.0 | ||||||||||||||
Property and equipment, net | 104.8 | 59.7 | 166.3 | (5.8 | ) | 325.0 | |||||||||||||
Other assets | 245.5 | 259.7 | 60.7 | — | 565.9 | ||||||||||||||
Goodwill | — | 80.0 | — | — | 80.0 | ||||||||||||||
Intercompany receivables | 1,047.7 | — | — | (1,047.7 | ) | — | |||||||||||||
Total Assets | $ | 10,678.2 | $ | 6,358.9 | $ | 1,013.6 | $ | (5,866.1 | ) | $ | 12,184.6 | ||||||||
LIABILITIES & EQUITY | |||||||||||||||||||
Accounts payable and other liabilities | $ | 483.9 | $ | 956.9 | $ | 126.6 | $ | (2.0 | ) | $ | 1,565.4 | ||||||||
Intercompany payables | — | 732.2 | 315.5 | (1,047.7 | ) | — | |||||||||||||
Notes payable | 2,443.4 | 8.2 | 420.0 | — | 2,871.6 | ||||||||||||||
Total Liabilities | 2,927.3 | 1,697.3 | 862.1 | (1,049.7 | ) | 4,437.0 | |||||||||||||
Stockholders’ equity | 7,750.9 | 4,661.6 | 151.0 | (4,816.4 | ) | 7,747.1 | |||||||||||||
Noncontrolling interests | — | — | 0.5 | — | 0.5 | ||||||||||||||
Total Equity | 7,750.9 | 4,661.6 | 151.5 | (4,816.4 | ) | 7,747.6 | |||||||||||||
Total Liabilities & Equity | $ | 10,678.2 | $ | 6,358.9 | $ | 1,013.6 | $ | (5,866.1 | ) | $ | 12,184.6 |
D.R. Horton, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
Revenues | $ | 5,835.0 | $ | 9,795.7 | $ | 488.0 | $ | (50.7 | ) | $ | 16,068.0 | ||||||||
Cost of sales | 4,612.5 | 7,752.5 | 74.9 | (41.8 | ) | 12,398.1 | |||||||||||||
Selling, general and administrative expense | 665.6 | 676.1 | 335.1 | — | 1,676.8 | ||||||||||||||
Equity in earnings of unconsolidated entities | — | — | (5.3 | ) | 2.5 | (2.8 | ) | ||||||||||||
Gain on sale of assets | (2.4 | ) | — | (16.4 | ) | — | (18.8 | ) | |||||||||||
Other (income) expense | (6.0 | ) | (0.2 | ) | (39.1 | ) | — | (45.3 | ) | ||||||||||
Income before income taxes | 565.3 | 1,367.3 | 138.8 | (11.4 | ) | 2,060.0 | |||||||||||||
Income tax expense | 167.9 | 406.1 | 27.1 | (3.4 | ) | 597.7 | |||||||||||||
Equity in net income of subsidiaries, net of tax | 1,069.7 | — | — | (1,069.7 | ) | — | |||||||||||||
Net income | 1,467.1 | 961.2 | 111.7 | (1,077.7 | ) | 1,462.3 | |||||||||||||
Net income attributable to noncontrolling interests | — | — | 3.1 | (1.1 | ) | 2.0 | |||||||||||||
Net income attributable to D.R. Horton, Inc. | $ | 1,467.1 | $ | 961.2 | $ | 108.6 | $ | (1,076.6 | ) | $ | 1,460.3 |
D.R. Horton, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
Revenues | $ | 4,773.6 | $ | 8,939.5 | $ | 387.0 | $ | (9.1 | ) | $ | 14,091.0 | ||||||||
Cost of sales | 3,827.6 | 7,199.6 | 24.1 | (8.5 | ) | 11,042.8 | |||||||||||||
Selling, general and administrative expense | 584.3 | 631.0 | 256.3 | — | 1,471.6 | ||||||||||||||
Other (income) expense | (8.3 | ) | (1.4 | ) | (15.8 | ) | — | (25.5 | ) | ||||||||||
Income before income taxes | 370.0 | 1,110.3 | 122.4 | (0.6 | ) | 1,602.1 | |||||||||||||
Income tax expense | 129.4 | 388.6 | 45.9 | (0.2 | ) | 563.7 | |||||||||||||
Equity in net income of subsidiaries, net of tax | 798.2 | — | — | (798.2 | ) | — | |||||||||||||
Net income | $ | 1,038.8 | $ | 721.7 | $ | 76.5 | $ | (798.6 | ) | $ | 1,038.4 |
D.R. Horton, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
Revenues | $ | 3,947.5 | $ | 7,930.3 | $ | 295.6 | $ | (16.0 | ) | $ | 12,157.4 | ||||||||
Cost of sales | 3,163.6 | 6,357.5 | (7.7 | ) | (10.8 | ) | 9,502.6 | ||||||||||||
Selling, general and administrative expense | 503.8 | 592.7 | 223.8 | — | 1,320.3 | ||||||||||||||
Goodwill impairment | — | 7.2 | — | — | 7.2 | ||||||||||||||
Gain on sale of assets | (4.5 | ) | — | — | — | (4.5 | ) | ||||||||||||
Other (income) expense | (3.1 | ) | (3.9 | ) | (14.7 | ) | — | (21.7 | ) | ||||||||||
Income before income taxes | 287.7 | 976.8 | 94.2 | (5.2 | ) | 1,353.5 | |||||||||||||
Income tax expense | 98.6 | 334.9 | 35.5 | (1.8 | ) | 467.2 | |||||||||||||
Equity in net income of subsidiaries, net of tax | 700.6 | — | — | (700.6 | ) | — | |||||||||||||
Net income | $ | 889.7 | $ | 641.9 | $ | 58.7 | $ | (704.0 | ) | $ | 886.3 |
D.R. Horton, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 195.0 | $ | 903.8 | $ | (445.9 | ) | $ | (107.7 | ) | $ | 545.2 | |||||||
INVESTING ACTIVITIES | |||||||||||||||||||
Expenditures for property and equipment | (34.5 | ) | (30.3 | ) | (3.3 | ) | — | (68.1 | ) | ||||||||||
Proceeds from sale of assets | — | — | 292.9 | — | 292.9 | ||||||||||||||
Expenditures related to multi-family rental properties | — | — | (81.8 | ) | 11.6 | (70.2 | ) | ||||||||||||
Decrease (increase) in restricted cash | 1.2 | (0.5 | ) | (17.1 | ) | — | (16.4 | ) | |||||||||||
Return of investment in unconsolidated entities | — | — | 17.5 | — | 17.5 | ||||||||||||||
Net principal increase of other mortgage loans and real estate owned | — | — | (1.2 | ) | — | (1.2 | ) | ||||||||||||
Proceeds from debt securities collateralized by residential real estate | 7.3 | — | — | — | 7.3 | ||||||||||||||
Intercompany advances | 801.8 | — | — | (801.8 | ) | — | |||||||||||||
Payments related to business acquisitions, net of cash acquired | (561.0 | ) | — | 401.8 | — | (159.2 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 214.8 | (30.8 | ) | 608.8 | (790.2 | ) | 2.6 | ||||||||||||
FINANCING ACTIVITIES | |||||||||||||||||||
Proceeds from notes payable | 2,162.1 | — | 1.4 | — | 2,163.5 | ||||||||||||||
Repayment of notes payable | (2,165.9 | ) | (5.2 | ) | (10.6 | ) | — | (2,181.7 | ) | ||||||||||
Advances on mortgage repurchase facility, net | — | — | 217.7 | — | 217.7 | ||||||||||||||
Intercompany advances | — | (863.6 | ) | 61.8 | 801.8 | — | |||||||||||||
Proceeds from stock associated with certain employee benefit plans | 47.4 | — | — | — | 47.4 | ||||||||||||||
Cash paid for shares withheld for taxes | (10.3 | ) | — | — | — | (10.3 | ) | ||||||||||||
Cash dividends paid | (188.4 | ) | — | (96.1 | ) | 96.1 | (188.4 | ) | |||||||||||
Repurchases of common stock | (127.5 | ) | — | — | — | (127.5 | ) | ||||||||||||
Distributions to noncontrolling interests, net | — | — | (3.2 | ) | — | (3.2 | ) | ||||||||||||
Net cash (used in) provided by financing activities | (282.6 | ) | (868.8 | ) | 171.0 | 897.9 | (82.5 | ) | |||||||||||
Increase in cash and cash equivalents | 127.2 | 4.2 | 333.9 | — | 465.3 | ||||||||||||||
Cash and cash equivalents at beginning of year | 780.9 | 154.5 | 72.4 | — | 1,007.8 | ||||||||||||||
Cash and cash equivalents at end of year | $ | 908.1 | $ | 158.7 | $ | 406.3 | $ | — | $ | 1,473.1 |
D.R. Horton, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (283.2 | ) | $ | 721.0 | $ | 115.0 | $ | (112.6 | ) | $ | 440.2 | |||||||
INVESTING ACTIVITIES | |||||||||||||||||||
Expenditures for property and equipment | (54.2 | ) | (26.2 | ) | (22.3 | ) | — | (102.7 | ) | ||||||||||
Expenditures related to multi-family rental properties | — | — | (63.7 | ) | 9.1 | (54.6 | ) | ||||||||||||
(Increase) decrease in restricted cash | (0.4 | ) | 0.6 | (7.2 | ) | — | (7.0 | ) | |||||||||||
Net principal decrease of other mortgage loans and real estate owned | — | — | 6.2 | — | 6.2 | ||||||||||||||
Purchases of debt securities collateralized by residential real estate | (8.8 | ) | — | — | — | (8.8 | ) | ||||||||||||
Intercompany advances | 561.7 | — | — | (561.7 | ) | — | |||||||||||||
Payments related to business acquisitions | (4.1 | ) | — | — | — | (4.1 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 494.2 | (25.6 | ) | (87.0 | ) | (552.6 | ) | (171.0 | ) | ||||||||||
FINANCING ACTIVITIES | |||||||||||||||||||
Proceeds from notes payable | 835.0 | — | — | — | 835.0 | ||||||||||||||
Repayment of notes payable | (1,187.2 | ) | (5.1 | ) | — | — | (1,192.3 | ) | |||||||||||
Payments on mortgage repurchase facility, net | — | — | (53.0 | ) | — | (53.0 | ) | ||||||||||||
Intercompany advances | — | (689.8 | ) | 128.1 | 561.7 | — | |||||||||||||
Proceeds from stock associated with certain employee benefit plans | 46.7 | — | — | — | 46.7 | ||||||||||||||
Excess income tax benefit from employee stock awards | 14.3 | — | — | — | 14.3 | ||||||||||||||
Cash paid for shares withheld for taxes | (5.1 | ) | — | — | — | (5.1 | ) | ||||||||||||
Cash dividends paid | (149.6 | ) | — | (103.5 | ) | 103.5 | (149.6 | ) | |||||||||||
Repurchases of common stock | (60.6 | ) | — | — | — | (60.6 | ) | ||||||||||||
Net cash used in financing activities | (506.5 | ) | (694.9 | ) | (28.4 | ) | 665.2 | (564.6 | ) | ||||||||||
(Decrease) increase in cash and cash equivalents | (295.5 | ) | 0.5 | (0.4 | ) | — | (295.4 | ) | |||||||||||
Cash and cash equivalents at beginning of year | 1,076.4 | 154.0 | 72.8 | — | 1,303.2 | ||||||||||||||
Cash and cash equivalents at end of year | $ | 780.9 | $ | 154.5 | $ | 72.4 | $ | — | $ | 1,007.8 |
D.R. Horton, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
(In millions) | |||||||||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 121.0 | $ | 596.7 | $ | (16.0 | ) | $ | (77.8 | ) | $ | 623.9 | |||||||
INVESTING ACTIVITIES | |||||||||||||||||||
Expenditures for property and equipment | (40.7 | ) | (14.3 | ) | (23.1 | ) | — | (78.1 | ) | ||||||||||
Expenditures related to multi-family rental properties | — | — | (24.0 | ) | 16.0 | (8.0 | ) | ||||||||||||
Decrease in restricted cash | — | 0.2 | — | — | 0.2 | ||||||||||||||
Net principal decrease of other mortgage loans and real estate owned | — | — | 19.7 | — | 19.7 | ||||||||||||||
Proceeds from debt securities collateralized by residential real estate | 35.8 | — | — | — | 35.8 | ||||||||||||||
Intercompany advances | 409.9 | — | — | (409.9 | ) | — | |||||||||||||
Payments related to business acquisitions | (82.2 | ) | — | — | — | (82.2 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 322.8 | (14.1 | ) | (27.4 | ) | (393.9 | ) | (112.6 | ) | ||||||||||
FINANCING ACTIVITIES | |||||||||||||||||||
Repayment of notes payable | (542.9 | ) | (1.9 | ) | — | — | (544.8 | ) | |||||||||||
Payments on mortgage repurchase facility, net | — | — | (4.9 | ) | — | (4.9 | ) | ||||||||||||
Intercompany advances | — | (521.3 | ) | 111.4 | 409.9 | — | |||||||||||||
Proceeds from stock associated with certain employee benefit plans | 72.4 | — | — | — | 72.4 | ||||||||||||||
Excess income tax benefit from employee stock awards | 10.0 | — | — | — | 10.0 | ||||||||||||||
Cash paid for shares withheld for taxes | (5.9 | ) | — | — | — | (5.9 | ) | ||||||||||||
Cash dividends paid | (118.7 | ) | — | (61.8 | ) | 61.8 | (118.7 | ) | |||||||||||
Net cash (used in) provided by financing activities | (585.1 | ) | (523.2 | ) | 44.7 | 471.7 | (591.9 | ) | |||||||||||
(Decrease) increase in cash and cash equivalents | (141.3 | ) | 59.4 | 1.3 | — | (80.6 | ) | ||||||||||||
Cash and cash equivalents at beginning of year | 1,217.7 | 94.6 | 71.5 | — | 1,383.8 | ||||||||||||||
Cash and cash equivalents at end of year | $ | 1,076.4 | $ | 154.0 | $ | 72.8 | $ | — | $ | 1,303.2 |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
(a) Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | ||||||||||
Plan Category | ||||||||||||
Equity compensation plans approved by stockholders | 11,644,881 | (1) | $ | 17.25 | (2) | 21,555,619 | (3) | |||||
Equity compensation plans not approved by stockholders | — | n/a | — | |||||||||
Total | 11,644,881 | $ | 17.25 | 21,555,619 |
(1) | Amount includes outstanding stock option and restricted stock unit awards. The number of outstanding performance-based restricted stock unit awards is based on the target number of units granted. |
(2) | Amount reflects the weighted average exercise price with respect to outstanding stock options and does not take into account outstanding restricted stock units, which do not have an exercise price. |
(3) | Amount includes 3,100,740 shares reserved for issuance under the Company’s Employee Stock Purchase Plan. Under the Employee Stock Purchase Plan, employees purchased 114,340 shares of common stock in fiscal 2018. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Exhibit Number | Exhibit | ||
2.1 | |||
3.1 | |||
3.2 | |||
4.1 | |||
4.2 | |||
4.3 | |||
4.4 | |||
4.5 | |||
4.6 |
Exhibit Number | Exhibit | ||
4.7 | |||
4.8 | |||
4.9 | |||
4.10 | |||
4.11 | |||
4.12 | |||
4.13 | |||
10.1 | Form of Indemnification Agreement between the Registrant and each of its directors and executive officers and schedules of substantially identical documents (incorporated by reference from Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 1995, filed with the SEC on November 22, 1995 (file number 1-14122); Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed with the SEC on August 6, 1998; and Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, filed with the SEC on May 15, 2001). | ||
10.2 | † | ||
10.3 | † | ||
10.4 | † | Form of Non-Qualified Stock Option Agreement under the D.R. Horton, Inc. 1991 Stock Incentive Plan (Term Vesting) (incorporated by reference from Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 (Registration No. 3-81856), filed with the SEC on July 22, 1994). | |
10.5 | † |
Exhibit Number | Exhibit | ||
10.6 | † | ||
10.7 | † | ||
10.8 | † | ||
10.9 | † | ||
10.10 | † | ||
10.11 | † | ||
10.12 | † | ||
10.13 | † | ||
10.14 | † | ||
10.15 | † | ||
10.16 | † | ||
10.17 | † | ||
10.18 | † | D.R. Horton, Inc. Supplemental Executive Retirement Plan No. 1 (incorporated by reference from the Registrant’s Transitional Report on Form 10-K for the period from January 1, 1993 to September 30, 1993, filed with the SEC on December 28, 1993 (file number 1-14122)). | |
10.19 | † |
Exhibit Number | Exhibit | ||
10.20 | † | ||
10.21 | † | ||
10.22 | † | ||
10.23 | † | ||
10.24 | † | ||
10.25 | † | ||
10.26 | † | ||
10.27 | † | ||
10.28 | |||
10.29 | |||
10.30 | |||
10.31 | |||
10.32 | |||
10.33 | |||
10.34 |
Exhibit Number | Exhibit | ||
10.35 | |||
10.36 | |||
10.37 | |||
10.38 | |||
10.39 | |||
10.40 | |||
10.41 | |||
10.42 | |||
10.43 | |||
10.44 | |||
10.45 | |||
10.46 |
Exhibit Number | Exhibit | ||
10.47 | |||
14.1 | Code of Ethical Conduct for the CEO, CFO and Senior Financial Officers (**) | ||
21.1 | |||
23.1 | |||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
101 | The following financial statements from D.R. Horton, Inc.'s Annual Report on Form 10-K for the year ended September 30, 2018, filed on November 16, 2018, formatted in XBRL (Extensible Business Reporting Language); (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Total Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements. (*) |
ITEM 16. | 10-K SUMMARY |
D.R. Horton, Inc. | ||||
Date: | November 16, 2018 | By: | /s/ Bill W. Wheat | |
Bill W. Wheat | ||||
Executive Vice President and Chief Financial Officer |
Signature | Title | Date | ||||
/s/ David V. Auld | President and Chief Executive Officer (Principal Executive Officer) | November 16, 2018 | ||||
David V. Auld | ||||||
/s/ Bill W. Wheat | Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | November 16, 2018 | ||||
Bill W. Wheat | ||||||
/s/ Donald R. Horton | Chairman of the Board and Director | November 16, 2018 | ||||
Donald R. Horton | ||||||
/s/ Barbara K. Allen | Director | November 16, 2018 | ||||
Barbara K. Allen | ||||||
/s/ Brad S. Anderson | Director | November 16, 2018 | ||||
Brad S. Anderson | ||||||
/s/ Michael R. Buchanan | Director | November 16, 2018 | ||||
Michael R. Buchanan | ||||||
/s/ Michael W. Hewatt | Director | November 16, 2018 | ||||
Michael W. Hewatt |
Annual Base Salary | Annual Incentive Bonus | |||||
Name | Office | Fiscal 2019 | Fiscal 2019 | |||
Donald R. Horton | Chairman of the Board | $1,000,000 | See Below | |||
David V. Auld | President and CEO | $700,000 | See Below | |||
Michael J. Murray | Executive Vice President and COO | $500,000 | See Below |
(1) | Up to 0.6% of Pre-Tax Income of the Company for the six-month period ending March 31, 2019, and |
(2) | Up to 0.6% of Pre-Tax Income of the Company for the six-month period ending September 30, 2019. |
(1) | Up to 0.4% of Pre-Tax Income of the Company for the six-month period ending March 31, 2019, and |
(2) | Up to 0.4% of Pre-Tax Income of the Company for the six-month period ending September 30, 2019. |
(1) | Up to 0.15% of Pre-Tax Income of the Company for the six-month period ending March 31, 2019, and |
(2) | Up to 0.15% of Pre-Tax Income of the Company for the six-month period ending September 30, 2019. |
Name | Office | Target Number of Performance Restricted Stock Units | ||
Donald R. Horton | Chairman of the Board | 200,000 | ||
David V. Auld | President and CEO | 100,000 | ||
Michael J. Murray | Executive Vice President and COO | 30,000 |
Annual Base Salary | Discretionary Bonus | |||||
Name | Office | Fiscal 2019 | Fiscal 2019 | |||
Bill W. Wheat | Executive Vice President and CFO | $500,000 | See Below |
Name | Office | Target Number of Performance Restricted Stock Units | ||
Bill W. Wheat | Executive Vice President and CFO | 30,000 |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS | ||
ANN & 215, LLC | Delaware | |||
Austin Data, Inc. | Texas | |||
BP456, Inc. | Delaware | |||
C. Richard Dobson Builders, Inc. | Virginia | Dobson Builders | ||
Cane Island, LLC | Delaware | |||
CH Funding, LLC | Delaware | |||
CH Investments of Texas, Inc. | Delaware | |||
CHI Construction Company | Arizona | |||
CHM Partners, L.P. | Texas | |||
CHTEX of Texas, Inc. | Delaware | |||
The Club at Cobblestone, LLC | Delaware | |||
The Club at Hidden River, LLC | Delaware | |||
Continental Homes, Inc. | Delaware | Astante Luxury Communities; Astante Luxury Homes; D.R. Horton - Astante Series; D.R. Horton - Continental Series; Traditions; Traditions - D.R. Horton | ||
Continental Homes of Texas, L.P. | Texas | D.R. Horton Homes; D.R. Horton America’s Builder; Emerald Homes; Express Homes; Freedom Homes | ||
Continental Residential, Inc. | California | Continental Homes; D.R. Horton America’s Builder; Horton Continental; Emerald Homes; Freedom Homes | ||
Continental Traditions, LLC | Arizona | |||
Crown Operating Company, Inc. | Delaware | |||
CV Mountain View 25 Inv, LLC | Delaware | |||
Cypress Road, L.P. | California | |||
Desert Ridge Phase I Partners | Arizona | |||
DHI Communities, Inc. | Delaware | DHI Communities | ||
DHI Communities II, LLC | Delaware | DHI Communities | ||
DHI Communities Construction, LLC | Delaware | |||
DHI Communities Construction of Arizona, LLC | Delaware |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS |
DHI Communities Construction of Florida, LLC | Delaware | |||
DHI Communities Construction of Texas, LLC | Delaware | |||
DHI Engineering, LLC | Delaware | |||
DHI Insurance, Inc. | Vermont | |||
DHI Mortgage Company | Colorado | CH Mortgage Company | ||
DHI Mortgage Company GP, Inc. | Delaware | |||
DHI Mortgage Company LP, Inc. | Delaware | |||
DHI Mortgage Company, Ltd. | Texas | CH Mortgage I, Ltd., CH Mortgage Company I, Limited Partnership.; CH Mortgage Company I, Ltd., L.P.; DHI Mortgage Company Ltd., Limited; DHI Mortgage Company Ltd., Limited Partnership; DHI Mortgage, Limited Partnership | ||
DHI Ranch, Ltd. | Texas | |||
DHI Title GP, Inc. | Texas | |||
DHI Title LP, Inc. | Delaware | |||
DHI Title of Alabama, Inc. | Alabama | DHI Title of Mississippi | ||
DHI Title of Arizona, Inc. | Arizona | DHI Title Agency | ||
DHI Title of Florida, Inc. | Florida | |||
DHI Title of Minnesota, Inc. | Delaware | DHI Title of Hawaii; DHI Title of Louisiana | ||
DHI Title of Nevada, Inc. | Delaware | |||
DHI Title of Texas, Ltd. | Texas | |||
DHI Verandah South Shores Communities, LLC | Delaware | D.R. Horton | ||
DHIC, LLC | Delaware | |||
DHIC - Bridges, LLC | Delaware | DHI Communities | ||
DHIC - Desert Peak, LLC | Delaware | DHI Communities | ||
DHIC - Freestone, LLC | Delaware | |||
DHIC - Jacob’s Reserve, LLC | Delaware | DHI Communities | ||
DHIC - Minton Cove, LLC | Delaware | DHI Communities | ||
DHIC - Prairie Village, LLC | Delaware | DHI Communities | ||
DHIC - Tamarron, LLC | Delaware | DHI Communities | ||
DHIC - Waterleigh, LLC | Delaware | DHI Communities | ||
DHIC - Westridge, LLC | Delaware | DHI Communities | ||
D.R. Horton - CHAustin, LLC | Delaware | |||
D.R. Horton - Colorado, LLC | Delaware |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS |
D.R. Horton - Crown, LLC | Delaware | Crown Communities | ||
D.R. Horton - Emerald, Ltd. | Texas | |||
D.R. Horton - Georgia, LLC | Delaware | |||
D.R. Horton - Highland, LLC | Delaware | |||
D.R. Horton - Indiana, LLC | Delaware | |||
D.R. Horton - Iowa, LLC | Delaware | |||
D.R. Horton - MV, LLC | Delaware | |||
D.R. Horton - Permian, LLC | Delaware | |||
D.R. Horton - Regent, LLC | Delaware | |||
D.R. Horton - Schuler Homes, LLC | Delaware | Emerald Homes; Express Homes; Freedom Homes | ||
D.R. Horton - Terramor, LLC | Delaware | |||
D.R. Horton - Texas, Ltd. | Texas | D.R. Horton - Texas, Ltd. LP; Emerald Homes; Express Homes | ||
D.R. Horton - WPH, LLC | Delaware | |||
D.R. Horton, Inc. - Birmingham | Alabama | Express Homes | ||
D.R. Horton, Inc. - Chicago | Delaware | |||
D.R. Horton, Inc. - Denver | Delaware | Trimark Communities; D.R. Horton - Trimark Series | ||
D.R. Horton, Inc. - Dietz-Crane | Delaware | |||
D.R. Horton, Inc. - Greensboro | Delaware | |||
D.R. Horton, Inc. - Gulf Coast | Delaware | |||
D.R. Horton, Inc. - Huntsville | Delaware | Emerald Homes; Express Homes | ||
D.R. Horton, Inc. - Jacksonville | Delaware | Continental Homes; Continental Homes - Jacksonville; Emerald Homes; Express Homes; Freedom Homes | ||
D.R. Horton, Inc. - Louisville | Delaware | |||
D.R. Horton, Inc. - Midwest | California | Cambridge Homes; Emerald Homes; Express Homes; Express Homes of Illinois; Freedom Homes; Freedom Homes of Illinois | ||
D.R. Horton, Inc. - Minnesota | Delaware | Emerald Homes; Express Homes; Freedom Homes | ||
D.R. Horton, Inc. - New Jersey | Delaware | D.R. Horton; D.R. Horton, Northeast Division; D.R. Horton, Mid-Atlantic Division; Emerald Homes; Emerald Homes of Pennsylvania; Express Homes; Express Homes of Pennsylvania; Freedom Homes; Freedom Homes of Pennsylvania |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS |
D.R. Horton, Inc. - Portland | Delaware | D.R. Horton America’s Builder; Emerald Homes; Express Homes; Express Homes of Oregon; Freedom Homes | ||
D.R. Horton, Inc. - Torrey | Delaware | Torrey Homes | ||
D.R. Horton, Inc. Foundation | Texas | |||
D.R. Horton BAY, Inc. | Delaware | D.R. Horton America’s Builder; Emerald Homes; Express Homes | ||
D.R. Horton CA2, Inc. | California | D.R. Horton America’s Builder; Emerald Homes; Express Homes | ||
D.R. Horton CA3, Inc. | Delaware | D.R. Horton America’s Builder; Emerald Homes; Express Homes; Freedom Homes | ||
D.R. Horton CA4, LLC | Delaware | |||
D.R. Horton Commercial, Inc. | Delaware | |||
D.R. Horton Cruces Construction, Inc. | Delaware | |||
D.R. Horton Insurance Agency, Inc. | Texas | |||
D.R. Horton LA North, Inc. | Delaware | |||
D.R. Horton Life Insurance Agency, Inc. | Texas | |||
D.R. Horton Los Angeles Holding Company, Inc. | California | D.R. Horton America’s Builder; Emerald Homes; Express Homes; Freedom Homes; Seabridge Marina | ||
D.R. Horton Management Company, Ltd. | Texas | |||
D.R. Horton Materials, Inc. | Delaware | |||
D.R. Horton Realty, LLC | Delaware | |||
D.R. Horton Realty of Central Florida, LLC | Delaware | |||
D.R. Horton Realty of Georgia, Inc. | Delaware | |||
D.R. Horton Realty of Melbourne, LLC | Delaware | |||
D.R. Horton Realty of Northwest Florida, LLC | Delaware | |||
D.R. Horton Realty of Southeast Florida, LLC | Delaware | |||
D.R. Horton Realty of Southwest Florida, LLC | Delaware | |||
D.R. Horton Realty of Tampa, LLC | Delaware | |||
D.R. Horton Seabridge Marina, Inc. | Delaware | |||
D.R. Horton Serenity Construction, LLC | Delaware | |||
D.R. Horton Urban Renewal, LLC | New Jersey | |||
D.R. Horton VEN, Inc. | California | D.R. Horton America’s Builder; Emerald Homes | ||
DRH Cambridge Homes, LLC | Delaware | |||
DRH Capital Trust I | Delaware |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS |
DRH Capital Trust II | Delaware | |||
DRH Capital Trust III | Delaware | |||
DRH Colorado Realty, Inc. | Delaware | |||
DRH Construction, Inc. | Delaware | |||
DRH Energy, Inc. | Colorado | |||
DRH Land Opportunities I, Inc. | Delaware | |||
DRH Land Opportunities II, Inc. | Delaware | |||
DRH FS Mortgage Reinsurance, Ltd. | Turks & Caicos | |||
DRH Mountain View, LLC | Delaware | |||
DRH Oil & Gas, Inc. | Delaware | |||
DRH Opportunities I, Inc. | Delaware | |||
DRH Properties, Inc. | Arizona | |||
DRH Realty Capital, LLC | Delaware | |||
DRH Realty Company, Inc. | California | CH Realty | ||
DRH Regrem VII, LP | Texas | |||
DRH Regrem XII, LP | Texas | |||
DRH Regrem XIV, Inc. | Delaware | |||
DRH Regrem XV, Inc. | Delaware | |||
DRH Regrem XVI, Inc. | Delaware | |||
DRH Regrem XVII, Inc. | Delaware | |||
DRH Regrem XVIII, Inc. | Delaware | |||
DRH Regrem XIX, Inc. | Delaware | |||
DRH Regrem XX, Inc. | Delaware | |||
DRH Regrem XXI, Inc. | Delaware | |||
DRH Regrem XXII, Inc. | Delaware | |||
DRH Regrem XXIII, Inc. | Delaware | |||
DRH Regrem XXIV, Inc. | Delaware | |||
DRH Regrem XXV, Inc. | Delaware | |||
DRH Regrem XLI, LLC | Delaware | |||
DRH Regrem XLII, LLC | Delaware | |||
DRH Regrem XLIII, LLC | Delaware | |||
DRH Regrem XLIV, LLC | Delaware | |||
DRH Regrem XLV, LLC | Delaware |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS |
DRH Regrem XLVI, LLC | Delaware | |||
DRH Regrem XLVII, LLC | Delaware | |||
DRH Regrem XLVIII, LLC | Delaware | |||
DRH Regrem XLIX, LLC | Delaware | |||
DRH Regrem L, LLC | Delaware | |||
DRH Regrem LI, LLC | Delaware | |||
DRH Regrem LII, LLC | Delaware | |||
DRH Regrem LIII, LLC | Delaware | |||
DRH Regrem LIV, LLC | Delaware | |||
DRH Regrem LV, LLC | Delaware | |||
DRH Southwest Construction, Inc. | California | |||
DRH Tucson Construction, Inc. | Delaware | |||
DRHI, Inc. | Delaware | Express Homes | ||
Emerald Creek No. 4, L.P. | Texas | |||
Emerald Realty of Alabama, LLC | Delaware | |||
Emerald Realty of Central Florida, LLC | Delaware | |||
Emerald Realty of North Florida, LLC | Delaware | |||
Emerald Realty of Northwest Florida, LLC | Delaware | |||
Emerald Realty of Southeast Florida, LLC | Delaware | |||
Emerald Realty of Southwest Florida, LLC | Delaware | |||
Emerald Realty of Tampa, LLC | Delaware | |||
Encore II, Inc. | Arizona | |||
Encore Venture Partners, L.P. | Delaware | |||
Encore Venture Partners II (California), L.P. | Delaware | |||
Encore Venture Partners II (Texas), L.P. | Delaware | |||
Express Homes Realty of Alabama, LLC | Delaware | |||
Express Realty of Central Florida, LLC | Delaware | |||
Express Realty of North Florida, LLC | Delaware | |||
Express Realty of Northwest Florida, LLC | Delaware | |||
Express Realty of Southeast Florida, LLC | Delaware | |||
Express Realty of Southwest Florida, LLC | Delaware | |||
Express Realty of Tampa, LLC | Delaware | |||
Forestar Group Inc. | Delaware |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS |
Founders Oil & Gas, LLC | Delaware | |||
Founders Oil & Gas II, LLC | Delaware | |||
Founders Oil & Gas III, LLC | Delaware | |||
Founders Oil & Gas IV, LLC | Delaware | |||
Founders Oil & Gas Operating, LLC | Delaware | |||
Freedom Realty of Tampa, LLC | Delaware | |||
Georgetown Data, Inc. | Texas | |||
Germann & McQueen, L.L.C. | Arizona | |||
GP-Encore, Inc. | Arizona | |||
Grande Realty Incorporated | New Jersey | D.R. Horton Realty, Inc. | ||
Grande Realty of Pennsylvania, LLC | Delaware | |||
Grand Title Agency, LLC | New Jersey | |||
Greywes, LLC | California | D.R. Horton America’s Builder | ||
Hadian, LLC | Delaware | |||
Haskell Canyon Partners, L.P. | California | |||
Haskell Canyon Partners II, L.P. | California | |||
HPH Homebuilders 2000 L.P. | California | |||
Iao Partners, a Hawaii General Partnership | Hawaii | |||
Kaomalo LLC | Hawaii | |||
KDB Homes, Inc. | Delaware | Continental Homes; Continental Welcome Home; D.R. Horton - Continental Series; D.R. Horton America’s Builder | ||
Lexington Homes - DRH, LLC | Delaware | D.R. Horton America’s Builder; Emerald Homes; Express Homes; Lexington Homes | ||
Martin Road Lake Forest, LLC | Colorado | |||
McQueen & Willis, LLC | Arizona | |||
Meadows I, Ltd. | Delaware | |||
Meadows II, Ltd. | Delaware | |||
Meadows VIII, Ltd. | Delaware | |||
Meadows IX, Inc. | New Jersey | |||
Meadows X, Inc. | New Jersey | |||
Melody Homes, Inc. | Delaware | D.R. Horton - Melody Series; D. Jensen Homes, Inc.; D.R. Horton America’s Builder; Emerald Homes; Express Homes; Freedom Homes |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS |
Metro Title, LLC | Virginia | |||
MRLF, LLC | Colorado | |||
Pacific Ridge - DRH, LLC | Delaware | D.R. Horton; Pacific Ridge; Pacific Ridge - DRH | ||
Rielly Carlsbad LLC | Delaware | |||
Rielly Homes Madison, LLC | Delaware | |||
Schuler Homes of Arizona LLC | Delaware | D.R. Horton - Continental Series; D.R. Horton - Schuler Series | ||
Schuler Homes of California, Inc. | California | |||
Schuler Homes of Oregon, Inc. | Oregon | |||
Schuler Homes of Washington, Inc. | Washington | Keys & Schuler Homes; Schuler Homes Northwest | ||
SGS Communities at Grand Quay L.L.C | New Jersey | |||
SHA Construction LLC | Delaware | |||
SHLR of California, Inc. | California | |||
SHLR of Nevada, Inc. | Nevada | |||
SHLR of Washington, Inc. | Washington | |||
SRHI LLC | Delaware | |||
SSHI LLC | Delaware | D.R. Horton; D.R. Horton Custom Homes; DR Horton; DR Horton Custom Homes; Emerald Homes; Express Homes; Stafford Custom Homes; Stafford Homes | ||
Summerlin Pkwy & Cimarron, LLC | Delaware | |||
Surprise Village North, LLC | Arizona | |||
Travis County Title Company | Texas | DHI Title of Georgia; DHI Title of Central Texas; DHI Title of North Carolina | ||
Treasure Assets, LLC | Delaware | |||
Venture Management of South Carolina, LLC | South Carolina | |||
Vertical Construction Corporation | Delaware | |||
Walker Drive, LLC | Delaware | |||
Western Pacific Brea Development, LLC | Delaware | |||
Western Pacific Housing, Inc. | Delaware | D.R. Horton America’s Builder; D.R. Horton Homes Western Pacific Housing San Diego Division; Emerald Homes; Express Homes; Freedom Homes | ||
Western Pacific Housing - Antigua, LLC | Delaware | |||
Western Pacific Housing - Broadway, LLC | Delaware | |||
Western Pacific Housing - Canyon Park, LLC | Delaware |
NAME | STATE OF INCORPORATION OR ORGANIZATION | DOING BUSINESS AS |
Western Pacific Housing - Carrillo, LLC | Delaware | |||
Western Pacific Housing - Communications Hill, LLC | Delaware | |||
Western Pacific Housing - Copper Canyon, LLC | Delaware | |||
Western Pacific Housing - Coto Venture, L.P. | California | |||
Western Pacific Housing - Creekside, LLC | Delaware | |||
Western Pacific Housing - Lomas Verdes, LLC | Delaware | |||
Western Pacific Housing - Lyons Canyon Partners, LLC | Delaware | |||
Western Pacific Housing Management, Inc. | California | D.R. Horton America’s Builder; Emerald Homes; Express Homes | ||
Western Pacific Housing - McGonigle Canyon, LLC | Delaware | |||
Western Pacific Housing - Mountaingate, L.P. | California | |||
Western Pacific Housing - Norco Estates, LLC | Delaware | |||
Western Pacific Housing - Pacific Park II, LLC | Delaware | |||
Western Pacific Housing - Park Avenue East, LLC | Delaware | |||
Western Pacific Housing - Park Avenue West, LLC | Delaware | |||
Western Pacific Housing - Playa Vista, LLC | Delaware | |||
Western Pacific Housing - River Ridge, LLC | Delaware | |||
Western Pacific Housing - SDG, LLC | California | |||
Western Pacific Housing - Terra Bay Duets, LLC | Delaware | |||
Western Pacific Housing - Torrey Meadows, LLC | Delaware | |||
Western Pacific Housing - Torrey Village Center, LLC | Delaware | |||
Western Pacific Housing - Westlake II, L.P. | California | |||
Western Pacific Housing - Windemere, LLC | Delaware | |||
WPH-Camino Ruiz, LLC | Delaware | |||
WPH-Copper Canyon, LLC | Delaware | |||
WPH-Copper Canyon II, LLC | Delaware | |||
WPHD/Camarillo, LLC | California | |||
WPHD/Ventura, LLC | California | |||
11241 Slater Avenue NE, LLC | Delaware | |||
2 C Development Company LLC | California | |||
8800 Roswell Road Bldg. B, LLC | Delaware | |||
91st Avenue & Happy Valley, L.L.C. | Arizona |
1. | I have reviewed this Annual Report on Form 10-K of D.R. Horton, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ DAVID V. AULD | ||
By: | David V. Auld President and Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of D.R. Horton, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ BILL W. WHEAT | ||
By: | Bill W. Wheat Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | November 16, 2018 | /s/ DAVID V. AULD | ||
By: | David V. Auld President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | November 16, 2018 | /s/ BILL W. WHEAT | ||
By: | Bill W. Wheat Executive Vice President and Chief Financial Officer |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Nov. 07, 2018 |
Mar. 31, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | HORTON D R INC /DE/ | ||
Entity Central Index Key | 0000882184 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 15,499,559,000 | ||
Entity Common Stock, Shares Outstanding | 376,274,635 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
ASSETS | ||
Valuation allowance for deferred income taxes | $ 17.7 | $ 11.2 |
EQUITY | ||
Preferred stock, par value | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 30,000,000 | 30,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 388,120,243 | 384,036,150 |
Common stock, shares outstanding | 376,261,635 | 374,986,079 |
Treasury stock, shares | 11,858,608 | 9,050,071 |
Consolidated Statements of Total Equity (Parenthetical) - shares |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Increase (Decrease) in Stockholders' Equity | |||
Beginning Balances,shares | 374,986,079 | ||
Issuances under employee benefit plans, shares | 114,340 | 111,527 | 89,652 |
Ending Balances, shares | 376,261,635 | 374,986,079 | |
Common Stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Beginning Balances,shares | 374,986,079 | 372,923,187 | 368,647,371 |
Issuances under employee benefit plans, shares | 114,340 | 111,527 | 89,652 |
Exercise of stock options, shares | 2,547,139 | 2,770,569 | 3,504,989 |
Issuances under employee incentive plans, shares | 1,422,614 | 1,030,796 | 681,175 |
Treasury Stock, Shares, Acquired | (2,808,537) | (1,850,000) | |
Ending Balances, shares | 376,261,635 | 374,986,079 | 372,923,187 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and include the accounts of D.R. Horton, Inc. and all of its 100% owned, majority-owned and controlled subsidiaries, which are collectively referred to as the Company, unless the context otherwise requires. Noncontrolling interests represent the proportionate equity interests in consolidated entities that are not 100% owned by the Company. The Company owns a 75% controlling interest in Forestar Group Inc. (Forestar) and therefore is required to consolidate 100% of Forestar within its consolidated financial statements, and the 25% interest the Company does not own is accounted for as noncontrolling interests. The Company’s investment in unconsolidated entities in which significant influence, but not control, is held is accounted for by the equity method of accounting. All intercompany accounts, transactions and balances have been eliminated in consolidation. Change in Presentation and Reclassifications Certain reclassifications have been made to conform to the current year’s presentation. The Company has changed the presentation of the consolidated balance sheets and statements of operations to present its homebuilding, Forestar, financial services and other operations on a combined basis. Prior year amounts have also been combined to reflect this presentation. Of the $56.7 million previously presented as accounts payable and other liabilities in financial services and other operations at September 30, 2017, $4.8 million is classified as accounts payable and $51.9 million is classified as accrued expenses and other liabilities under the new presentation. See Note B for detailed financial information for the Company’s reporting segments. As a result of the adoption of ASU 2016-09 on October 1, 2017, $5.1 million and $5.9 million of cash paid for shares withheld for taxes on stock-based awards was reclassified from operating cash flows to financing cash flows in the consolidated statements of cash flows for fiscal 2017 and 2016, respectively. These amounts were also reclassified from stock issued under employee incentive plans on the consolidated statements of total equity for fiscal 2017 and 2016. These reclassifications had no effect on the Company’s consolidated financial position or results of operations. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Revenue Recognition Homebuilding revenue and related profit are generally recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the buyer. In situations where the buyer’s financing is originated by DHI Mortgage, the Company’s 100% owned mortgage subsidiary, and the buyer has not made an adequate initial or continuing investment, the profit is deferred until the sale of the related mortgage loan to a third-party purchaser has been completed. At both September 30, 2018 and 2017, the deferred profit on these home sales was $3.6 million. Any profit on land sales is deferred until the full accrual method criteria are met. When appropriate, revenue and profit on long-term construction projects are recognized under the percentage-of-completion method. Financial services revenues associated with the Company’s title operations are recognized as closing services are rendered and title insurance policies are issued, both of which generally occur simultaneously as each home is closed. The Company transfers substantially all underwriting risk associated with title insurance policies to third-party insurers. The Company typically elects the fair value option for its mortgage loan originations. Mortgage loans held for sale are initially recorded at fair value based on either sale commitments or current market quotes and are adjusted for subsequent changes in fair value until the loans are sold. Net origination costs and fees associated with mortgage loans are recognized at the time of origination. The expected net future cash flows related to the associated servicing of a loan are included in the measurement of all written loan commitments that are accounted for at fair value through earnings at the time of commitment. The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers. Interest income is earned from the date a mortgage loan is originated until the loan is sold. Cash and Cash Equivalents The Company considers all highly liquid investments with an initial maturity of three months or less when purchased to be cash equivalents. Proceeds from home closings held for the Company’s benefit at title companies are included in homebuilding cash and cash equivalents in the consolidated balance sheets. Cash balances of the Company’s captive insurance subsidiary, which are expected to be used to fund the subsidiary’s operations and pay future anticipated legal claims, were $44.2 million and $36.7 million at September 30, 2018 and 2017, respectively, and are included in cash and cash equivalents in the consolidated balance sheets. Restricted Cash The Company has cash that is restricted as to its use. Restricted cash related to homebuilding and land development operations includes cash used as collateral for outstanding letters of credit issued under secured letter of credit agreements and customer deposits that are temporarily restricted in accordance with regulatory requirements. Restricted cash related to financial services is mortgagor related funds held for taxes and insurance on an interim basis until the sale of the loans. Inventories and Cost of Sales Inventory includes the costs of direct land acquisition, land development and home construction, capitalized interest, real estate taxes and direct overhead costs incurred during development and home construction. Costs incurred after development projects or homes are substantially complete, such as utilities, maintenance, and cleaning, are charged to selling, general and administrative (SG&A) expense as incurred. All indirect overhead costs, such as compensation of sales personnel, division and region management, and the costs of advertising and builder’s risk insurance are charged to SG&A expense as incurred. Land and development costs are typically allocated to individual residential lots on a pro-rata basis, and the costs of residential lots are transferred to construction in progress when home construction begins. Home construction costs are specifically identified and recorded to individual homes. Cost of sales for homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) allocated to each residential lot based upon the total number of homes expected to be closed in each community. Any changes to the estimated total development costs subsequent to the initial home closings in a community are generally allocated on a pro-rata basis to the remaining homes in the community associated with the relevant development activity. When a home is closed, the Company generally has not paid all incurred costs necessary to complete the home. A liability and a corresponding charge to cost of sales are recorded for the amount estimated to ultimately be paid related to completed homes that have been closed. Home construction budgets are compared to actual recorded costs to determine the additional costs remaining to be paid on each closed home. The Company rarely purchases land for resale. However, when the Company owns land or communities under development that do not fit into its development and construction plans, and the Company determines that it will sell the asset, the project is accounted for as land held for sale if certain criteria are met. The Company records land held for sale at the lesser of its carrying value or fair value less estimated costs to sell. Each quarter, the Company reviews its communities and land inventories for indicators of potential impairment. If indicators of impairment are present for a community, the Company performs an impairment evaluation of the community, which includes an analysis to determine if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If so, impairment charges are recorded to cost of sales if the fair value of such assets is less than their carrying amounts. Impairment charges are also recorded on finished homes in substantially completed communities when events or circumstances indicate that the carrying values are greater than the fair values less estimated costs to sell these homes. The key assumptions relating to inventory valuations are impacted by local market and economic conditions and are inherently uncertain. Due to uncertainties in the estimation process, actual results could differ from such estimates. See Note C. Capitalized Interest The Company capitalizes interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred. During fiscal 2018 and 2017, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory. See Note E. Land Option Deposits and Pre-Acquisition Costs The Company enters into land and lot option purchase contracts to acquire land or lots for the construction of homes. Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of many of the option purchase contracts, the option deposits are not refundable in the event the Company elects to terminate the contract. Option deposits and capitalized pre-acquisition costs are expensed to inventory and land option charges when the Company believes it is probable that it will not acquire the property under option and will not be able to recover these costs through other means. See Notes C and K. Variable Interests Option purchase contracts can result in the creation of a variable interest in the entity holding the land parcel under option. There were no variable interest entities reported in the consolidated balance sheets at September 30, 2018 and 2017 because, with regard to each entity, the Company determined it did not control the activities that most significantly impact the variable interest entity’s economic performance, and it did not have an obligation to absorb losses of or the right to receive benefits from the entity. The maximum exposure to losses related to the Company’s variable interest entities is limited to the amounts of the Company’s related option deposits. At September 30, 2018 and 2017, the option deposits related to these contracts totaled $326.0 million and $222.9 million, respectively, and are included in other assets in the consolidated balance sheets. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Repairs and maintenance costs are expensed as incurred. Depreciation generally is recorded using the straight-line method over the estimated useful life of the asset. The depreciable life of model home furniture is 2 years, depreciable lives of office furniture and equipment typically range from 2 to 5 years, and depreciable lives of buildings and improvements typically range from 5 to 30 years. The Company’s property and equipment balances and the related accumulated depreciation at September 30, 2018 and 2017 were as follows:
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Depreciation expense was $58.2 million, $49.4 million and $50.8 million in fiscal 2018, 2017 and 2016, respectively. Business Acquisitions The Company accounts for acquisitions of businesses by allocating the purchase price of the business to the various assets acquired and liabilities assumed at their respective fair values. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets. These estimates and assumptions are based on historical experience, information obtained from the management of the acquired companies and the Company’s estimates of significant assumptions that a market participant would use when determining fair value. While the Company believes the estimates and assumptions are reasonable, they are inherently uncertain. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions. On October 5, 2017, the Company acquired 75% of the outstanding shares of Forestar for $558.3 million in cash, pursuant to the terms of the merger agreement entered into in June 2017 (the acquisition). Forestar is a publicly traded residential lot development company listed on the New York Stock Exchange under the ticker symbol “FOR,” with operations in 24 markets and 14 states as of September 30, 2018. The Company’s alignment with Forestar advances its strategy of increasing its access to optioned land and lot positions to enhance operational efficiency and returns. The Company’s homebuilding divisions and Forestar are identifying land development opportunities to expand Forestar’s platform, and the Company’s homebuilding operations are acquiring finished lots from Forestar in accordance with the master supply agreement between the two companies. As the controlling shareholder of Forestar, the Company strongly influences the strategic direction and operations of Forestar. The Company hired a valuation firm to assist in the allocation of the purchase price to Forestar’s assets and liabilities. The fair values of inventories and the investment in unconsolidated entities were determined by discounting the expected future cash flows using discount rates of approximately 16% to 22% or based on contract prices from third parties. The fair values of inventories and the investment in unconsolidated entities utilized significant inputs not observable in the market, and thus represent Level 3 measurements within the fair value hierarchy. The fair value of noncontrolling interests was based on valuing the Forestar shares that were not purchased by the Company at the weighted average stock price of Forestar on the acquisition date, which is a Level 1 measurement. The fair value of notes payable was based on quoted market prices, which is a Level 2 measurement. The fair values of other assets and liabilities primarily approximate carrying value due to their short-term nature. The purchase price was allocated based on the estimated fair value of 100% of Forestar’s assets and liabilities, as follows (in millions):
As a result of the acquisition, the Company recorded $29.2 million of goodwill, none of which is tax deductible. The goodwill relates to expected synergies from the relationship with Forestar under the master supply agreement that will increase the Company’s access to optioned land and lot positions. The transaction costs incurred by the Company related to this acquisition totaled $7.2 million, of which $5.3 million was incurred during fiscal 2018 and expensed to selling, general and administrative expense. The following unaudited pro forma data presents consolidated pro forma information as if the acquisition had been completed on October 1, 2016. The unaudited pro forma results include adjustments for interest expense and other acquisition related costs and their related income tax effects. This pro forma data should not be considered indicative of the results that would have actually occurred if the acquisition had been consummated on October 1, 2016 or of future results.
In September 2016, the Company acquired the homebuilding operations of Wilson Parker Homes for $91.9 million. Wilson Parker Homes operated in Atlanta and Augusta, Georgia; Raleigh, North Carolina; Columbia, South Carolina and Phoenix, Arizona. The assets acquired included approximately 380 homes in inventory, 490 lots and control of approximately 1,850 additional lots through option contracts. The Company also acquired a sales order backlog of 308 homes. No goodwill was recorded as a result of this acquisition. All of the assets acquired in this transaction were recorded at their estimated fair values by the Company. The acquisition was not material to the Company’s results of operations or its financial condition. Subsequent to year end, the Company acquired the homebuilding operations of Westport Homes for approximately $190 million in cash. See Note O. Goodwill The Company records goodwill associated with its acquisitions of businesses when the purchase price of the business exceeds the fair value of the net tangible and identifiable intangible assets acquired. Goodwill balances are evaluated for potential impairment on at least an annual basis by comparing the carrying value of each of the operating segments with goodwill to their estimated fair values. The estimated fair value is determined by discounting the future cash flows of the operating segment to their present value. If the carrying value of the operating segment exceeds its fair value, the Company determines if an impairment exists based on the implied fair value of the operating segment’s goodwill. As a result of the goodwill evaluations performed in fiscal 2018 and 2017, no impairment charges were recorded. As a result of the goodwill evaluation performed in fiscal 2016, an impairment charge of $7.2 million was recorded to write off the remaining goodwill in the Huntsville operating segment in the Southeast reporting region. This operating segment experienced lower levels of profitability than anticipated primarily due to difficult market conditions. The Company’s goodwill balances by reporting segment were as follows:
Warranty Claims The Company typically provides its homebuyers with a ten-year limited warranty for major defects in structural elements such as framing components and foundation systems, a two-year limited warranty on major mechanical systems and a one-year limited warranty on other construction components. Since the Company subcontracts its construction work to subcontractors who typically provide it with an indemnity and a certificate of insurance prior to receiving payments for their work, claims relating to workmanship and materials are generally the primary responsibility of the subcontractors. Warranty liabilities have been established by charging cost of sales for each home delivered. The amounts charged are based on management’s estimate of expected warranty-related costs under all unexpired warranty obligation periods. The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates and is adjusted to reflect qualitative risks associated with the types of homes built and the geographic areas in which they are built. See Note K. Legal Claims and Insurance The Company records expenses and liabilities for legal claims related to construction defect matters, personal injury claims, employment matters, land development issues, contract disputes and other matters. The amounts recorded for these contingencies are based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes. The Company estimates and records receivables under its applicable insurance policies for these legal claims when recovery is probable. Additionally, the Company may have the ability to recover a portion of its losses from its subcontractors and their insurance carriers when the Company has been named as an additional insured on their insurance policies. See Note K. Advertising Costs The Company expenses advertising costs as incurred. Advertising expense was approximately $44.1 million, $45.4 million and $41.2 million in fiscal 2018, 2017 and 2016, respectively. Income Taxes The Company’s income tax expense is calculated using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement amounts of assets and liabilities and their respective tax bases and attributable to net operating losses and tax credit carryforwards. When assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of sufficient taxable income in future periods and in the jurisdictions in which those temporary differences become deductible. The Company records a valuation allowance when it determines it is more likely than not that a portion of the deferred tax assets will not be realized. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company’s consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation of the Company’s deferred tax assets and liabilities. See Note G. Interest and penalties related to unrecognized tax benefits are recognized in the financial statements as a component of income tax expense. Significant judgment is required to evaluate uncertain tax positions. The Company evaluates its uncertain tax positions on a quarterly basis. The evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in increases or decreases in the Company’s income tax expense in the period in which the change is made. Earnings Per Share Basic earnings per share is based on the weighted average number of shares of common stock outstanding during each year. Diluted earnings per share is based on the weighted average number of shares of common stock and dilutive securities outstanding during each year. See Note H. Stock-Based Compensation The Company’s stockholders formally authorize shares of its common stock to be available for future grants of stock-based compensation awards. From time to time, the Compensation Committee of the Company’s Board of Directors authorizes the grant of stock-based compensation to its employees and directors from these available shares. At September 30, 2018, the outstanding stock-based compensation awards include stock options and restricted stock units. Grants of restricted stock units may vest immediately or over a certain number of years as determined by the Compensation Committee of the Board of Directors. Restricted stock units outstanding at September 30, 2018 have a remaining vesting period of 1 to 5 years. Stock options are granted at exercise prices which equal the market value of the Company’s common stock at the date of the grant. The stock options outstanding at September 30, 2018 vest during the next year and expire 10 years after the dates on which they were granted. The compensation expense for stock-based awards is based on the fair value of the award and is recognized on a straight-line basis over the remaining vesting period. The fair values of restricted stock units are based on the Company’s stock price at the date of grant. The fair values of stock options granted are calculated on the date of grant using a Black-Scholes option pricing model. Determining the fair value of stock options requires judgment in developing assumptions and involves a number of estimates. These estimates include, but are not limited to, the expected stock price volatility over the term of the awards, the expected dividend yield and expected stock option exercise behavior. In addition, judgment is used in estimating the number of stock options that are expected to be forfeited. See Note J. Fair Value Measurements The Financial Accounting Standards Board’s (FASB) authoritative guidance for fair value measurements establishes a three-level hierarchy based upon the inputs to the valuation model of an asset or liability. When available, the Company uses quoted market prices in active markets to determine fair value. The Company considers the principal market and nonperformance risk associated with the Company’s counterparties when determining the fair value measurements, if applicable. Fair value measurements are used for the Company’s mortgage loans held for sale, debt securities collateralized by residential real estate, interest rate lock commitments and other derivative instruments on a recurring basis and are used for inventories, other mortgage loans and real estate owned on a nonrecurring basis, when events and circumstances indicate that the carrying value may not be recoverable. See Note M. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which is a comprehensive new revenue recognition model that will replace most existing revenue recognition guidance. The core principle of this guidance is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The guidance is effective for the Company beginning October 1, 2018 and allows for full retrospective or modified retrospective methods of adoption. The Company plans to adopt this standard using the modified retrospective method. Upon adoption of the standard, the Company expects to record an adjustment to increase retained earnings and recognize a contract asset for expected future insurance brokerage commission renewals. The Company has not yet determined the amount of this adjustment and is continuing to evaluate other effects of the standard, but does not expect the adoption of this standard to have a material impact on its consolidated financial position, results of operations or cash flows. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities,” which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires that lease assets and liabilities be recognized on the balance sheet and that key information about leasing arrangements be disclosed. The guidance is effective for the Company beginning October 1, 2019, although early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations and cash flows. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information in determining credit loss estimates. The guidance is effective for the Company beginning October 1, 2020 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments,” which amends and clarifies the current guidance to reduce diversity in practice of the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated statements of cash flows. In October 2016, the FASB issued ASU 2016-16, “Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory,” which requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated financial position or cash flows. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash,” which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated financial position or cash flows. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other,” which simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test and requires the determination of the fair value of individual assets and liabilities of a reporting unit. Under the new guidance, goodwill impairment is measured as the amount by which a reporting unit’s carrying amount exceeds its fair value with the loss recognized limited to the total amount of goodwill allocated to the reporting unit. The guidance is effective for the Company beginning October 1, 2020 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. In February 2017, the FASB issued ASU 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets,” which updates the definition of an in substance nonfinancial asset and clarifies the derecognition guidance for nonfinancial assets to conform to the new revenue recognition standard (ASU 2014-09). The guidance is effective for the Company beginning October 1, 2018, concurrent with the adoption of ASU 2014-09, as required, and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation: Scope of Modification Accounting,” which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION The Company’s operating segments are its 46 homebuilding divisions, its majority-owned Forestar residential lot development operations, its financial services operations and its other business activities. The Company’s reporting segments are its homebuilding reporting segments, its Forestar land development segment and its financial services segment. The homebuilding operating segments are aggregated into the following six reporting segments: East, Midwest, Southeast, South Central, Southwest and West. These reporting segments have homebuilding operations located in the following states:
Homebuilding is the Company’s core business, generating 97% of consolidated revenues in fiscal 2018 and 98% of consolidated revenues in fiscal 2017 and 2016. The Company’s homebuilding segments are primarily engaged in the acquisition and development of land and the construction and sale of residential homes, with operations in 81 markets in 27 states across the United States. The homebuilding segments generate most of their revenues from the sale of completed homes and to a lesser extent from the sale of land and lots. The Forestar segment is a residential lot development company with operations in 24 markets and 14 states. The Company’s homebuilding divisions and Forestar are identifying land development opportunities to expand Forestar’s platform, and the homebuilding divisions are acquiring finished lots from Forestar in accordance with the master supply agreement between the two companies. Forestar’s segment results are presented on their historical cost basis, consistent with the manner in which management evaluates segment performance. The Company’s financial services segment provides mortgage financing and title agency services to homebuyers in many of the Company’s homebuilding markets. The segment generates the substantial majority of its revenues from originating and selling mortgages and collecting fees for title insurance agency and closing services. The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers. In addition to its homebuilding, Forestar and financial services operations, the Company has subsidiaries that engage in other business activities. These subsidiaries conduct insurance-related operations, construct and own income-producing rental properties, own non-residential real estate including ranch land and improvements and own and operate oil and gas related assets. One of these subsidiaries, DHI Communities, is developing and constructing multi-family rental properties on land parcels the Company already owned and currently has four projects under active construction and two projects that are substantially complete. At September 30, 2018 and 2017, property and equipment in the consolidated balance sheets included $171.4 million and $93.7 million, respectively, of assets owned by DHI Communities. The operating results of these subsidiaries are immaterial for separate reporting and therefore are grouped together and presented as other. The accounting policies of the reporting segments are described throughout Note A. Financial information relating to the Company’s reporting segments is as follows:
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Inventory |
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Sep. 30, 2018 | |
Inventory Impairments and Land Option Cost Write-Offs [Abstract] | |
Inventory | INVENTORIES At the end of each quarter during fiscal 2018, the Company reviewed the performance and outlook for all of its communities and land inventories for indicators of potential impairment and performed detailed impairment evaluations and analyses when necessary. As of September 30, 2018, the Company performed detailed impairment evaluations of communities and land inventories with a combined carrying value of $60.5 million and recorded impairment charges of $3.5 million during the fourth quarter to reduce the carrying value of impaired communities and land to fair value. Total impairment charges during fiscal 2018, 2017 and 2016 were $11.8 million, $23.2 million and $20.3 million, respectively. Inventory impairments and the land option charges discussed below are included in cost of sales in the consolidated statements of operations. During fiscal 2018, 2017 and 2016, earnest money and pre-acquisition cost write-offs related to land option contracts that the Company has terminated or expects to terminate were $14.1 million, $17.0 million and $11.1 million, respectively. Total inventory and land option charges of $50.4 million for fiscal 2018 also include a charge of $24.5 million related to the settlement of an outstanding dispute associated with a land transaction. On February 8, 2018, Forestar sold a portion of its assets for $232 million. This strategic asset sale included projects owned both directly and indirectly through ventures. The total net proceeds after certain purchase price adjustments, closing costs and other costs associated with selling these projects was $217.5 million, and a gain on the sale of these assets of $0.7 million is included in the Company’s consolidated statement of operations for the year ended September 30, 2018. |
Notes Payable |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable | NOTES PAYABLE The Company’s notes payable at their principal amounts, net of unamortized discounts and debt issuance costs, consist of the following:
Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $8.5 million and $9.5 million at September 30, 2018 and 2017, respectively. These costs are capitalized into inventory as they are amortized. Forestar’s 3.75% convertible senior notes due 2020 include an unamortized fair value adjustment of $8.2 million at September 30, 2018. As of September 30, 2018, maturities of consolidated notes payable, assuming the mortgage repurchase facility is not extended or renewed, are $1.1 billion in fiscal 2019, $618.9 million in fiscal 2020, $400.0 million in fiscal 2021, $350.0 million in fiscal 2022 and $700.0 million in fiscal 2023. Homebuilding: The Company has a senior unsecured homebuilding revolving credit facility which was amended in September 2018 to increase its capacity from $1.275 billion to $1.325 billion and to extend its maturity date to September 25, 2023. The facility has an uncommitted accordion feature that could increase the size of the facility to $1.9 billion, subject to certain conditions and availability of additional bank commitments. The facility also provides for the issuance of letters of credit with a sublimit equal to approximately 50% of the revolving credit commitment. Letters of credit issued under the facility reduce the available borrowing capacity. The interest rate on borrowings under the revolving credit facility may be based on either the Prime Rate or London Interbank Offered Rate (LIBOR) plus an applicable margin, as defined in the credit agreement governing the facility. Borrowings and repayments under the facility totaled $1.8 billion each during fiscal 2018. At September 30, 2018, there were no borrowings outstanding and $107.2 million of letters of credit issued under the revolving credit facility. The Company’s homebuilding revolving credit facility imposes restrictions on its operations and activities, including requiring the maintenance of a maximum allowable ratio of debt to tangible net worth and a borrowing base restriction if the Company’s ratio of debt to tangible net worth exceeds a certain level. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. The credit agreement governing the facility and the indenture governing the senior notes also impose restrictions on the creation of secured debt and liens. At September 30, 2018, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations. The Company has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in August 2018, registering debt and equity securities that the Company may issue from time to time in amounts to be determined. In December 2017, the Company issued $400 million principal amount of 2.55% senior notes due December 1, 2020, with interest payable semi-annually. The notes represent unsecured obligations of the Company. In December 2017, the Company redeemed $400 million principal amount of its 3.625% senior notes due February 2018. The senior notes were redeemed at a price equal to 100% of the principal amount of the notes, together with accrued and unpaid interest. The key terms of the Company’s homebuilding senior notes outstanding as of September 30, 2018 are summarized below.
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All series of homebuilding senior notes and borrowings under the revolving credit facility are senior obligations and rank pari passu in right of payment to all existing and future unsecured indebtedness and senior to all existing and future indebtedness expressly subordinated to them. The homebuilding senior notes and borrowings under the revolving credit facility are guaranteed by entities that hold approximately 85% of the Company’s assets. Upon the occurrence of both a change of control of the Company and a ratings downgrade event, as defined in the indenture governing its senior notes, the Company would be required in certain circumstances to offer to repurchase these notes at 101% of their principal amount, along with accrued and unpaid interest. Also, a change of control as defined in the revolving credit facility would constitute an event of default under the revolving credit facility, which could result in the acceleration of any borrowings outstanding under the facility and the termination of the commitments thereunder. Effective August 1, 2018, the Board of Directors authorized the repurchase of up to $500 million of the Company’s debt securities effective through September 30, 2019. All of the $500 million authorization was remaining at September 30, 2018. Forestar: In August 2018, Forestar entered into a $380 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $570 million, subject to certain conditions and availability of additional bank commitments. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the revolving credit commitment. Borrowings under the revolving credit facility are subject to a borrowing base based on Forestar’s book value of its real estate assets and unrestricted cash. The maturity date of the facility is August 16, 2021. The maturity date of the revolving credit facility may be extended by up to one year on up to three occasions, subject to the approval of lenders holding a majority of the commitments. At September 30, 2018, there were no borrowings outstanding and $4.5 million of letters of credit issued under the revolving credit facility. The revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. At September 30, 2018, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility. In August 2018, in connection with entering into the revolving credit facility agreement, Forestar amended its letter of credit facility agreement. Under the amendment, outstanding letters of credit issued by one bank were transferred into Forestar’s new revolving credit facility. The amendment reduced the capacity of the letter of credit facility from $30.0 million to $15.4 million and provided for a corresponding release of cash collateral in the amount of $13.8 million. The amendment also extended the maturity date of the facility to October 5, 2019. At September 30, 2018, letters of credit outstanding under the letter of credit facility totaled $15.4 million, secured by $16.2 million in cash, which is included in restricted cash in the consolidated balance sheet. On October 5, 2017, Forestar had $120 million principal amount outstanding of 3.75% convertible senior notes due 2020. The completion of the acquisition resulted in a fundamental change in the notes as described in the related note indentures and therefore, Forestar offered to purchase all or any part of every holder’s convertible senior notes for a price in cash equal to 100% of the aggregate principal amount of the notes, plus accrued and unpaid interest, if any, to the date of repurchase. As a result, Forestar purchased $1.1 million of the aggregate principal amount of the notes. Also, prior to the acquisition, upon conversion of the notes each holder was entitled to receive 40.8351 shares of former Forestar common stock per $1,000 principal amount of notes surrendered for conversion. In connection with the acquisition, the conversion ratio was adjusted in accordance with the indenture governing the convertible notes such that each holder is now entitled to receive $579.77062 in cash and 8.17192 shares of new Forestar common stock per $1,000 principal amount of notes surrendered for conversion. Forestar’s revolving credit facility and its convertible senior notes are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the Company’s homebuilding debt. Financial Services: The Company’s mortgage subsidiary, DHI Mortgage, has a mortgage repurchase facility that is accounted for as a secured financing. The mortgage repurchase facility provides financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to the counterparties against the transfer of funds by the counterparties, thereby becoming purchased loans. DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames from 45 to 60 days in accordance with the terms of the mortgage repurchase facility. The total capacity of the facility is $600 million; however, the capacity increases, without requiring additional commitments, to $725 million for approximately 30 days at each quarter end and to $800 million for approximately 45 days at fiscal year end. The capacity can also be increased to $1.0 billion subject to the availability of additional commitments. The maturity date of the facility is February 22, 2019. As of September 30, 2018, $758.6 million of mortgage loans held for sale with a collateral value of $735.6 million were pledged under the mortgage repurchase facility. As a result of advance paydowns totaling $97.9 million, DHI Mortgage had an obligation of $637.7 million outstanding under the mortgage repurchase facility at September 30, 2018 at a 4.1% annual interest rate. The mortgage repurchase facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the Company’s homebuilding debt. The facility contains financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable ratio of debt to tangible net worth and its minimum required liquidity. These covenants are measured and reported to the lenders monthly. At September 30, 2018, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facility. In the past, DHI Mortgage has been able to renew or extend its mortgage credit facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the credit agreement during periods of higher than normal volumes of mortgages held for sale. The liquidity of the Company’s financial services business depends upon its continued ability to renew and extend the mortgage repurchase facility or to obtain other additional financing in sufficient capacities. |
Capitalized Interest |
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Interest Costs Incurred [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Interest | CAPITALIZED INTEREST The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the years ended September 30, 2018, 2017 and 2016.
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Mortgage Loans |
12 Months Ended |
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Sep. 30, 2018 | |
Mortgage Loans on Real Estate [Abstract] | |
Mortgage Loans | MORTGAGE LOANS Mortgage Loans Held for Sale Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property. At September 30, 2018, mortgage loans held for sale had an aggregate carrying value of $796.4 million and an aggregate outstanding principal balance of $776.1 million. At September 30, 2017, mortgage loans held for sale had an aggregate carrying value of $587.3 million and an aggregate outstanding principal balance of $570.8 million. During the years ended September 30, 2018, 2017 and 2016, mortgage loans originated totaled $7.6 billion, $6.8 billion and $5.9 billion, respectively, and mortgage loans sold totaled $7.4 billion, $6.8 billion and $5.9 billion, respectively. The Company had gains on sales of loans and servicing rights of $265.1 million, $251.1 million and $207.5 million during the years ended September 30, 2018, 2017 and 2016, respectively. Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations. Approximately 92% of the mortgage loans sold by DHI Mortgage during fiscal 2018 were sold to four major financial entities, the largest percentage of which purchased 36% of the total loans sold. To manage the interest rate risk inherent in its mortgage operations, the Company hedges its risk using derivative instruments, generally forward sales of mortgage-backed securities (MBS), which are referred to as “hedging instruments” in the following discussion. The Company does not enter into or hold derivatives for trading or speculative purposes. Newly originated loans that have been closed but not committed to third-party purchasers are hedged to mitigate the risk of changes in their fair value. Hedged loans are committed to third-party purchasers typically within three days after origination. The notional amounts of the hedging instruments used to hedge mortgage loans held for sale vary in relationship to the underlying loan amounts, depending on the movements in the value of each hedging instrument relative to the value of the underlying mortgage loans. The fair value change related to the hedging instruments generally offsets the fair value change in the mortgage loans held for sale. The net fair value change, which for the years ended September 30, 2018, 2017 and 2016 was not significant, is recognized in revenues in the consolidated statements of operations. At September 30, 2018 and 2017, the Company’s mortgage loans held for sale that were not committed to third-party purchasers totaled $575.9 million and $330.7 million, respectively, and the notional amounts of the hedging instruments related to those loans totaled $575.8 million and $330.7 million, respectively. Other Mortgage Loans and Loss Reserves Mortgage loans are sold with limited recourse provisions derived from industry-standard representations and warranties in the relevant agreements. These representations and warranties primarily involve the absence of misrepresentations by the borrower or other parties, the appropriate underwriting of the loan and in some cases, a required minimum number of payments to be made by the borrower. The Company generally does not retain any other continuing interest related to mortgage loans sold in the secondary market. The majority of other mortgage loans consists of loans repurchased due to these limited recourse obligations. Typically, these loans are impaired, and some become real estate owned through the foreclosure process. At September 30, 2018 and 2017, the Company’s total other mortgage loans and real estate owned, before loss reserves, totaled $9.1 million and $8.3 million, respectively. The Company has recorded reserves for estimated losses on other mortgage loans, real estate owned and future loan repurchase obligations due to the limited recourse provisions, all of which are recorded as reductions of revenue. The loss reserve for loan repurchase and settlement obligations is estimated based on analysis of the volume of mortgages originated, loan repurchase requests received, actual repurchases and losses through the disposition of such loans or requests and discussions with mortgage purchasers. The reserve balances at September 30, 2018 and 2017 totaled $8.4 million and $8.7 million, respectively. Other mortgage loans and real estate owned net of the related loss reserves are included in other assets, while loan repurchase obligations are included in accrued expenses and other liabilities in the Company’s consolidated balance sheets. Loan Commitments and Related Derivatives The Company is party to interest rate lock commitments (IRLCs), which are extended to borrowers who have applied for loan funding and meet defined credit and underwriting criteria. At September 30, 2018 and 2017, the notional amount of IRLCs, which are accounted for as derivative instruments recorded at fair value, totaled $485.3 million and $446.2 million, respectively. The Company manages interest rate risk related to its IRLCs through the use of best-efforts whole loan delivery commitments and hedging instruments. These instruments are considered derivatives in an economic hedge and are accounted for at fair value with gains and losses recognized in revenues in the consolidated statements of operations. At September 30, 2018 and 2017, the notional amount of best-efforts whole loan delivery commitments totaled $25.6 million and $26.9 million, respectively, and the notional amount of hedging instruments related to IRLCs not yet committed to purchasers totaled $430.2 million and $389.3 million, respectively. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Income Tax Expense The components of the Company’s income tax expense are as follows:
The Company’s effective tax rate was 29.0%, 35.2% and 34.5% in fiscal 2018, 2017 and 2016, respectively. The effective tax rate for fiscal 2018 reflects the impact of the Tax Cuts and Jobs Act (Tax Act), which was enacted into law on December 22, 2017, an excess tax benefit related to stock-based compensation, the release of a valuation allowance against deferred tax assets related to Forestar, and the enactment of the Bipartisan Budget Act of 2018, which retroactively extended the expiration date of the federal energy efficient home credit from December 31, 2016 until December 31, 2017. The effective tax rates for all years include an expense for state income taxes, reduced by tax benefits for the domestic production activities deduction. The Tax Act reduced the corporate tax rate from 35% to 21% for all corporations effective January 1, 2018. For fiscal year companies, the change in law requires the application of a blended tax rate in the year of change, which for the Company was 24.5% for the fiscal year ended September 30, 2018. Thereafter, the applicable statutory tax rate is 21%. ASC 740 requires all companies to reflect the effects of the new law in the period in which the law was enacted. Accordingly, the Company reduced the statutory tax rate that applied to its year-to-date earnings from 35% to 24.5%. In addition, the Company remeasured its deferred tax assets and liabilities for the tax law change, which resulted in additional income tax expense of $108.7 million recognized during the three months ended December 31, 2017. No other tax law changes as a result of the Tax Act had a significant impact on the Company’s financial statements. On October 5, 2017, the Company acquired 75% of the outstanding shares of Forestar. The Company recorded goodwill of $29.2 million, which is not deductible for income tax purposes. At the acquisition date, a valuation allowance of $20.1 million was recorded against Forestar’s $20.4 million of deferred tax assets due to Forestar’s cumulative losses in recent years. During the fourth quarter of fiscal 2018, Forestar emerged from the cumulative loss position. The Company evaluated all positive and negative evidence and determined the emergence from the cumulative loss position and other positive evidence outweighed the negative evidence, and reduced the valuation allowance which resulted in a corresponding reduction in income tax expense. As of September 30, 2018, the Company has retained a valuation allowance of $3.5 million related to Forestar’s state deferred tax assets for net operating loss (NOL) carryforwards that are more likely than not to expire before being realized. Reconciliation of Expected Income Tax Expense Differences between income tax expense and tax computed by applying the federal statutory rate of 24.5% in fiscal 2018 and 35% in fiscal 2017 and 2016 to income before income taxes during each year is due to the following:
Deferred Income Taxes Deferred tax assets and liabilities reflect the tax consequences of temporary differences between the financial statement bases of assets and liabilities and their tax bases, tax losses and credit carryforwards. Components of deferred income taxes, including Forestar’s deferred tax assets and liabilities as of September 30, 2018, are summarized as follows:
D.R. Horton has $19.3 million of tax benefits for state NOL carryforwards that expire at various times depending on the tax jurisdiction. Of the total amount, $5.4 million of the tax benefits expire over the next ten years and the remaining $13.9 million expires from fiscal years 2029 to 2038. Forestar has $14.8 million of tax benefits for federal NOL carryforwards, after consideration of intra-entity profit eliminations, which have no expiration date. Additionally, Forestar has $4.0 million of tax benefits for state NOL carryforwards that expire at various times depending on the tax jurisdiction. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company’s consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation of the Company’s deferred tax assets. Valuation Allowance In addition to the $3.5 million valuation allowance related to Forestar’s state deferred tax assets, the Company has a valuation allowance of $14.2 million related to D.R. Horton’s state deferred tax assets for NOL carryforwards because it is more likely than not that a portion of the state NOL carryforwards will expire before being realized. In total, the Company’s valuation allowance was $17.7 million at September 30, 2018 and $11.2 million at September 30, 2017. The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to the remaining state NOL carryforwards. Any reversal of the valuation allowance in future periods will impact the Company’s effective tax rate. Regulations and Legislation D.R. Horton is subject to federal income tax and to income tax in multiple states. The statute of limitations for D.R. Horton’s major tax jurisdictions remains open for examination for fiscal years 2015 through 2018. D.R. Horton is currently being audited by various states; however, to date, management is not aware of any significant findings identified by the taxing authorities. Forestar is subject to federal income tax and to income tax in multiple states. All federal statutes of limitations for tax years prior to 2016 are effectively closed. The statute of limitations in major state jurisdictions for tax years prior to 2014 is closed. Forestar is currently under audit by the IRS for the 2016 tax year. At this time, Forestar is not aware of any significant findings identified by the IRS. Forestar is not currently being audited by any state jurisdictions. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE The following table sets forth the numerators and denominators used in the computation of basic and diluted earnings per share.
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Stockholders' Equity |
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Equity [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY The Company has an automatically effective universal shelf registration statement, filed with the SEC in August 2018, registering debt and equity securities that it may issue from time to time in amounts to be determined. Also, Forestar has an effective shelf registration statement filed with the SEC in September 2018, registering $500 million of equity securities. At September 30, 2018, the Company had 388,120,243 shares of common stock issued and 376,261,635 shares outstanding. No shares of preferred stock were issued or outstanding. During fiscal 2018, the Company repurchased 2.8 million shares of its common stock for $127.5 million. Effective August 1, 2018, the Board of Directors authorized the repurchase of up to $400 million of the Company’s common stock effective through September 30, 2019, which replaced the previous authorization. During August 2018, the Company repurchased 560,000 shares of its common stock for $24.5 million, resulting in a remaining authorization of $375.5 million at September 30, 2018. The Board of Directors approved and paid quarterly cash dividends of $0.125 per common share and $0.10 per common share in fiscal 2018 and 2017, respectively. In November 2018, the Board of Directors approved a cash dividend of $0.15 per common share, payable on December 10, 2018, to stockholders of record on November 26, 2018. |
Employee Benefit Plans |
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Compensation Related Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefits Plans | EMPLOYEE BENEFIT PLANS Deferred Compensation Plans The Company has a 401(k) plan for all employees who have been with the Company for a period of six months or more. The Company matches portions of employees’ voluntary contributions. Additional employer contributions in the form of profit sharing may also be made at the Company’s discretion. The Company recorded $18.4 million, $16.0 million and $13.3 million of expense for matching contributions in fiscal 2018, 2017 and 2016, respectively. The Company’s Supplemental Executive Retirement Plan (SERP) is a non-qualified deferred compensation program that provides benefits payable to certain management employees upon retirement, death or termination of employment. Under the SERP, the Company accrues an unfunded benefit based on a percentage of the eligible employees’ salaries, as well as an interest factor based upon a predetermined formula. The Company’s liabilities related to the SERP were $35.4 million and $31.6 million at September 30, 2018 and 2017, respectively. The Company recorded $5.4 million, $4.9 million and $4.6 million of expense for this plan in fiscal 2018, 2017 and 2016, respectively. The Company has a deferred compensation plan available to a select group of employees which allows participating employees to contribute compensation into the plan on a before tax basis and defer income taxation on the contributions until the funds are withdrawn from the plan. The participating employees designate investments for their contributions; however, the Company is not required to invest the contributions in the designated investments. The Company’s net liabilities related to the deferred compensation plan were $69.3 million and $58.2 million at September 30, 2018 and 2017, respectively. The Company records as expense the amount that the employee contributions would have earned had the funds been invested in the designated investments. Related to this plan, the Company recorded expense of $5.8 million, $6.3 million and $4.0 million in fiscal 2018, 2017 and 2016, respectively. Employee Stock Purchase Plan The Company’s Employee Stock Purchase Plan provides eligible employees the opportunity to purchase common stock of the Company at a discounted price of 85% of the fair market value of the stock on the designated dates of purchase. The price to eligible employees may be further discounted depending on the average fair market value of the stock during the period and certain other criteria. Under the terms of the plan, the total fair market value of common stock that an eligible employee may purchase each year is limited to the lesser of 15% of the employee’s annual compensation or $25,000. Under the plan, employees purchased 114,340 shares for $4.0 million in fiscal 2018, 111,527 shares for $2.8 million in fiscal 2017 and 89,652 shares for $2.2 million in fiscal 2016. At September 30, 2018, the Company had 3.1 million shares of common stock reserved for issuance pursuant to the Employee Stock Purchase Plan. Incentive Bonus Plan The Company’s Incentive Bonus Plan provides for the Compensation Committee to award short-term performance bonuses to senior management based upon the level of achievement of certain criteria. For fiscal 2018, 2017 and 2016, the Compensation Committee approved awards whereby certain executive officers could earn performance bonuses based upon percentages of the Company’s pre-tax income. Compensation expense related to these plans was $23.7 million, $16.8 million and $14.2 million in fiscal 2018, 2017 and 2016, respectively. Stock-Based Compensation The Company’s Stock Incentive Plan provides for the granting of stock options and restricted stock units to executive officers, other key employees and non-management directors. Restricted stock unit awards may be based on performance (performance-based) or on service over a requisite time period (time-based). At September 30, 2018, the Company had 29.1 million shares of common stock reserved for issuance and 18.5 million shares available for future grants under the Stock Incentive Plan. Stock Options Stock options are granted at exercise prices which equal the market value of the Company’s common stock at the date of the grant. The options outstanding at September 30, 2018 vest during the next year and expire 10 years after the dates on which they were granted. The Company did not grant stock options during fiscal 2018, 2017 or 2016; however, the following table provides additional information related to stock option activity during those years.
The aggregate intrinsic value of options exercised during fiscal 2018, 2017 and 2016 was $76.8 million, $49.5 million and $39.2 million, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the option exercise price. The aggregate intrinsic value of options outstanding and exercisable at September 30, 2018 was $146.0 million and $124.4 million, respectively. Exercise prices for options outstanding at September 30, 2018 ranged from $9.03 to $23.86. The weighted average remaining contractual lives of options outstanding and exercisable at September 30, 2018 is 3.5 years. For fiscal 2018, 2017 and 2016, compensation expense related to stock options was $6.9 million, $15.1 million and $20.5 million, respectively. At September 30, 2018, there was approximately $1.0 million of unrecognized compensation expense related to unvested stock option awards to be recognized in fiscal 2019. Performance-Based Restricted Stock Unit (RSU) Equity Awards During fiscal 2018, 2017 and 2016, performance-based RSU equity awards that vest at the end of three-year performance periods were granted to the Company’s Chairman, its Chief Executive Officer and its Chief Operating Officer. The number of units that ultimately vest depends on the Company’s relative position as compared to its peers in achieving certain performance criteria and can range from 0% to 200% of the number of units granted. The performance criteria are total shareholder return, return on investment, SG&A expense containment and gross profit. The performance-based RSUs have no dividend or voting rights during the performance period. Each of these performance-based RSUs represents the contingent right to receive one share of the Company’s common stock if the vesting conditions are satisfied. Compensation expense related to these grants is based on the Company’s performance against the peer group, the elapsed portion of the performance period and the grant date fair value of the award. The following table provides additional information related to the performance-based RSUs outstanding at September 30, 2018.
In November 2018, the Compensation Committee approved the payout of the performance-based RSUs that vested in September 2018 in the form of 350,625 shares of common stock to satisfy the awards. Time-Based Restricted Stock Unit (RSU) Equity Awards Time-based RSUs represent the contingent right to receive one share of the Company’s common stock if the vesting conditions are satisfied. The time-based RSUs have no dividend or voting rights during the vesting period. During fiscal 2018, 2017 and 2016, time-based RSUs were granted to the Company’s executive officers, other key employees and non-management directors (collectively, approximately 920, 600 and 570 recipients, respectively). These awards vest annually in equal installments over periods of three to five years. RSUs generally result in less dilution to shareholders than stock options, which have been granted to key employees in the past. The following table provides additional information related to time-based RSU activity during fiscal 2018, 2017 and 2016.
The total fair value of shares vested on the vesting date during fiscal 2018, 2017 and 2016 was $51.0 million, $25.0 million and $12.0 million, respectively. For fiscal 2018, 2017 and 2016, compensation expense related to time-based RSUs was $39.3 million, $28.8 million and $18.7 million respectively. At September 30, 2018, there was $101.1 million of unrecognized compensation expense related to unvested time-based RSU awards. This expense is expected to be recognized over a weighted average period of 3.5 years. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Warranty Claims The Company provides its homebuyers with warranties for defects in structural elements, mechanical systems and other construction components of the home. Warranty liabilities are established by charging cost of sales for each home delivered based on management’s estimate of expected warranty-related costs and by accruing for existing warranty claims. The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates and is adjusted to reflect qualitative risks associated with the types of homes built and the geographic areas in which they are built. The estimation of these costs is subject to a high degree of variability due to uncertainties related to these factors. Due to the high degree of judgment required in establishing the liability for warranty claims, actual future costs could differ significantly from current estimated amounts, and it is not possible for the Company to make a reasonable estimate of the possible loss or range of loss in excess of its warranty liability. Changes in the Company’s warranty liability during fiscal 2018 and 2017 were as follows:
The change in liabilities for pre-existing warranties was $49.3 million and $30.0 million in fiscal 2018 and 2017, respectively. These amounts reflect the Company’s ongoing efforts to improve its customer service and relations, which in many cases results in the performance of warranty service after the original warranty period has expired. The Company has increased the amount of its warranties issued as a percentage of home cost of sales to reflect this increase in warranty costs. Legal Claims and Insurance The Company is named as a defendant in various claims, complaints and other legal actions in the ordinary course of business. At any point in time, the Company is managing several hundred individual claims related to construction defect matters, personal injury claims, employment matters, land development issues, contract disputes and other matters. The Company has established reserves for these contingencies based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes. The estimated liabilities for these contingencies were $408.1 million and $420.6 million at September 30, 2018 and 2017, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets. Approximately 99% and 98% of these reserves related to construction defect matters at September 30, 2018 and 2017, respectively. Expenses related to the Company’s legal contingencies were $41.0 million, $87.8 million and $49.6 million in fiscal 2018, 2017 and 2016, respectively. The Company’s reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims. As of September 30, 2018, no individual existing claim was material to the Company’s financial statements. The Company has closed a significant number of homes during recent years and may be subject to future construction defect claims on these homes. Although regulations vary from state to state, construction defect issues can generally be reported for up to ten years after the home has closed in many states in which the Company operates. Historical data and trends regarding the frequency of claims incurred and the costs to resolve claims relative to the types of products and markets where the Company operates are used to estimate the construction defect liabilities for both existing and anticipated future claims. These estimates are subject to ongoing revision as the circumstances of individual pending claims and historical data and trends change. Adjustments to estimated reserves are recorded in the accounting period in which the change in estimate occurs. Historical trends in construction defect claims have been inconsistent, and the Company believes they may continue to fluctuate. Housing market conditions have been volatile across most of the Company’s markets over the past ten years, and the Company believes such conditions can affect the frequency and cost of construction defect claims. If the ultimate resolution of construction defect claims resulting from the Company’s home closings in prior years varies from current expectations, it could significantly change the Company’s estimates regarding the frequency and timing of claims incurred and the costs to resolve existing and anticipated future claims, which would impact the construction defect reserves in the future. If the frequency of claims incurred or costs of existing and future legal claims significantly exceed the Company’s current estimates, they will have a significant negative impact on its future earnings and liquidity. The Company’s reserves for legal claims decreased from $420.6 million at September 30, 2017 to $408.1 million at September 30, 2018. The increase in reserves during fiscal 2018 was less than the prior year was due to a decrease in known and expected future claims. Changes in the Company’s legal claims reserves during fiscal 2018 and 2017 were as follows:
In the majority of states in which it operates, the Company has, and requires the majority of the subcontractors it uses to have, general liability insurance which includes construction defect coverage. The Company’s general liability insurance policies protect it against a portion of its risk of loss from construction defect and other claims and lawsuits, subject to self-insured retentions and other coverage limits. For policy years ended June 30, 2006 through 2019, the Company is self-insured for the first $10.0 million to $17.5 million of aggregate completed operations indemnity claims incurred, depending on the policy year. After the aggregate self-insurance limits have been satisfied, the Company’s excess loss insurance coverage begins. However, the Company must still pay $0.25 million of any indemnity claim and a portion of the legal fees incurred for each claim occurrence. In some states where the Company believes it is too difficult or expensive for its subcontractors to obtain general liability insurance, the Company has waived its normal subcontractor general liability insurance requirements to obtain lower costs from subcontractors. In these states, the Company purchases insurance policies from either third-party carriers or its 100% owned captive insurance subsidiary and names certain subcontractors as additional insureds. The policies issued by the captive insurance subsidiary represent self-insurance of these risks by the Company. The Company is self-insured under its captive policies for up to $25.0 million in aggregate completed operations indemnity claims per policy year and for the first $0.25 million for each claim occurrence. For all policy years after April 2007, the captive insurance subsidiary has $15.0 million of excess loss insurance coverage with a third-party insurer. For policy years 2017, 2018 and 2019, after consideration of the aforementioned $15.0 million of risk transfer, the Company is self-insured under these captive policies for up to $10.0 million in aggregate completed operations indemnity claims, plus defense costs, per policy year and for up to $0.25 million for each claim occurrence. The Company is self-insured for the deductible amounts under its workers’ compensation insurance policies. The deductibles vary by policy year, but in no years exceed $0.5 million per occurrence. The deductible for the 2017, 2018 and 2019 policy years is $0.5 million per occurrence. The Company estimates and records receivables under its applicable insurance policies related to its estimated contingencies for known claims and anticipated future construction defect claims on previously closed homes and other legal claims and lawsuits incurred in the ordinary course of business when recovery is probable. Additionally, the Company may have the ability to recover a portion of its losses from its subcontractors and their insurance carriers when the Company has been named as an additional insured on their insurance policies. The Company’s receivables related to its estimates of insurance recoveries from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $54.6 million and $74.4 million at September 30, 2018 and 2017, respectively, and are included in other assets in the consolidated balance sheets. The estimation of losses related to these reserves and the related estimates of recoveries from insurance policies are subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to the Company’s markets and the types of products built, claim frequency, claim settlement costs and patterns, insurance industry practices and legal interpretations, among others. Due to the high degree of judgment required in establishing reserves for these contingencies, actual future costs and recoveries from insurance could differ significantly from current estimated amounts, and it is not possible for the Company to make a reasonable estimate of the possible loss or range of loss in excess of its reserves. Land and Lot Option Purchase Contracts The Company enters into land and lot option purchase contracts to acquire land or lots for the construction of homes. At September 30, 2018, the Company’s homebuilding segment had total option deposits of $401.1 million, consisting of cash deposits of $397.4 million and promissory notes and letters of credit of $3.7 million, to purchase land and lots with a total remaining purchase price of approximately $6.5 billion. The majority of land and lots under contract are currently expected to be purchased within three years. Of these amounts, $48.0 million of the option deposits related to contracts with Forestar to purchase land and lots with a remaining purchase price of $522.2 million. A limited number of the homebuilding land and lot option purchase contracts at September 30, 2018, representing $82.1 million of remaining purchase price, were subject to specific performance provisions which may require the Company to purchase the land or lots upon the land sellers meeting their contractual obligations. Of the $82.1 million remaining purchase price subject to specific performance provisions, $34.7 million related to a contract between the homebuilding segment and Forestar. During fiscal 2018, Forestar reimbursed the Company’s homebuilding segment $21.2 million for previously paid earnest money and $15.2 million for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar. At September 30, 2018, Forestar had total option deposits of $4.2 million to purchase land and lots from third parties with a total remaining purchase price of approximately $32.7 million. Other Commitments At September 30, 2018, the Company had outstanding surety bonds of $1.5 billion and letters of credit of $128.5 million to secure performance under various contracts. Of the total letters of credit, $107.2 million were issued under the homebuilding revolving credit facility and $4.5 million were issued under Forestar’s revolving credit facility. The remaining $16.8 million of letters of credit were issued under secured letter of credit agreements, of which $1.4 million related to homebuilding operations and $15.4 million related to Forestar. These agreements require the deposit of cash as collateral with the issuing banks which is included as restricted cash in the consolidated balance sheet. The Company leases office space and equipment under non-cancelable operating leases. At September 30, 2018, the future minimum annual lease payments under these agreements are as follows (in millions):
Rent expense was $27.8 million, $26.3 million and $24.7 million for fiscal 2018, 2017 and 2016, respectively. |
Other Assets, Accrued Expenses and Other Liabilities |
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Other Assets and Accrued Expenses and Other Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets, Accrued Expenses and Other Liabilities | OTHER ASSETS, ACCRUED EXPENSES AND OTHER LIABILITIES The Company’s other assets at September 30, 2018 and 2017 were as follows:
The Company’s accrued expenses and other liabilities at September 30, 2018 and 2017 were as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair value measurements are used for the Company’s mortgage loans held for sale, debt securities collateralized by residential real estate, IRLCs and other derivative instruments on a recurring basis and are used for inventories, other mortgage loans, rental properties and real estate owned on a nonrecurring basis, when events and circumstances indicate that the carrying value may not be recoverable. The fair value hierarchy and its application to the Company’s assets and liabilities is as follows:
The Company’s assets measured at fair value using Level 2 inputs on a nonrecurring basis are a limited number of mortgage loans held for sale with some degree of impairment affecting their marketability and are reported at the lower of carrying value or fair value. When available, fair value is determined by reference to quoted prices in the secondary markets for such assets. After consideration of nonperformance risk, no additional adjustments were made to the fair value measurements of mortgage loans held for sale, IRLCs or hedging instruments.
The Company’s assets measured at fair value using Level 3 inputs on a recurring basis are its debt securities collateralized by residential real estate and a limited number of mortgage loans held for sale with some degree of impairment affecting their marketability and for which reference to quoted prices in the secondary markets is not available. The Company’s assets measured at fair value using Level 3 inputs that are typically reported at the lower of carrying value or fair value on a nonrecurring basis are as follows:
The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2018 and 2017, and the changes in the fair value of the Level 3 assets during fiscal 2018 and 2017.
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The following table summarizes the Company’s assets measured at fair value on a nonrecurring basis at September 30, 2018 and 2017.
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For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at September 30, 2018 and 2017.
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Quarterly Results of Operations (Unaudited) |
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Quarterly Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results of Operations (Unaudited) | QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Consolidated quarterly results of operations for fiscal 2018 and 2017 were (in millions, except per share amounts):
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The Company experiences variability in its results of operations from quarter to quarter due to the seasonal nature of its homebuilding business. The Company generally closes more homes and has greater revenues and income before income taxes in the third and fourth quarters (June and September) than in the first and second quarters (December and March) of its fiscal year. |
Subsequent Event |
12 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENT On November 9, 2018, the Company acquired the homebuilding operations of Westport Homes for approximately $190 million in cash. Westport Homes operates in Indianapolis and Fort Wayne, Indiana, and Columbus, Ohio. The assets acquired included approximately 400 homes in inventory, 3,500 lots and control of approximately 3,200 additional lots through option contracts. The Company also acquired a sales order backlog of approximately 550 homes. |
Supplemental Guarantor Information |
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Supplemental Guarantor Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Guarantor Information | SUPPLEMENTAL GUARANTOR INFORMATION All of the Company’s homebuilding senior notes and the homebuilding revolving credit facility are fully and unconditionally guaranteed, on a joint and several basis, by D.R. Horton, Inc. and other subsidiaries (Guarantor Subsidiaries). Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by the Company. The Company’s subsidiaries associated with the Forestar land development operation, the financial services operations and certain other subsidiaries do not guarantee the Company’s homebuilding senior notes or the homebuilding revolving credit facility (collectively, Non-Guarantor Subsidiaries). In lieu of providing separate financial statements for the Guarantor Subsidiaries, consolidating condensed financial statements are presented below. Separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented because management has determined that they are not material to investors. The guarantees by a Guarantor Subsidiary will be automatically and unconditionally released and discharged upon: (1) the sale or other disposition of its common stock whereby it is no longer a subsidiary of the Company; (2) the sale or other disposition of all or substantially all of its assets (other than to the Company or another Guarantor); (3) its merger or consolidation with an entity other than the Company or another Guarantor; or (4) depending on the provisions of the applicable indenture, either its (a) proper designation as an unrestricted subsidiary, (b) ceasing to guarantee any of the Company’s publicly traded debt securities, or (c) ceasing to guarantee any of the Company’s obligations under the homebuilding revolving credit facility. To conform to the current year presentation, the Company’s equity in income of subsidiaries in its condensed consolidating statements of operations for fiscal 2017 and 2016 is presented after income tax expense. As a result, the amounts of equity in income of subsidiaries and income tax expense were each reduced by $434.5 million and $370.4 million in fiscal 2017 and 2016, respectively, in both the D.R. Horton, Inc. and Eliminations columns. This reclassification, which the Company determined was not material, had no impact on any financial statements or notes, except for the D.R. Horton, Inc. and Eliminations columns of the condensed consolidating statements of operations in this Supplemental Guarantor Information note. Prior period financial information will be presented similarly in the condensed consolidating statement of operations of future filings. NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Balance Sheet September 30, 2018
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Balance Sheet September 30, 2017
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Operations Year Ended September 30, 2018
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Operations Year Ended September 30, 2017
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Operations Year Ended September 30, 2016
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Cash Flows Year Ended September 30, 2018
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Cash Flows Year Ended September 30, 2017
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Cash Flows Year Ended September 30, 2016
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and include the accounts of D.R. Horton, Inc. and all of its 100% owned, majority-owned and controlled subsidiaries, which are collectively referred to as the Company, unless the context otherwise requires. Noncontrolling interests represent the proportionate equity interests in consolidated entities that are not 100% owned by the Company. The Company owns a 75% controlling interest in Forestar Group Inc. (Forestar) and therefore is required to consolidate 100% of Forestar within its consolidated financial statements, and the 25% interest the Company does not own is accounted for as noncontrolling interests. The Company’s investment in unconsolidated entities in which significant influence, but not control, is held is accounted for by the equity method of accounting. All intercompany accounts, transactions and balances have been eliminated in consolidation. |
Change in Presentation and Reclassifications | Change in Presentation and Reclassifications Certain reclassifications have been made to conform to the current year’s presentation. The Company has changed the presentation of the consolidated balance sheets and statements of operations to present its homebuilding, Forestar, financial services and other operations on a combined basis. Prior year amounts have also been combined to reflect this presentation. Of the $56.7 million previously presented as accounts payable and other liabilities in financial services and other operations at September 30, 2017, $4.8 million is classified as accounts payable and $51.9 million is classified as accrued expenses and other liabilities under the new presentation. See Note B for detailed financial information for the Company’s reporting segments. As a result of the adoption of ASU 2016-09 on October 1, 2017, $5.1 million and $5.9 million of cash paid for shares withheld for taxes on stock-based awards was reclassified from operating cash flows to financing cash flows in the consolidated statements of cash flows for fiscal 2017 and 2016, respectively. These amounts were also reclassified from stock issued under employee incentive plans on the consolidated statements of total equity for fiscal 2017 and 2016. These reclassifications had no effect on the Company’s consolidated financial position or results of operations. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. |
Revenue Recognition | Revenue Recognition Homebuilding revenue and related profit are generally recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the buyer. In situations where the buyer’s financing is originated by DHI Mortgage, the Company’s 100% owned mortgage subsidiary, and the buyer has not made an adequate initial or continuing investment, the profit is deferred until the sale of the related mortgage loan to a third-party purchaser has been completed. At both September 30, 2018 and 2017, the deferred profit on these home sales was $3.6 million. Any profit on land sales is deferred until the full accrual method criteria are met. When appropriate, revenue and profit on long-term construction projects are recognized under the percentage-of-completion method. Financial services revenues associated with the Company’s title operations are recognized as closing services are rendered and title insurance policies are issued, both of which generally occur simultaneously as each home is closed. The Company transfers substantially all underwriting risk associated with title insurance policies to third-party insurers. The Company typically elects the fair value option for its mortgage loan originations. Mortgage loans held for sale are initially recorded at fair value based on either sale commitments or current market quotes and are adjusted for subsequent changes in fair value until the loans are sold. Net origination costs and fees associated with mortgage loans are recognized at the time of origination. The expected net future cash flows related to the associated servicing of a loan are included in the measurement of all written loan commitments that are accounted for at fair value through earnings at the time of commitment. The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers. Interest income is earned from the date a mortgage loan is originated until the loan is sold. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an initial maturity of three months or less when purchased to be cash equivalents. Proceeds from home closings held for the Company’s benefit at title companies are included in homebuilding cash and cash equivalents in the consolidated balance sheets. Cash balances of the Company’s captive insurance subsidiary, which are expected to be used to fund the subsidiary’s operations and pay future anticipated legal claims, were $44.2 million and $36.7 million at September 30, 2018 and 2017, respectively, and are included in cash and cash equivalents in the consolidated balance sheets. |
Restricted Cash | Restricted Cash The Company has cash that is restricted as to its use. Restricted cash related to homebuilding and land development operations includes cash used as collateral for outstanding letters of credit issued under secured letter of credit agreements and customer deposits that are temporarily restricted in accordance with regulatory requirements. Restricted cash related to financial services is mortgagor related funds held for taxes and insurance on an interim basis until the sale of the loans. |
Inventories and Cost of Sales | Inventories and Cost of Sales Inventory includes the costs of direct land acquisition, land development and home construction, capitalized interest, real estate taxes and direct overhead costs incurred during development and home construction. Costs incurred after development projects or homes are substantially complete, such as utilities, maintenance, and cleaning, are charged to selling, general and administrative (SG&A) expense as incurred. All indirect overhead costs, such as compensation of sales personnel, division and region management, and the costs of advertising and builder’s risk insurance are charged to SG&A expense as incurred. Land and development costs are typically allocated to individual residential lots on a pro-rata basis, and the costs of residential lots are transferred to construction in progress when home construction begins. Home construction costs are specifically identified and recorded to individual homes. Cost of sales for homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) allocated to each residential lot based upon the total number of homes expected to be closed in each community. Any changes to the estimated total development costs subsequent to the initial home closings in a community are generally allocated on a pro-rata basis to the remaining homes in the community associated with the relevant development activity. When a home is closed, the Company generally has not paid all incurred costs necessary to complete the home. A liability and a corresponding charge to cost of sales are recorded for the amount estimated to ultimately be paid related to completed homes that have been closed. Home construction budgets are compared to actual recorded costs to determine the additional costs remaining to be paid on each closed home. The Company rarely purchases land for resale. However, when the Company owns land or communities under development that do not fit into its development and construction plans, and the Company determines that it will sell the asset, the project is accounted for as land held for sale if certain criteria are met. The Company records land held for sale at the lesser of its carrying value or fair value less estimated costs to sell. Each quarter, the Company reviews its communities and land inventories for indicators of potential impairment. If indicators of impairment are present for a community, the Company performs an impairment evaluation of the community, which includes an analysis to determine if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If so, impairment charges are recorded to cost of sales if the fair value of such assets is less than their carrying amounts. Impairment charges are also recorded on finished homes in substantially completed communities when events or circumstances indicate that the carrying values are greater than the fair values less estimated costs to sell these homes. The key assumptions relating to inventory valuations are impacted by local market and economic conditions and are inherently uncertain. Due to uncertainties in the estimation process, actual results could differ from such estimates. See Note C. |
Capitalized Interest | Capitalized Interest The Company capitalizes interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred. During fiscal 2018 and 2017, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory. See Note E. |
Land Option Deposits and Pre-Acquisition Costs | Land Option Deposits and Pre-Acquisition Costs The Company enters into land and lot option purchase contracts to acquire land or lots for the construction of homes. Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of many of the option purchase contracts, the option deposits are not refundable in the event the Company elects to terminate the contract. Option deposits and capitalized pre-acquisition costs are expensed to inventory and land option charges when the Company believes it is probable that it will not acquire the property under option and will not be able to recover these costs through other means. See Notes C and K. |
Variable Interests | Variable Interests Option purchase contracts can result in the creation of a variable interest in the entity holding the land parcel under option. There were no variable interest entities reported in the consolidated balance sheets at September 30, 2018 and 2017 because, with regard to each entity, the Company determined it did not control the activities that most significantly impact the variable interest entity’s economic performance, and it did not have an obligation to absorb losses of or the right to receive benefits from the entity. The maximum exposure to losses related to the Company’s variable interest entities is limited to the amounts of the Company’s related option deposits. At September 30, 2018 and 2017, the option deposits related to these contracts totaled $326.0 million and $222.9 million, respectively, and are included in other assets in the consolidated balance sheets. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Repairs and maintenance costs are expensed as incurred. Depreciation generally is recorded using the straight-line method over the estimated useful life of the asset. The depreciable life of model home furniture is 2 years, depreciable lives of office furniture and equipment typically range from 2 to 5 years, and depreciable lives of buildings and improvements typically range from 5 to 30 years. |
Business Acquisitions | Business Acquisitions The Company accounts for acquisitions of businesses by allocating the purchase price of the business to the various assets acquired and liabilities assumed at their respective fair values. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets. These estimates and assumptions are based on historical experience, information obtained from the management of the acquired companies and the Company’s estimates of significant assumptions that a market participant would use when determining fair value. While the Company believes the estimates and assumptions are reasonable, they are inherently uncertain. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions. |
Goodwill | Goodwill The Company records goodwill associated with its acquisitions of businesses when the purchase price of the business exceeds the fair value of the net tangible and identifiable intangible assets acquired. Goodwill balances are evaluated for potential impairment on at least an annual basis by comparing the carrying value of each of the operating segments with goodwill to their estimated fair values. The estimated fair value is determined by discounting the future cash flows of the operating segment to their present value. If the carrying value of the operating segment exceeds its fair value, the Company determines if an impairment exists based on the implied fair value of the operating segment’s goodwill. |
Warranty Claims | Warranty Claims The Company typically provides its homebuyers with a ten-year limited warranty for major defects in structural elements such as framing components and foundation systems, a two-year limited warranty on major mechanical systems and a one-year limited warranty on other construction components. Since the Company subcontracts its construction work to subcontractors who typically provide it with an indemnity and a certificate of insurance prior to receiving payments for their work, claims relating to workmanship and materials are generally the primary responsibility of the subcontractors. Warranty liabilities have been established by charging cost of sales for each home delivered. The amounts charged are based on management’s estimate of expected warranty-related costs under all unexpired warranty obligation periods. The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates and is adjusted to reflect qualitative risks associated with the types of homes built and the geographic areas in which they are built. See Note K. |
Legal Claims and Insurance | Legal Claims and Insurance The Company records expenses and liabilities for legal claims related to construction defect matters, personal injury claims, employment matters, land development issues, contract disputes and other matters. The amounts recorded for these contingencies are based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes. The Company estimates and records receivables under its applicable insurance policies for these legal claims when recovery is probable. Additionally, the Company may have the ability to recover a portion of its losses from its subcontractors and their insurance carriers when the Company has been named as an additional insured on their insurance policies. See Note K. |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. |
Income Taxes | Income Taxes The Company’s income tax expense is calculated using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement amounts of assets and liabilities and their respective tax bases and attributable to net operating losses and tax credit carryforwards. When assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of sufficient taxable income in future periods and in the jurisdictions in which those temporary differences become deductible. The Company records a valuation allowance when it determines it is more likely than not that a portion of the deferred tax assets will not be realized. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company’s consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation of the Company’s deferred tax assets and liabilities. See Note G. Interest and penalties related to unrecognized tax benefits are recognized in the financial statements as a component of income tax expense. Significant judgment is required to evaluate uncertain tax positions. The Company evaluates its uncertain tax positions on a quarterly basis. The evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in increases or decreases in the Company’s income tax expense in the period in which the change is made. |
Earnings Per Share | Earnings Per Share Basic earnings per share is based on the weighted average number of shares of common stock outstanding during each year. Diluted earnings per share is based on the weighted average number of shares of common stock and dilutive securities outstanding during each year. See Note H. |
Stock-Based Compensation | Stock-Based Compensation The Company’s stockholders formally authorize shares of its common stock to be available for future grants of stock-based compensation awards. From time to time, the Compensation Committee of the Company’s Board of Directors authorizes the grant of stock-based compensation to its employees and directors from these available shares. At September 30, 2018, the outstanding stock-based compensation awards include stock options and restricted stock units. Grants of restricted stock units may vest immediately or over a certain number of years as determined by the Compensation Committee of the Board of Directors. Restricted stock units outstanding at September 30, 2018 have a remaining vesting period of 1 to 5 years. Stock options are granted at exercise prices which equal the market value of the Company’s common stock at the date of the grant. The stock options outstanding at September 30, 2018 vest during the next year and expire 10 years after the dates on which they were granted. The compensation expense for stock-based awards is based on the fair value of the award and is recognized on a straight-line basis over the remaining vesting period. The fair values of restricted stock units are based on the Company’s stock price at the date of grant. The fair values of stock options granted are calculated on the date of grant using a Black-Scholes option pricing model. Determining the fair value of stock options requires judgment in developing assumptions and involves a number of estimates. These estimates include, but are not limited to, the expected stock price volatility over the term of the awards, the expected dividend yield and expected stock option exercise behavior. In addition, judgment is used in estimating the number of stock options that are expected to be forfeited. See Note J. |
Fair Value Measurements | Fair Value Measurements The Financial Accounting Standards Board’s (FASB) authoritative guidance for fair value measurements establishes a three-level hierarchy based upon the inputs to the valuation model of an asset or liability. When available, the Company uses quoted market prices in active markets to determine fair value. The Company considers the principal market and nonperformance risk associated with the Company’s counterparties when determining the fair value measurements, if applicable. Fair value measurements are used for the Company’s mortgage loans held for sale, debt securities collateralized by residential real estate, interest rate lock commitments and other derivative instruments on a recurring basis and are used for inventories, other mortgage loans and real estate owned on a nonrecurring basis, when events and circumstances indicate that the carrying value may not be recoverable. See Note M. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which is a comprehensive new revenue recognition model that will replace most existing revenue recognition guidance. The core principle of this guidance is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The guidance is effective for the Company beginning October 1, 2018 and allows for full retrospective or modified retrospective methods of adoption. The Company plans to adopt this standard using the modified retrospective method. Upon adoption of the standard, the Company expects to record an adjustment to increase retained earnings and recognize a contract asset for expected future insurance brokerage commission renewals. The Company has not yet determined the amount of this adjustment and is continuing to evaluate other effects of the standard, but does not expect the adoption of this standard to have a material impact on its consolidated financial position, results of operations or cash flows. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities,” which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires that lease assets and liabilities be recognized on the balance sheet and that key information about leasing arrangements be disclosed. The guidance is effective for the Company beginning October 1, 2019, although early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations and cash flows. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information in determining credit loss estimates. The guidance is effective for the Company beginning October 1, 2020 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments,” which amends and clarifies the current guidance to reduce diversity in practice of the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated statements of cash flows. In October 2016, the FASB issued ASU 2016-16, “Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory,” which requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated financial position or cash flows. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash,” which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated financial position or cash flows. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other,” which simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test and requires the determination of the fair value of individual assets and liabilities of a reporting unit. Under the new guidance, goodwill impairment is measured as the amount by which a reporting unit’s carrying amount exceeds its fair value with the loss recognized limited to the total amount of goodwill allocated to the reporting unit. The guidance is effective for the Company beginning October 1, 2020 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. In February 2017, the FASB issued ASU 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets,” which updates the definition of an in substance nonfinancial asset and clarifies the derecognition guidance for nonfinancial assets to conform to the new revenue recognition standard (ASU 2014-09). The guidance is effective for the Company beginning October 1, 2018, concurrent with the adoption of ASU 2014-09, as required, and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation: Scope of Modification Accounting,” which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The guidance is effective for the Company beginning October 1, 2018 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows. |
Summary of Significant Accounting Policies (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | The Company’s property and equipment balances and the related accumulated depreciation at September 30, 2018 and 2017 were as follows:
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The purchase price was allocated based on the estimated fair value of 100% of Forestar’s assets and liabilities, as follows (in millions):
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Business Acquisition, Pro Forma Information [Table Text Block] | The following unaudited pro forma data presents consolidated pro forma information as if the acquisition had been completed on October 1, 2016. The unaudited pro forma results include adjustments for interest expense and other acquisition related costs and their related income tax effects. This pro forma data should not be considered indicative of the results that would have actually occurred if the acquisition had been consummated on October 1, 2016 or of future results.
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Goodwill by reporting segment | The Company’s goodwill balances by reporting segment were as follows:
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Segment Information (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reporting segment results | Financial information relating to the Company’s reporting segments is as follows:
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Notes Payable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of notes payable at principal amounts, net of unamortized discounts | The Company’s notes payable at their principal amounts, net of unamortized discounts and debt issuance costs, consist of the following:
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Summary of notes payable terms | The key terms of the Company’s homebuilding senior notes outstanding as of September 30, 2018 are summarized below.
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Capitalized Interest (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Costs Incurred [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest costs incurred, capitalized and expensed | The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the years ended September 30, 2018, 2017 and 2016.
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Income Taxes (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of income tax expense (benefit) | The components of the Company’s income tax expense are as follows:
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Comparison of income tax expense (benefit) and tax computed at the statutory rate | Differences between income tax expense and tax computed by applying the federal statutory rate of 24.5% in fiscal 2018 and 35% in fiscal 2017 and 2016 to income before income taxes during each year is due to the following:
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Components of deferred tax assets and liabilities | Components of deferred income taxes, including Forestar’s deferred tax assets and liabilities as of September 30, 2018, are summarized as follows:
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Earnings Per Share (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Numerator and denominator used to compute basic and diluted earnings (loss) per share | The following table sets forth the numerators and denominators used in the computation of basic and diluted earnings per share.
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Employee Benefit Plans (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation Related Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized information related to activity under the Company's Stock Incentive Plan | The Company did not grant stock options during fiscal 2018, 2017 or 2016; however, the following table provides additional information related to stock option activity during those years.
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Additional information related to performance-based RSUs outstanding | The following table provides additional information related to the performance-based RSUs outstanding at September 30, 2018.
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Additional information related to time-based RSU activity | The following table provides additional information related to time-based RSU activity during fiscal 2018, 2017 and 2016.
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in warranty liability | Changes in the Company’s warranty liability during fiscal 2018 and 2017 were as follows:
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Rollforward of reserves for legal claims | Changes in the Company’s legal claims reserves during fiscal 2018 and 2017 were as follows:
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Minimum annual lease payments | At September 30, 2018, the future minimum annual lease payments under these agreements are as follows (in millions):
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Other Assets, Accrued Expenses and Other Liabilities (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets and Accrued Expenses and Other Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Homebuilding other assets | The Company’s other assets at September 30, 2018 and 2017 were as follows:
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Homebuilding accrued expenses and other liabilities | The Company’s accrued expenses and other liabilities at September 30, 2018 and 2017 were as follows:
________________
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements of assets and liabilities on a recurring basis | The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2018 and 2017, and the changes in the fair value of the Level 3 assets during fiscal 2018 and 2017.
___________________
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Fair value measurements of assets on a non-recurring basis | The following table summarizes the Company’s assets measured at fair value on a nonrecurring basis at September 30, 2018 and 2017.
___________________
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Fair value of financial assets and liabilities | For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at September 30, 2018 and 2017.
___________________
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Quarterly Results of Operations (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of quarterly results of operations | Consolidated quarterly results of operations for fiscal 2018 and 2017 were (in millions, except per share amounts):
_____________
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Supplemental Guarantor Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Guarantor Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statements | Consolidating Balance Sheet September 30, 2018
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Balance Sheet September 30, 2017
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Operations Year Ended September 30, 2018
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Operations Year Ended September 30, 2017
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Operations Year Ended September 30, 2016
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Cash Flows Year Ended September 30, 2018
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Cash Flows Year Ended September 30, 2017
NOTE P – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued) Consolidating Statement of Cash Flows Year Ended September 30, 2016
|
Summary of Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Oct. 05, 2017 |
|
Goodwill [Line Items] | ||||
Goodwill impairment | $ 0.0 | $ 0.0 | $ 7.2 | |
Goodwill | 109.2 | 80.0 | ||
Homebuilding [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill impairment | $ 7.2 | |||
Goodwill | 80.0 | 80.0 | ||
Homebuilding [Member] | East [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | 21.8 | 21.8 | ||
Homebuilding [Member] | Midwest [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | 0.0 | 0.0 | ||
Homebuilding [Member] | Southeast [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | 40.1 | 40.1 | ||
Homebuilding [Member] | South Central [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | 15.9 | 15.9 | ||
Homebuilding [Member] | Southwest [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | 0.0 | 0.0 | ||
Homebuilding [Member] | West [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | 2.2 | 2.2 | ||
Forestar Consolidated [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 0.0 | $ 29.2 | ||
Segment Reconciling Items [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 29.2 |
Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Stock Based Compensation (Details) |
12 Months Ended |
---|---|
Sep. 30, 2018 | |
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Remaining vesting period | 1 year |
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Remaining vesting period | 5 years |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration period | 10 years |
Inventory (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Inventory Impairments Information [Line Items] | |||||
Impairment charges | $ 3.5 | $ 11.8 | $ 23.2 | $ 20.3 | |
Inventory and land option charges | 50.4 | 40.2 | 31.4 | ||
Payments for Legal Settlements | 24.5 | ||||
Write-offs (recoveries) of earnest money deposits and pre-acquisition costs | 14.1 | 17.0 | 11.1 | ||
Homebuilding [Member] | |||||
Inventory Impairments Information [Line Items] | |||||
Carrying value of communities with impairment indicators | $ 60.5 | 60.5 | |||
Inventory and land option charges | 48.8 | $ 40.2 | $ 31.4 | ||
Forestar Group [Member] | |||||
Inventory Impairments Information [Line Items] | |||||
Inventory and land option charges | 1.0 | ||||
Proceeds from Sale of Productive Assets | $ 232.0 | ||||
Payments for (Proceeds from) Productive Assets | $ (217.5) | ||||
Gain (Loss) on Sale of Interest in Projects | $ 0.7 |
Notes Payable Notes Payable - Financial Services Textuals (Details) - USD ($) |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Notes payable | $ 3,203,500,000 | $ 2,871,600,000 |
Financial Services [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage repurchase facility, current capacity | 600,000,000 | |
Mortgage repurchase facility, maximum borrowing capacity | 1,000,000,000 | |
Mortgage loans held for sale pledged under repurchase agreement | 758,600,000 | |
Mortgage loans held for sale pledged under repurchase agreement, collateral value | 735,600,000 | |
Advance pay downs on mortgage repurchase facility | 97,900,000 | |
Notes payable | $ 637,700,000 | $ 420,000,000 |
Interest rate on mortgage repurchase facility | 4.10% | |
Weighted Average [Member] | Financial Services [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage repurchase facility, current capacity | $ 725,000,000 | |
Maximum [Member] | Financial Services [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage repurchase facility, current capacity | $ 800,000,000 |
Capitalized Interest Capitalized Interest (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | |||
Capitalized interest, beginning of year | $ 167.9 | $ 191.2 | $ 208.0 |
Interest incurred | 125.4 | 129.3 | 152.3 |
Charged to cost of sales | (130.6) | (152.6) | (169.1) |
Capitalized interest, end of year | 162.7 | 167.9 | 191.2 |
Financial Services [Member] | |||
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | |||
Interest incurred | 12.1 | $ 8.5 | $ 8.4 |
Forestar Group [Member] | |||
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | |||
Interest incurred | $ 3.4 |
Mortgage Loans - Mortgage Loans Held for Sale Textual (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Loans Receivable [Line Items] | |||
Mortgage loans held for sale | $ 796.4 | $ 587.3 | |
Mortgage loans held for sale, principal amount | 776.1 | 570.8 | |
Payments for Origination of Mortgage Loans Held-for-sale | 7,600.0 | 6,800.0 | $ 5,900.0 |
Proceeds from Sale of Mortgage Loans Held-for-sale | 7,400.0 | 6,800.0 | 5,900.0 |
Net gain on sales of loans | $ 265.1 | 251.1 | $ 207.5 |
Percentage of Mortgage Loans Sold to Major Purchasers | 92.00% | ||
Percentage Of Mortgage Loans Sold To Major Purchaser | 36.00% | ||
Financial Services [Member] | |||
Loans Receivable [Line Items] | |||
Mortgage loans held for sale | $ 796.4 | 587.3 | |
Uncommitted Loans [Member] | |||
Loans Receivable [Line Items] | |||
Mortgage loans held for sale | 575.9 | 330.7 | |
Uncommitted Loans [Member] | Hedging Instruments Related To IRLCs [Member] | |||
Loans Receivable [Line Items] | |||
Derivative Asset, Notional Amount | $ 575.8 | $ 330.7 |
Mortgage Loans - Other Mortgage Loans and Real Estate Owned (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Mortgage Loans on Real Estate, Write-down or Reserve [Line Items] | ||
Other mortgage loans and real estate owned, before loss reserves | $ 9.1 | $ 8.3 |
Mortgage Loans - Mortgage Loss Reserves (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Loss reserves related to: | ||
Reserve balances | $ 8.4 | $ 8.7 |
Mortgage Loans - Loan Commitments and Related Derivatives Textual (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Interest rate lock commitments [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 485.3 | $ 446.2 |
Best-efforts whole loan delivery commitments [Member] | ||
Derivative [Line Items] | ||
Notional amount | 25.6 | 26.9 |
Hedging Instruments Related To IRLCs [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 430.2 | $ 389.3 |
Income Taxes - Income Tax Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Current tax expense (benefit): | |||||||||||
Federal | $ 373.2 | $ 425.6 | $ 376.0 | ||||||||
State | 53.6 | 27.3 | 15.9 | ||||||||
Total current tax expense (benefit) | 426.8 | 452.9 | 391.9 | ||||||||
Deferred tax expense: | |||||||||||
Federal | 158.7 | 87.9 | 47.6 | ||||||||
State | 12.2 | 22.9 | 27.7 | ||||||||
Total deferred tax expense (benefit) | 170.9 | 110.8 | 75.3 | ||||||||
Total income tax expense (benefit) | $ 138.8 | $ 162.5 | $ 94.0 | $ 202.4 | $ 172.3 | $ 155.5 | $ 124.7 | $ 111.2 | $ 597.7 | $ 563.7 | $ 467.2 |
Income Taxes - Reconciliation of Expected Income Tax Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Comparison of income tax expense (benefit) and tax computed at the statutory rate | |||||||||||
Income taxes at federal statutory rate | $ 505.0 | $ 560.7 | $ 473.7 | ||||||||
Increase (decrease) in tax resulting from: | |||||||||||
State income taxes, net of federal benefit | 59.4 | 42.3 | 38.6 | ||||||||
Domestic production activities deduction | (36.7) | (39.8) | (36.3) | ||||||||
Valuation allowance | (7.3) | 0.8 | 0.2 | ||||||||
Tax credits | (19.0) | (3.5) | (15.9) | ||||||||
Excess tax benefit from equity compensation | (21.2) | 0.0 | 0.0 | ||||||||
Tax law change from enactment of Tax Act | $ 108.7 | 108.7 | 0.0 | 0.0 | |||||||
Other | 8.8 | 3.2 | 6.9 | ||||||||
Total income tax expense (benefit) | $ 138.8 | $ 162.5 | $ 94.0 | $ 202.4 | $ 172.3 | $ 155.5 | $ 124.7 | $ 111.2 | $ 597.7 | $ 563.7 | $ 467.2 |
Income Taxes - Deferred Income Taxes (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Deferred tax assets: | ||
Inventory costs | $ 40.9 | $ 42.6 |
Inventory impairments | 31.8 | 83.9 |
Warranty and construction defect costs | 121.8 | 163.7 |
Net operating loss carryforwards | 38.1 | 26.2 |
Tax credit carryforwards | 4.3 | 2.5 |
Incentive compensation plans | 55.2 | 92.6 |
Deferred income | 1.3 | 1.7 |
Other | 5.8 | 13.9 |
Total deferred tax assets | 299.2 | 427.1 |
Valuation allowance | (17.7) | (11.2) |
Total deferred tax assets, net of valuation allowance | 281.5 | 415.9 |
Deferred tax liabilities: | ||
Deferral of profit on home sales | 64.9 | 41.6 |
Other | 22.6 | 9.3 |
Total deferred tax liabilities | 87.5 | 50.9 |
Deferred income taxes, net | $ 194.0 | $ 365.0 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share Reconciliation [Abstract] | |||||||||||
Net Income (Loss) Attributable to Parent | $ 466.1 | $ 453.8 | $ 351.0 | $ 189.3 | $ 313.2 | $ 289.0 | $ 229.2 | $ 206.9 | $ 1,460.3 | $ 1,038.4 | $ 886.3 |
Denominator: | |||||||||||
Denominator for basic earnings per share - weighted average common shares | 376.6 | 374.3 | 371.0 | ||||||||
Effect of dilutive securities: | |||||||||||
Employee stock awards | 6.8 | 4.6 | 4.1 | ||||||||
Denominator for diluted earnings per share - adjusted weighted average common shares | 383.4 | 378.9 | 375.1 | ||||||||
Basic net income per common share attributable to D.R. Horton, Inc. | $ 1.24 | $ 1.20 | $ 0.93 | $ 0.50 | $ 0.84 | $ 0.77 | $ 0.61 | $ 0.55 | $ 3.88 | $ 2.77 | $ 2.39 |
Diluted net income per common share attributable to D.R. Horton, Inc. | $ 1.22 | $ 1.18 | $ 0.91 | $ 0.49 | $ 0.82 | $ 0.76 | $ 0.60 | $ 0.55 | $ 3.81 | $ 2.74 | $ 2.36 |
Stockholders' Equity (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Aug. 01, 2018 |
|
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||||||||||||
Common stock, shares issued | 388,120,243 | 384,036,150 | 388,120,243 | 384,036,150 | ||||||||
Common stock, shares outstanding | 376,261,635 | 374,986,079 | 376,261,635 | 374,986,079 | ||||||||
Preferred stock, shares issued | 0 | 0 | 0 | 0 | ||||||||
Treasury Stock, Common, Shares | 560,000 | 2,800,000 | ||||||||||
Payments for Repurchase of Common Stock | $ 24,500,000 | $ 127,500,000 | $ 60,600,000 | |||||||||
Amount of stock repurchase authorization | $ 400,000,000 | |||||||||||
Amount remaining under stock repurchase authorization | $ 375,500,000.0 | 375,500,000.0 | ||||||||||
Dividends, Common Stock [Abstract] | ||||||||||||
Cash dividends declared per common share | $ 0.125 | $ 0.125 | $ 0.125 | $ 0.125 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | ||||
Cash dividends paid per common share | $ 0.125 | $ 0.125 | $ 0.125 | $ 0.125 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | ||||
Forestar Group [Member] | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Equity Securities Registered, Value | $ 500,000,000 | $ 500,000,000 | ||||||||||
Subsequent Event [Member] | ||||||||||||
Dividends, Common Stock [Abstract] | ||||||||||||
Cash dividends declared per common share | $ 0.15 |
Employee Benefit Plans - Deferred Compensation Plans (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Defined Contribution Plan, Cost | $ 18.4 | $ 16.0 | $ 13.3 |
Supplemental Executive Retirement Plan [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Deferred Compensation Liability, Current and Noncurrent | 35.4 | 31.6 | |
Compensation expense (reduction in expense) | 5.4 | 4.9 | 4.6 |
Deferred Compensation Plan For Select Group Of Employees [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Deferred Compensation Liability, Current and Noncurrent | 69.3 | 58.2 | |
Compensation expense (reduction in expense) | $ 5.8 | $ 6.3 | $ 4.0 |
Commitments and Contingencies - Warranty Liability (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Changes in warranty liability | ||
Warranty liability, beginning of year | $ 143.7 | $ 104.4 |
Warranties issued | 81.6 | 69.7 |
Changes in liability for pre-existing warranties | 49.3 | 30.0 |
Settlements made | (72.6) | (60.4) |
Warranty liability, end of year | $ 202.0 | $ 143.7 |
Commitments and Contingencies Commitments and Contingencies - Reserves for Legal Claims (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Rollforward of reserves for legal claims | ||
Reserves for legal claims, beginning of period | $ 420.6 | $ 423.5 |
Change in reserves | 46.4 | 91.0 |
Payments | (58.9) | (93.9) |
Reserves for legal claims, end of period | $ 408.1 | $ 420.6 |
Commitments and Contingencies - Minimum Annual Lease Payments (Details) $ in Millions |
Sep. 30, 2018
USD ($)
|
---|---|
Minimum annual lease payments | |
2019 | $ 16.8 |
2020 | 12.0 |
2021 | 6.8 |
2022 | 3.8 |
2023 | 2.1 |
Thereafter | 0.8 |
Total | $ 42.3 |
Other Assets, Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
---|---|---|---|
Other assets | |||
Earnest money and refundable deposits | $ 445.2 | $ 312.2 | |
Insurance receivables | 54.6 | 74.4 | |
Other receivables | 81.7 | 60.0 | |
Prepaid assets | 36.9 | 30.8 | |
Rental properties | 39.2 | 52.0 | |
Other assets | 44.3 | 36.5 | |
Total other assets | 701.9 | 565.9 | |
Accrued expenses and other liabilities | |||
Reserves for legal claims | 408.1 | 420.6 | $ 423.5 |
Employee compensation and related liabilities | 252.5 | 208.9 | |
Warranty liability | 202.0 | 143.7 | $ 104.4 |
Accrued interest | 14.8 | 12.7 | |
Federal and state income tax liabilities | 35.2 | 20.3 | |
Inventory related accruals | 45.5 | 24.8 | |
Homebuyer deposits | 58.1 | 51.8 | |
Accrued property taxes | 38.0 | 33.9 | |
Other liabilities | 73.3 | 68.3 | |
Total accrued expenses and other liabilities | 1,127.5 | 985.0 | |
Homebuilding [Member] | |||
Other assets | |||
Total other assets | 673.7 | 518.7 | |
Accrued expenses and other liabilities | |||
Total accrued expenses and other liabilities | $ 1,041.3 | $ 933.1 |
Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Summary of quarterly results of operations | |||||||||||
Revenues | $ 4,505.2 | $ 4,435.3 | $ 3,794.7 | $ 3,332.7 | $ 4,159.1 | $ 3,776.4 | $ 3,251.3 | $ 2,904.2 | $ 16,068.0 | $ 14,091.0 | $ 12,157.4 |
Income before income taxes | 607.7 | 616.2 | 444.8 | 391.2 | 485.5 | 444.5 | 353.9 | 318.1 | 2,060.0 | 1,602.1 | 1,353.5 |
Income tax expense | 138.8 | 162.5 | 94.0 | 202.4 | 172.3 | 155.5 | 124.7 | 111.2 | 597.7 | 563.7 | 467.2 |
Net income | 468.9 | 453.7 | 350.8 | 188.8 | 1,462.3 | 1,038.4 | 886.3 | ||||
Net income attributable to noncontrolling interests | 2.8 | (0.1) | (0.2) | (0.5) | 2.0 | 0.0 | 0.0 | ||||
Net income attributable to D.R. Horton, Inc. | $ 466.1 | $ 453.8 | $ 351.0 | $ 189.3 | $ 313.2 | $ 289.0 | $ 229.2 | $ 206.9 | $ 1,460.3 | $ 1,038.4 | $ 886.3 |
Basic net income per common share attributable to D.R. Horton, Inc. | $ 1.24 | $ 1.20 | $ 0.93 | $ 0.50 | $ 0.84 | $ 0.77 | $ 0.61 | $ 0.55 | $ 3.88 | $ 2.77 | $ 2.39 |
Diluted net income per common share attributable to D.R. Horton, Inc. | $ 1.22 | $ 1.18 | $ 0.91 | $ 0.49 | $ 0.82 | $ 0.76 | $ 0.60 | $ 0.55 | $ 3.81 | $ 2.74 | $ 2.36 |
Homebuilding [Member] | |||||||||||
Summary of quarterly results of operations | |||||||||||
Revenues | $ 15,623.8 | $ 13,741.5 | $ 11,861.8 | ||||||||
Income before income taxes | $ 1,957.2 | $ 1,489.3 | $ 1,264.4 |
Quarterly Results of Operations (Unaudited) (Details Textuals) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Inventory Impairments Information [Line Items] | ||||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | $ 108.7 | $ 108.7 | $ 0.0 | $ 0.0 |
Subsequent Event Subsequent Event (Details) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Nov. 09, 2018
Lot
Home
|
|
Subsequent Event [Line Items] | |||||
Payments to Acquire Businesses, Net of Cash Acquired | $ | $ 159.2 | $ 4.1 | $ 82.2 | ||
Westport Homes [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Payments to Acquire Businesses, Net of Cash Acquired | $ | $ 190.0 | ||||
Business Acquisition, Number of Homes Acquired | Home | 400 | ||||
Business Acquisition, Number of Finished Lots Acquired | Lot | 3,500 | ||||
Business Acquisition, Number of Lots Under Option Contracts | Lot | 3,200 | ||||
Business Acquisition, Sales Order Backlog Acquired (Homes) | Home | 550 |
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