10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________________________________________________________________

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2019

Commission file number 1-14122

___________________________________________________________________________________________________________________

D.R. Horton, Inc.

(Exact name of registrant as specified in its charter)

Delaware	75-2386963
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1341 Horton Circle Arlington, Texas 76011
(Address of principal executive offices) (Zip Code)
(817) 390-8200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerý Accelerated filer ¨ Non-accelerated filer  ¨ Smaller reporting company  ¨ Emerging growth company  ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No  ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock, $.01 par value – 373,176,964 shares as of April 24, 2019

D.R. HORTON, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

	Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Balance Sheets at March 31, 2019 and September 30, 2018	3
Consolidated Statements of Operations for the three and six months ended March 31, 2019 and 2018	4
Consolidated Statements of Total Equity for the three and six months ended March 31, 2019 and 2018	5
Consolidated Statements of Cash Flows for the six months ended March 31, 2019 and 2018	7
Notes to Consolidated Financial Statements	8
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	68
ITEM 4. Controls and Procedures	69
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings	70
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	70
ITEM 6. Exhibits	71
SIGNATURE	72

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

D.R. HORTON, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31, 2019			September 30, 2018
	(In millions) (Unaudited)
ASSETS
Cash and cash equivalents	$	698.8		$	1,473.1
Restricted cash	32.4			32.9
Total cash, cash equivalents and restricted cash	731.2			1,506.0
Inventories:
Construction in progress and finished homes	6,087.6			5,086.3
Residential land and lots — developed and under development	5,672.9			5,172.4
Land held for development	110.8			96.1
Land held for sale	49.0			40.2
Total inventory	11,920.3			10,395.0
Mortgage loans held for sale	796.5			796.4
Deferred income taxes, net of valuation allowance of $17.0 million and $17.7 million at March 31, 2019 and September 30, 2018, respectively	171.9			194.0
Property and equipment, net	437.9			401.1
Other assets	785.7			712.9
Goodwill	163.5			109.2
Total assets	$	15,007.0		$	14,114.6
LIABILITIES
Accounts payable	$	658.5		$	624.7
Accrued expenses and other liabilities	1,192.1			1,127.5
Notes payable	3,622.4			3,203.5
Total liabilities	5,473.0			4,955.7
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, 391,091,572 shares issued and 373,132,964 shares outstanding at March 31, 2019 and 388,120,243 shares issued and 376,261,635 shares outstanding at September 30, 2018	3.9			3.9
Additional paid-in capital	3,123.4			3,085.0
Retained earnings	6,771.6			6,217.9
Treasury stock, 17,958,608 shares and 11,858,608 shares at March 31, 2019 and September 30, 2018, respectively, at cost	(538.6		)	(322.4		)
Stockholders’ equity	9,360.3			8,984.4
Noncontrolling interests	173.7			174.5
Total equity	9,534.0			9,158.9
Total liabilities and equity	$	15,007.0		$	14,114.6

See accompanying notes to consolidated financial statements.

3

D.R. HORTON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2019			2018			2019			2018
	(In millions, except per share data) (Unaudited)
Revenues	$	4,128.7		$	3,794.7		$	7,647.7		$	7,127.6
Cost of sales	3,256.7			2,961.6			6,007.8			5,541.8
Selling, general and administrative expense	444.2			400.9			847.0			785.1
Gain on sale of assets	(29.3		)	(1.1		)	(31.3		)	(14.5		)
Other (income) expense	(5.7		)	(11.5		)	(14.3		)	(20.9		)
Income before income taxes	462.8			444.8			838.5			836.1
Income tax expense	108.4			94.0			197.4			296.4
Net income	354.4			350.8			641.1			539.7
Net income (loss) attributable to noncontrolling interests	3.1			(0.2		)	2.7			(0.6		)
Net income attributable to D.R. Horton, Inc.	$	351.3		$	351.0		$	638.4		$	540.3
Basic net income per common share attributable to D.R. Horton, Inc.	$	0.94		$	0.93		$	1.71		$	1.44
Weighted average number of common shares	373.3			376.8			374.2			376.3
Diluted net income per common share attributable to D.R. Horton, Inc.	$	0.93		$	0.91		$	1.68		$	1.41
Adjusted weighted average number of common shares	377.7			383.9			378.9			383.8

See accompanying notes to consolidated financial statements.

4

D.R. HORTON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF TOTAL EQUITY

	Common Stock		Additional Paid-in Capital			Retained Earnings			Treasury Stock			Non-controlling Interests			Total Equity
	(In millions, except common stock share data) (Unaudited)
Balances at September 30, 2018 (376,261,635 shares)	$	3.9	$	3,085.0		$	6,217.9		$	(322.4	)	$	174.5		$	9,158.9
Cumulative effect of adoption of ASC 606 (see Note A)	—		—			27.1			—			—			27.1
Net income	—		—			287.2			—			(0.5		)	286.7
Exercise of stock options (806,817 shares)	—		8.6			—			—			—			8.6
Stock issued under employee benefit plans (273,608 shares)	—		—			—			—			—			—
Cash paid for shares withheld for taxes	—		(4.1		)	—			—			—			(4.1		)
Stock-based compensation expense	—		18.1			—			—			—			18.1
Cash dividends declared ($0.15 per share)	—		—			(56.0		)	—			—			(56.0		)
Repurchases of common stock (4,100,000 shares)	—		—			—			(140.6		)	—			(140.6		)
Distributions to noncontrolling interests	—		—			—			—			(0.5		)	(0.5		)
Balances at December 31, 2018 (373,242,060 shares)	$	3.9	$	3,107.6		$	6,476.2		$	(463.0	)	$	173.5		$	9,298.2
Net income	—		—			351.3			—			3.1			354.4
Exercise of stock options (831,489 shares)	—		11.4			—			—			—			11.4
Stock issued under employee benefit plans (1,059,415 shares)	—		2.0			—			—			0.3			2.3
Cash paid for shares withheld for taxes	—		(15.4		)	—			—			—			(15.4		)
Stock-based compensation expense	—		17.8			—			—			—			17.8
Cash dividends declared ($0.15 per share)	—		—			(55.9		)	—			—			(55.9		)
Repurchases of common stock (2,000,000 shares)	—		—			—			(75.6		)	—			(75.6		)
Distributions to noncontrolling interests	—		—			—			—			(3.2		)	(3.2		)
Balances at March 31, 2019 (373,132,964 shares)	$	3.9	$	3,123.4		$	6,771.6		$	(538.6	)	$	173.7		$	9,534.0

See accompanying notes to consolidated financial statements.

5

D.R. HORTON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF TOTAL EQUITY (Continued)

	Common Stock		Additional Paid-in Capital			Retained Earnings			Treasury Stock			Non-controlling Interests			Total Equity
	(In millions, except common stock share data) (Unaudited)
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	—		—			189.3			—			(0.5		)	188.8
Exercise of stock options (916,913 shares)	0.1		14.7			—			—			—			14.8
Stock issued under employee benefit plans (290,974 shares)	—		—			—			—			—			—
Cash paid for shares withheld for taxes	—		(10.3		)	—			—			—			(10.3		)
Stock-based compensation expense	—		13.6			—			—			—			13.6
Cash dividends declared ($0.125 per share)	—		—			(47.1		)	—			—			(47.1		)
Repurchases of common stock (500,000 shares)	—		—			—			(25.4		)	—			(25.4		)
Distributions to noncontrolling interests	—		—			—			—			(1.8		)	(1.8		)
Balances at December 31, 2017 (375,693,966 shares)	$	3.9	$	3,010.2		$	5,088.2		$	(220.3	)	$	173.4		$	8,055.4
Net income	—		—			351.0			—			(0.2		)	350.8
Exercise of stock options (1,046,210 shares)	—		16.3			—			—			—			16.3
Stock issued under employee benefit plans (1,169,341 shares)	—		1.8			—			—			—			1.8
Stock-based compensation expense	—		17.4			—			—			—			17.4
Cash dividends declared ($0.125 per share)	—		—			(47.1		)	—			—			(47.1		)
Repurchases of common stock (500,000 shares)	—		—			—			(22.5		)	—			(22.5		)
Distributions to noncontrolling interests	—		—			—			—			(0.2		)	(0.2		)
Balances at March 31, 2018 (377,409,517 shares)	$	3.9	$	3,045.7		$	5,392.1		$	(242.8	)	$	173.0		$	8,371.9

See accompanying notes to consolidated financial statements.

6

D.R. HORTON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended   March 31,
	2019			2018
	(In millions) (Unaudited)
OPERATING ACTIVITIES
Net income	$	641.1		$	539.7
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	34.1			33.1
Amortization of discounts and fees	5.1			2.4
Stock-based compensation expense	35.9			31.0
Equity in earnings of unconsolidated entities	(0.5		)	(2.7		)
Distributions of earnings of unconsolidated entities	0.5			0.2
Deferred income taxes	12.6			145.0
Inventory and land option charges	21.8			33.8
Gain on sale of assets	(31.3		)	(14.5		)
Changes in operating assets and liabilities:
Increase in construction in progress and finished homes	(755.2		)	(514.5		)
Increase in residential land and lots –      developed, under development, held for development and held for sale	(445.6		)	(271.5		)
(Increase) decrease in other assets	(39.9		)	4.4
Increase in mortgage loans held for sale	—			(70.7		)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	59.7			(14.5		)
Net cash used in operating activities	(461.7		)	(98.8		)
INVESTING ACTIVITIES
Expenditures for property and equipment	(69.8		)	(39.5		)
Proceeds from sale of assets	83.8			253.4
Expenditures related to multi-family rental properties	(28.3		)	(39.5		)
Return of investment in unconsolidated entities	4.4			15.1
Net principal increase of other mortgage loans and real estate owned	(1.6		)	—
Payments related to business acquisitions, net of cash acquired	(309.6		)	(158.1		)
Net cash (used in) provided by investing activities	(321.1		)	31.4
FINANCING ACTIVITIES
Proceeds from notes payable	1,815.0			1,913.6
Repayment of notes payable	(1,531.0		)	(1,752.5		)
Advances on mortgage repurchase facility, net	53.0			69.8
Proceeds from stock associated with certain employee benefit plans	22.3			32.7
Cash paid for shares withheld for taxes	(19.5		)	(10.3		)
Cash dividends paid	(111.9		)	(94.1		)
Repurchases of common stock	(216.2		)	(47.9		)
Distributions to noncontrolling interests, net	(3.7		)	(2.0		)
Net cash provided by financing activities	8.0			109.3
Net (decrease) increase in cash, cash equivalents and restricted cash	(774.8		)	41.9
Cash, cash equivalents and restricted cash at beginning of period	1,506.0			1,024.3
Cash, cash equivalents and restricted cash at end of period	$	731.2		$	1,066.2
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:
Notes payable issued for inventory	$	80.8		$	—
Stock issued under employee incentive plans	$	49.0		$	63.4
Accrual for holdback payment related to acquisition	$	16.3		$	—

See accompanying notes to consolidated financial statements.

7

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, 2019

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited, consolidated financial statements 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. All intercompany accounts, transactions and balances have been eliminated in consolidation.

The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments considered necessary to fairly state the results for the interim periods shown, including normal recurring accruals and other items. These financial statements, including the consolidated balance sheet as of September 30, 2018, which was derived from audited financial statements, do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2018.

Changes in Presentation and Reclassifications

In connection with the adoption of Accounting Standards Update (ASU) 2016-18 in fiscal 2019, restricted cash is now included with cash and cash equivalents when reconciling beginning and ending amounts in the consolidated statements of cash flows. Prior period amounts have been reclassified to conform to the current year presentation, resulting in a decrease in cash used in investing activities of $38.9 million for the six months ended March 31, 2018.

In August 2018, the Securities and Exchange Commission (SEC) issued Final Rule Release No. 33-10532, “Disclosure Update and Simplification,” which makes a number of changes meant to simplify interim disclosures. In complying with the relevant aspects of the rule within the current year quarterly reports, the Company has removed the presentation of cash dividends declared per common share from the statements of operations and has added the consolidated statements of total equity.

Certain other prior period amounts have been reclassified to conform to the current year presentation.

Adoption of New Accounting Standard

On October 1, 2018, the Company adopted Accounting Standards Codification 606, "Revenue from Contracts with Customers" (ASC 606), which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services and satisfaction of performance obligations to a customer in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company applied the modified retrospective method to contracts that were not completed as of October 1, 2018. Results for the reporting period beginning after October 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and will continue to be reported under the previous accounting standards. The Company recorded an increase to retained earnings of $27.1 million, net of tax, as of October 1, 2018, due to the cumulative effect of adopting ASC 606, which was primarily related to the recognition of contract assets totaling $32.4 million for insurance brokerage commission renewals. Under ASC 606, the Company recognizes revenue and a contract asset for estimated future renewals of these policies upon issuance of the initial policy, the date at which the performance obligation is satisfied. There was not a material impact to revenues as a result of applying ASC 606 for the three and six months ended March 31, 2019, and there have not been significant changes to the Company’s business processes, systems, or internal controls as a result of implementing the standard.

8

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

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.

Seasonality

Historically, the homebuilding industry has experienced seasonal fluctuations; therefore, the operating results for the three and six months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019 or subsequent periods.

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. The Company’s performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. 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.

The Company rarely purchases land for resale, but periodically may elect to sell parcels of land that no longer fit into its strategic operating plans. Cash consideration from land sales is typically due on the closing date, which is generally when performance obligations are satisfied.

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.

The Company collects insurance commissions on homeowner policies placed with third party carriers through its wholly owned insurance agency. The Company recognizes revenue and a contract asset for estimated future renewals of these policies upon issuance of the initial policy, the date at which the performance obligation is satisfied.

Business Acquisitions

During the first quarter of fiscal 2019, the Company acquired the homebuilding operations of Westport Homes, Classic Builders and Terramor Homes for $325.9 million. The assets acquired included approximately 700 homes in inventory, 4,500 lots and control of approximately 4,300 additional lots through land purchase contracts. The Company also acquired a sales order backlog of approximately 700 homes. Westport Homes operates in Indianapolis and Fort Wayne, Indiana, and Columbus, Ohio; Classic Builders operates in Des Moines, Iowa; and Terramor Homes operates in Raleigh, North Carolina.

9

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

The Company’s allocation of the aggregate purchase price to the assets and liabilities acquired through these transactions is not finalized and is subject to revision as additional information becomes available and more detailed analyses are completed. The preliminary allocation of the purchase price to the assets and liabilities acquired is as follows (in millions):

Inventories	$	265.5
Other assets	23.3
Goodwill	54.3
Intangible assets	8.6
Other liabilities	(25.8		)
Net assets acquired	$	325.9

As a result of these transactions, the Company’s preliminary estimate of goodwill is $54.3 million, of which $49.7 million was allocated to the Midwest region and $4.6 million was allocated to the East region. The goodwill is tax deductible and relates to expected synergies from expanding the Company’s market presence in its Midwest and East regions, the experienced and knowledgeable workforce of these entities and their capital efficient operating processes. The intangible assets will be amortized on a straight-line basis to selling, general and administrative (SG&A) expense over their expected lives, which range from one to three years.

Pending Accounting Standards

In February 2016, the Financial Accounting Standards Board (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 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.

10

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE B – SEGMENT INFORMATION

The Company is a national homebuilder that is primarily engaged in the acquisition and development of land and the construction and sale of residential homes, with operations in 84 markets in 29 states across the United States. The Company’s operating segments are its 51 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:

East:	Delaware, Georgia (Savannah only), Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina and Virginia
Midwest:	Colorado, Illinois, Indiana, Iowa, Minnesota and Ohio
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

The Company’s homebuilding divisions design, build and sell single-family detached homes on lots they develop and on fully developed lots purchased ready for home construction. To a lesser extent, the homebuilding divisions also build and sell attached homes, such as townhomes, duplexes and triplexes. Most of the revenue generated by the Company’s homebuilding operations is 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 41 markets and 17 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, constructs multi-family rental properties and has four projects under active construction and two projects that are substantially complete at March 31, 2019. In January 2019, DHI Communities sold its first multi-family rental property for $73.4 million and recorded a gain on the sale of $29.3 million, which is included in the consolidated statements of operations for the three and six months ended March 31, 2019. At March 31, 2019 and September 30, 2018, the consolidated balance sheets included $170.2 million and $173.2 million, respectively, of assets related to DHI Communities. The operating results of these subsidiaries are immaterial for separate reporting and therefore are grouped together and presented as other.

11

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

The accounting policies of the reporting segments are described throughout Note A included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2018. Financial information relating to the Company’s reporting segments is as follows:

	March 31, 2019
	Homebuilding		Forestar (1)		Financial Services		Other (2)		Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Assets
Cash and cash equivalents	$	557.3	$	66.4	$	61.1	$	14.0	$	—		$	—		$	698.8
Restricted cash	9.4		15.7		7.3		—		—			—			32.4
Inventories:
Construction in progress and finished homes	6,086.1		—		—		—		1.5			—			6,087.6
Residential land and lots — developed and under development	4,879.4		803.0		—		—		(22.1		)	12.6			5,672.9
Land held for development	62.3		48.5		—		—		—			—			110.8
Land held for sale	49.0		—		—		—		—			—			49.0
	11,076.8		851.5		—		—		(20.6		)	12.6			11,920.3
Mortgage loans held for sale	—		—		796.5		—		—			—			796.5
Deferred income taxes, net	155.0		22.9		—		—		1.5			(7.5		)	171.9
Property and equipment, net	220.2		2.4		3.4		211.9		—			—			437.9
Other assets	732.8		26.0		52.1		37.4		(75.2		)	12.6			785.7
Goodwill	134.3		—		—		—		—			29.2			163.5
	$	12,885.8	$	984.9	$	920.4	$	263.3	$	(94.3	)	$	46.9		$	15,007.0
Liabilities
Accounts payable	$	631.7	$	16.1	$	9.4	$	3.0	$	(1.7	)	$	—		$	658.5
Accrued expenses and other liabilities	1,102.2		131.9		43.8		10.9		(83.3		)	(13.4		)	1,192.1
Notes payable	2,777.2		149.2		690.7		—		—			5.3			3,622.4
	$	4,511.1	$	297.2	$	743.9	$	13.9	$	(85.0	)	$	(8.1	)	$	5,473.0

______________

(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.

(4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.

12

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

	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
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		31.4		43.6		0.9		(48.6		)	11.9			712.9
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 Forestar interest expense to inventory.

(4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.

13

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

	Three Months Ended March 31, 2019
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	3,980.5		$	—		$	—		$	—		$	—		$	—		$	3,980.5
Land/lot sales and other	14.9			65.4			—			6.0			(39.7		)	—			46.6
Financial services	—			—			101.6			—			—			—			101.6
	3,995.4			65.4			101.6			6.0			(39.7		)	—			4,128.7
Cost of sales:
Home sales (5)	3,214.2			—			—			—			(0.7		)	—			3,213.5
Land/lot sales and other	9.3			43.7			—			—			(31.8		)	8.2			29.4
Inventory and land option charges	13.8			—			—			—			—			—			13.8
	3,237.3			43.7			—			—			(32.5		)	8.2			3,256.7
Selling, general and administrative expense	359.3			6.2			71.3			7.3			—			0.1			444.2
Gain on sale of assets	—			—			—			(29.3		)	—			—			(29.3		)
Other (income) expense	(1.6		)	(0.9		)	(3.7		)	0.5			—			—			(5.7		)
Income before income taxes	$	400.4		$	16.4		$	34.0		$	27.5		$	(7.2	)	$	(8.3	)	$	462.8

______________

(1) Results 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 results of certain subsidiaries that are immaterial for separate reporting.

(3) Amounts represent the elimination of intercompany transactions.

(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 recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.

14

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

	Six Months Ended March 31, 2019
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	7,391.2		$	—		$	—		$	—		$	—		$	—		$	7,391.2
Land/lot sales and other	21.7			103.8			—			12.8			(68.7		)	—			69.6
Financial services	—			—			186.9			—			—			—			186.9
	7,412.9			103.8			186.9			12.8			(68.7		)	—			7,647.7
Cost of sales:
Home sales (5)	5,943.4			—			—			—			(1.7		)	—			5,941.7
Land/lot sales and other	14.5			74.3			—			—			(56.3		)	11.8			44.3
Inventory and land option charges	21.8			—			—			—			—			—			21.8
	5,979.7			74.3			—			—			(58.0		)	11.8			6,007.8
Selling, general and administrative expense	683.9			11.9			137.0			13.9			—			0.3			847.0
Gain on sale of assets	(2.0		)	(0.9		)	—			(29.3		)	—			0.9			(31.3		)
Other (income) expense	(3.5		)	(2.8		)	(7.7		)	(0.3		)	—			—			(14.3		)
Income before income taxes	$	754.8		$	21.3		$	57.6		$	28.5		$	(10.7	)	$	(13.0	)	$	838.5
Summary Cash Flow Information:
Depreciation and amortization	$	30.1		$	0.1		$	0.7		$	2.9		$	—		$	0.3		$	34.1
Cash (used in) provided by operating activities	$	(215.9	)	$	(283.4	)	$	48.8		$	(4.1	)	$	(2.7	)	$	(4.4	)	$	(461.7	)

______________

(1) Results 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 results of certain subsidiaries that are immaterial for separate reporting.

(3) Amounts represent the elimination of intercompany transactions.

(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 recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.

15

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

	Three Months Ended March 31, 2018
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	3,672.1		$	—		$	—		$	—		$	—		$	—		$	3,672.1
Land/lot sales and other	13.6			22.6			—			—			(8.5		)	—			27.7
Financial services	—			—			94.9			—			—			—			94.9
	3,685.7			22.6			94.9			—			(8.5		)	—			3,794.7
Cost of sales:
Home sales	2,907.5			—			—			—			—			—			2,907.5
Land/lot sales and other	12.0			16.2			—			—			(6.7		)	2.5			24.0
Inventory and land option charges	30.1			—			—			—			—			—			30.1
	2,949.6			16.2			—			—			(6.7		)	2.5			2,961.6
Selling, general and administrative expense	322.7			5.6			66.7			5.8			—			0.1			400.9
Gain on sale of assets	—			(2.7		)	—			—			—			1.6			(1.1		)
Interest expense	—			2.1			—			—			(2.1		)	—			—
Other (income) expense	(2.6		)	(3.2		)	(3.2		)	(3.6		)	—			1.1			(11.5		)
Income (loss) before income taxes	$	416.0		$	4.6		$	31.4		$	(2.2	)	$	0.3		$	(5.3	)	$	444.8

______________

(1) Results 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 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.

16

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

	Six Months Ended March 31, 2018
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	6,856.6		$	—		$	—		$	—		$	—		$	—		$	6,856.6
Land/lot sales and other	50.0			53.5			—			—			(8.5		)	—			95.0
Financial services	—			—			176.0			—			—			—			176.0
	6,906.6			53.5			176.0			—			(8.5		)	—			7,127.6
Cost of sales:
Home sales	5,429.0			—			—			—			—			—			5,429.0
Land/lot sales and other	43.3			35.5			—			—			(6.7		)	6.9			79.0
Inventory and land option charges	33.8			—			—			—			—			—			33.8
	5,506.1			35.5			—			—			(6.7		)	6.9			5,541.8
Selling, general and administrative expense	627.5			19.1			128.4			9.8			—			0.3			785.1
Gain on sale of assets	(13.4		)	(2.7		)	—			—			—			1.6			(14.5		)
Interest expense	—			4.2			—			—			(4.2		)	—			—
Other (income) expense	(3.4		)	(11.3		)	(6.1		)	(6.5		)	—			6.4			(20.9		)
Income (loss) before income taxes	$	789.8		$	8.7		$	53.7		$	(3.3	)	$	2.4		$	(15.2	)	$	836.1
Summary Cash Flow Information:
Depreciation and amortization	$	26.3		$	2.5		$	0.7		$	3.3		$	—		$	0.3		$	33.1
Cash provided by (used in) operating activities	$	90.7		$	(150.2	)	$	(30.7	)	$	(0.5	)	$	—		$	(8.1	)	$	(98.8	)

______________

(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.

17

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

Homebuilding Inventories by Reporting Segment (1)	March 31, 2019		September 30, 2018
	(In millions)
East	$	1,354.4	$	1,192.0
Midwest	817.7		583.1
Southeast	2,852.1		2,668.7
South Central	2,720.6		2,439.4
Southwest	628.1		499.7
West	2,466.9		2,268.5
Corporate and unallocated (2)	237.0		223.7
	$	11,076.8	$	9,875.1

_________________

(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	Three Months Ended   March 31,				Six Months Ended   March 31,
	2019		2018		2019		2018
	(In millions)
Revenues
East	$	518.2	$	435.8	$	965.7	$	828.9
Midwest	248.1		203.6		497.2		365.0
Southeast	1,205.3		1,042.0		2,219.2		2,030.6
South Central	990.2		919.0		1,862.7		1,727.8
Southwest	173.2		172.1		316.9		328.5
West	860.4		913.2		1,551.2		1,625.8
	$	3,995.4	$	3,685.7	$	7,412.9	$	6,906.6
Inventory and Land Option Charges
East	$	0.3	$	0.7	$	1.7	$	0.6
Midwest	0.2		0.2		0.5		0.4
Southeast	2.2		25.1		3.5		26.2
South Central	1.4		0.6		1.9		1.9
Southwest	0.1		—		0.2		0.8
West	9.6		3.5		14.0		3.9
	$	13.8	$	30.1	$	21.8	$	33.8
Income before Income Taxes (1)
East	$	45.9	$	46.7	$	83.9	$	91.7
Midwest	9.5		18.7		20.2		32.0
Southeast	131.0		96.3		243.2		218.8
South Central	119.3		120.5		225.3		222.0
Southwest	18.6		22.0		36.3		36.7
West	76.1		111.8		145.9		188.6
	$	400.4	$	416.0	$	754.8	$	789.8

_________________

(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.

18

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE C – INVENTORIES

At March 31, 2019, 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. The Company performed detailed impairment evaluations of communities and land inventories with a combined carrying value of $95.5 million and recorded impairment charges of $7.7 million during the three months ended March 31, 2019 to reduce the carrying value of impaired communities to fair value. During the six months ended March 31, 2019, impairment charges totaled $11.9 million. There were $3.0 million and $4.4 million of impairment charges recorded in the three and six months ended March 31, 2018, respectively. Inventory impairments and the land option charges discussed below are included in cost of sales in the consolidated statements of operations.

During the three and six months ended March 31, 2019, the Company wrote off $6.1 million and $9.9 million, respectively, of earnest money deposits and pre-acquisition costs related to land purchase contracts that the Company has terminated or expects to terminate. Earnest money and pre-acquisition cost write-offs for the three and six months ended March 31, 2018 were $2.6 million and $4.9 million, respectively. Inventory and land option charges for the three and six months ended March 31, 2018 also included a charge of $24.5 million related to the settlement of an outstanding dispute associated with a land transaction.

In February 2018, the Forestar land development segment 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 three and six months ended March 31, 2018.

19

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE D – NOTES PAYABLE

The Company’s notes payable at their principal amounts, net of unamortized discounts and debt issuance costs, consist of the following:

	March 31, 2019		September 30, 2018
	(In millions)
Homebuilding:
Unsecured:
Revolving credit facility, maturing 2023	$	750.0	$	—
3.75% senior notes due 2019	—		499.6
4.0% senior notes due 2020	499.2		498.8
2.55% senior notes due 2020	398.4		397.9
4.375% senior notes due 2022	348.6		348.4
4.75% senior notes due 2023	298.8		298.7
5.75% senior notes due 2023	398.2		398.0
Other secured notes	84.0		4.5
	2,777.2		2,445.9
Forestar:
Unsecured:
Revolving credit facility, maturing 2021	35.0		—
3.75% convertible senior notes due 2020	119.5		119.9
	154.5		119.9
Financial Services:
Mortgage repurchase facility, maturing 2020	690.7		637.7
	$	3,622.4	$	3,203.5

Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $6.8 million and $8.5 million at March 31, 2019 and September 30, 2018, 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 $5.3 million and $8.2 million at March 31, 2019 and September 30, 2018, respectively.

Homebuilding:

The Company has a $1.325 billion senior unsecured homebuilding revolving credit facility with 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. The maturity date of the facility is September 25, 2023. Borrowings and repayments under the facility were $1.8 billion and $1.0 billion, respectively, during the six months ended March 31, 2019. At March 31, 2019, there were $750 million of borrowings outstanding at a 3.7% annual interest rate and $128.0 million of letters of credit issued under the revolving credit facility.

20

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

The Company’s 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 March 31, 2019, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and public debt obligations.

D.R. Horton has an automatically effective universal shelf registration statement filed with the SEC in August 2018, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.

On March 1, 2019, the Company repaid $500 million principal amount of its 3.75% senior notes at maturity.

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 March 31, 2019.

Forestar:

Forestar has 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 March 31, 2019, there were $35 million of borrowings outstanding at a 4.8% annual interest rate and $3.8 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 March 31, 2019, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

Forestar also has a secured letter of credit agreement that requires it to deposit cash as collateral with the issuing bank. At March 31, 2019, letters of credit outstanding under the letter of credit facility totaled $15.0 million, secured by $15.7 million in cash, which is included in restricted cash in the consolidated balance sheet.

In April 2019, Forestar issued $350 million principal amount of 8.0% senior notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The notes are due April 15, 2024, with interest payable semi-annually, and represent unsecured obligations of Forestar. The annual effective interest rate of these notes after giving effect to the amortization of financing costs is 8.5%. These notes may be redeemed prior to maturity, subject to certain limitations and premiums defined in the indenture agreement.

Forestar’s revolving credit facility, its senior notes 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.

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D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

Financial Services:

The Company’s mortgage subsidiary, DHI Mortgage, has a mortgage repurchase facility that provides financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to the counterparties upon receipt of funds from the counterparties. 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. In February 2019, the mortgage repurchase facility was amended to extend its maturity date to February 21, 2020. 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 of the facility can also be increased to $1.0 billion subject to the availability of additional commitments. Additional commitments were obtained to increase the capacity of the facility to $800 million for approximately 30 days at the March 2019 quarter end.

As of March 31, 2019, $784.5 million of mortgage loans held for sale with a collateral value of $759.4 million were pledged under the mortgage repurchase facility. DHI Mortgage had an obligation of $690.7 million outstanding under the mortgage repurchase facility at March 31, 2019 at a 4.2% 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 March 31, 2019, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facility.

22

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE E – 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 the first six months of fiscal 2019 and fiscal 2018, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and six months ended March 31, 2019 and 2018:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2019			2018			2019			2018
	(In millions)
Capitalized interest, beginning of period	$	168.8		$	170.3		$	162.7		$	167.9
Interest incurred (1)	35.0			31.8			66.7			62.8
Interest charged to cost of sales	(29.9		)	(32.0		)	(55.5		)	(60.6		)
Capitalized interest, end of period	$	173.9		$	170.1		$	173.9		$	170.1

_______________

(1) Interest incurred included interest on the Company's mortgage repurchase facility of $3.0 million and $6.3 million in the three and six months ended March 31, 2019, respectively, and $2.4 million and $4.5 million in the same periods of fiscal 2018. Also included in the amounts is interest incurred by Forestar of $1.5 million and $2.8 million in the three and six months ended March 31, 2019, respectively, and $1.3 million and $1.4 million in the same periods of fiscal 2018.

NOTE F – MORTGAGE LOANS

Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property. At March 31, 2019, mortgage loans held for sale had an aggregate carrying value of $796.5 million and an aggregate outstanding principal balance of $768.7 million. 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. During the six months ended March 31, 2019 and 2018, mortgage loans originated totaled $3.6 billion and $3.4 billion, respectively, and mortgage loans sold totaled $3.6 billion and $3.3 billion, respectively. The Company had gains on sales of loans and servicing rights of $73.1 million and $132.9 million during the three and six months ended March 31, 2019, respectively, compared to $68.8 million and $125.7 million in the prior year periods. Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations. Approximately 93% of the mortgage loans sold by DHI Mortgage during the six months ended March 31, 2019 were sold to four major financial entities, the largest of which purchased 32% of the total loans sold.

23

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE G – INCOME TAXES

The Company’s income tax expense for the three and six months ended March 31, 2019 was $108.4 million and $197.4 million, respectively, compared to $94.0 million and $296.4 million in the prior year periods. The effective tax rate was 23.4% and 23.5% for the three and six months ended March 31, 2019, respectively, compared to 21.1% and 35.5% in the prior year periods. The higher effective tax rate for the six months ended March 31, 2018 was primarily due to the remeasurement of the Company’s deferred tax assets and liabilities as a result of the Tax Cuts and Jobs Act (Tax Act), which was enacted into law on December 22, 2017. The effective tax rates for all periods include an expense for state income taxes, reduced by tax benefits related to stock-based compensation.

The Tax Act reduced the federal corporate tax rate from 35% to 21% for all corporations effective January 1, 2018. For fiscal year companies, the change in law required 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. For the fiscal year ending September 30, 2019 and thereafter, the applicable statutory federal tax rate is 21%. The Tax Act also repealed the domestic production activities deduction effective for the Company for fiscal 2019.

The Company’s deferred tax assets, net of deferred tax liabilities, were $188.9 million at March 31, 2019 compared to $211.7 million at September 30, 2018. The Company has a valuation allowance related to state deferred tax assets for net operating loss (NOL) carryforwards of $17.0 million at March 31, 2019 and $17.7 million at September 30, 2018. 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.

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.

NOTE H – EARNINGS PER SHARE

The following table sets forth the numerators and denominators used in the computation of basic and diluted earnings per share.

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2019		2018		2019		2018
	(In millions)
Numerator:
Net income attributable to D.R. Horton, Inc.	$	351.3	$	351.0	$	638.4	$	540.3
Denominator:
Denominator for basic earnings per share — weighted average common shares	373.3		376.8		374.2		376.3
Effect of dilutive securities:
Employee stock awards	4.4		7.1		4.7		7.5
Denominator for diluted earnings per share — adjusted weighted average common shares	377.7		383.9		378.9		383.8
Basic net income per common share attributable to D.R. Horton, Inc.	$	0.94	$	0.93	$	1.71	$	1.44
Diluted net income per common share attributable to D.R. Horton, Inc.	$	0.93	$	0.91	$	1.68	$	1.41

24

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE I – STOCKHOLDERS’ EQUITY

D.R. Horton 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. Forestar also has an effective shelf registration statement filed with the SEC in September 2018, registering $500 million of equity securities.

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. During the six months ended March 31, 2019, the Company repurchased 6.1 million shares of its common stock for $216.2 million. The Company’s remaining authorization at March 31, 2019 was $159.3 million.

During the three months ended March 31, 2019, the Board of Directors approved a quarterly cash dividend of $0.15 per common share, which was paid on February 25, 2019 to stockholders of record on February 11, 2019. In April 2019, the Board of Directors approved a quarterly cash dividend of $0.15 per common share, payable on May 28, 2019 to stockholders of record on May 13, 2019. Cash dividends of $0.125 per common share were approved and paid in each quarter of fiscal 2018.

NOTE J – EMPLOYEE BENEFIT PLANS

Restricted Stock Units (RSUs)

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). Performance-based and time-based RSU equity awards represent the contingent right to receive one share of the Company’s common stock per RSU if the vesting conditions and/or performance criteria are satisfied. The RSUs have no dividend or voting rights until vested.

In November 2018, a total of 360,000 performance-based RSU equity awards were granted to the Company’s Chairman and executive officers. These awards vest at the end of a three-year performance period ending September 30, 2021. 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 10% to 200% of the number of units granted. The performance criteria are total shareholder return; return on investment; selling, general and administrative expense containment; and gross profit. The grant date fair value of these equity awards was $37.75 per unit. Compensation expense related to these grants was $1.4 million and $3.1 million in the three and six months ended March 31, 2019, respectively, based on the Company’s performance against its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

During the six months ended March 31, 2019, a total of 1.8 million time-based RSUs were granted to approximately 900 recipients, including the Company’s executive officers, other key employees and non-management directors. The weighted average grant date fair value of these equity awards was $33.75 per unit, and they vest annually in equal installments over periods of three to five years. Compensation expense related to these grants was $3.0 million and $7.4 million in the three and six months ended March 31, 2019, respectively, of which $3.5 million in the six month period related to expense recognized for employees that were retirement eligible on the date of grant.

25

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE K – COMMITMENTS AND CONTINGENCIES

Warranty Claims

The Company 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. 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.

Changes in the Company’s warranty liability during the three and six months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2019			2018			2019			2018
	(In millions)
Warranty liability, beginning of period	$	205.6		$	149.4		$	202.0		$	143.7
Warranties issued	21.0			19.3			38.9			35.8
Changes in liability for pre-existing warranties	6.0			13.7			11.5			20.5
Settlements made	(18.7		)	(19.8		)	(38.5		)	(37.4		)
Warranty liability, end of period	$	213.9		$	162.6		$	213.9		$	162.6

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 $419.1 million and $408.1 million at March 31, 2019 and September 30, 2018, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets. Approximately 99% of these reserves related to construction defect matters at both March 31, 2019 and September 30, 2018. Expenses related to the Company’s legal contingencies were $14.6 million and $39.0 million in the six months ended March 31, 2019 and 2018, respectively.

The Company’s reserves for legal claims increased from $408.1 million at September 30, 2018 to $419.1 million at March 31, 2019. Changes in the Company’s legal claims reserves during the six months ended March 31, 2019 and 2018 were as follows:

	Six Months Ended   March 31,
	2019			2018
	(In millions)
Reserves for legal claims, beginning of period	$	408.1		$	420.6
Increase in reserves	23.3			41.4
Payments	(12.3		)	(18.4		)
Reserves for legal claims, end of period	$	419.1		$	443.6

26

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

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 $56.9 million, $54.6 million and $69.0 million at March 31, 2019, September 30, 2018 and March 31, 2018, 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 Purchase Contracts

The Company enters into land and lot 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 purchase contracts, the deposits are not refundable in the event the Company elects to terminate the contract. Land and lot purchase contract deposits are included in other assets in the consolidated balance sheets.

At March 31, 2019, the Company’s homebuilding segment had total deposits of $461.0 million, consisting of cash deposits of $457.9 million and promissory notes and letters of credit of $3.1 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $7.4 billion. The majority of land and lots under contract are currently expected to be purchased within three years. Of these amounts, $76.5 million of the deposits related to contracts with Forestar to purchase land and lots with a remaining purchase price of $895.8 million. A limited number of the homebuilding land and lot purchase contracts at March 31, 2019, representing $96.8 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations. Of the $96.8 million remaining purchase price subject to specific performance provisions, $50.9 million related to contracts between the homebuilding segment and Forestar.

During the three and six months ended March 31, 2019, Forestar reimbursed the Company’s homebuilding segment $4.7 million and $16.8 million, respectively, for previously paid earnest money and $0.7 million and $3.7 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar. During the three and six months ended March 31, 2018, Forestar reimbursed the Company’s homebuilding segment $11.8 million and $14.0 million, respectively, for previously paid earnest money and $5.9 million and $8.2 million, respectively, for pre-acquisition and other due diligence costs.

Other Commitments

At March 31, 2019, the Company had outstanding surety bonds of $1.6 billion and letters of credit of $148.3 million to secure performance under various contracts. Of the total letters of credit, $128.0 million were issued under the homebuilding revolving credit facility and $3.8 million were issued under Forestar’s revolving credit facility. The remaining $16.5 million of letters of credit were issued under secured letter of credit agreements, of which $1.5 million related to homebuilding operations and $15.0 million related to Forestar. These agreements require the deposit of cash as collateral with the issuing banks, which is included in restricted cash in the consolidated balance sheets.

27

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE L – OTHER ASSETS, ACCRUED EXPENSES AND OTHER LIABILITIES

The Company’s other assets at March 31, 2019 and September 30, 2018 were as follows:

	March 31, 2019		September 30, 2018
	(In millions)
Earnest money and refundable deposits	$	477.0	$	445.2
Insurance receivables	56.9		54.6
Other receivables	79.4		81.7
Prepaid assets	30.9		36.9
Rental properties	33.9		39.2
Contract assets - insurance agency commissions	34.4		—
Other	73.2		55.3
	$	785.7	$	712.9

The Company’s accrued expenses and other liabilities at March 31, 2019 and September 30, 2018 were as follows:

	March 31, 2019		September 30, 2018
	(In millions)
Reserves for legal claims	$	419.1	$	408.1
Employee compensation and related liabilities	244.5		252.5
Warranty liability	213.9		202.0
Accrued interest	12.9		14.8
Federal and state income tax liabilities	83.8		35.2
Inventory related accruals	42.6		45.5
Customer deposits	62.5		58.1
Accrued property taxes	20.5		38.0
Other	92.3		73.3
	$	1,192.1	$	1,127.5

28

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE M – FAIR VALUE MEASUREMENTS

The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2019 and September 30, 2018. Changes in the fair value of the Level 3 assets during the six months ended March 31, 2019 and 2018 were not material.

		Fair Value at March 31, 2019
	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	—		784.4			8.4		792.8
Derivatives not designated as hedging instruments (b):
Interest rate lock commitments	Other assets	—		19.8			—		19.8
Forward sales of mortgage-backed securities	Other liabilities	—		(8.0		)	—		(8.0		)
Best-efforts and mandatory commitments	Other liabilities	—		(0.8		)	—		(0.8		)

		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 mortgage-backed securities	Other assets	—		3.3		—		3.3
Best-efforts and mandatory commitments	Other assets	—		0.2		—		0.2

___________________

(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 March 31, 2019 and September 30, 2018 include $8.4 million and $7.8 million, respectively, of loans for which the Company elected the fair value option upon origination and did not sell into the secondary market. 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.

29

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

The following table summarizes the Company’s assets measured at fair value on a nonrecurring basis at March 31, 2019 and September 30, 2018:

		Fair Value at    March 31, 2019				Fair Value at    September 30, 2018
	Balance Sheet Location	Level 2		Level 3		Level 2		Level 3
		(In millions)
Inventory held and used (a) (b)	Inventories	$	—	$	20.8	$	—	$	4.4
Inventory available for sale (a) (c)	Inventories	—		—		—		1.4
Mortgage loans held for sale (a) (d)	Mortgage loans held for sale	—		0.8		—		2.9
Other mortgage loans (a) (e)	Other assets	—		1.8		—		1.0

___________________

(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 16% 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 value of other mortgage loans was determined based on the value of the underlying collateral.

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 March 31, 2019 and September 30, 2018:

	Carrying Value		Fair Value at March 31, 2019
			Level 1		Level 2		Level 3		Total
	(In millions)
Cash and cash equivalents (a)	$	698.8	$	698.8	$	—	$	—	$	698.8
Restricted cash (a)	32.4		32.4		—		—		32.4
Notes payable (b) (c)	3,622.4		—		2,124.2		1,559.7		3,683.9

	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

___________________

(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.

30

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE N – RELATED PARTY TRANSACTIONS

In March 2019, the Company assigned its rights under a land purchase contract to R&R Riverview LLC (R&R), an entity owned by Ryan Horton and Reagan Horton, the adult sons of Donald Horton, the Company’s Chairman. In March 2019, R&R exercised its rights under the purchase contract and purchased 119 acres of undeveloped land in Arizona for $77.5 million. In connection with the transaction, Donald Horton loaned R&R $77.5 million at a 2.55% annual interest rate and obtained a security interest in the land. Concurrent with the contract assignment to R&R, the Company entered into a land purchase contract with R&R to purchase the 119 acres for R&R’s cost plus an annualized return of 16%. Based on the terms of the contract, the Company will purchase the land in two phases. The first purchase is expected in October 2019. The Company has determined R&R is a variable interest entity, the Company has the power to control the activities that most significantly impact the entity’s economic performance, and the Company is the primary beneficiary. Accordingly, the Company consolidated the variable interest entity in its consolidated financial statements by increasing inventory and notes payable at March 31, 2019 by $77.5 million.

31

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – 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) its ceasing to guarantee any of the Company’s publicly traded debt securities and ceasing to guarantee any of the Company’s obligations under the homebuilding revolving credit facility.

32

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Balance Sheet

March 31, 2019

	D.R. Horton, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
	(In millions)
ASSETS
Cash and cash equivalents	$	405.4	$	104.3	$	189.1	$	—		$	698.8
Restricted cash	7.6		1.8		23.0		—			32.4
Investment in subsidiaries	6,739.8		—		—		(6,739.8		)	—
Inventories	4,458.3		6,527.4		955.2		(20.6		)	11,920.3
Mortgage loans held for sale	—		—		796.5		—			796.5
Deferred income taxes, net	52.1		92.3		24.6		2.9			171.9
Property and equipment, net	112.2		76.8		253.3		(4.4		)	437.9
Other assets	328.7		402.5		129.6		(75.1		)	785.7
Goodwill	—		134.3		29.2		—			163.5
Intercompany receivables	596.9		—		—		(596.9		)	—
Total Assets	$	12,701.0	$	7,339.4	$	2,400.5	$	(7,433.9	)	$	15,007.0
LIABILITIES & EQUITY
Accounts payable and other liabilities	$	625.2	$	1,034.1	$	272.1	$	(80.8	)	$	1,850.6
Intercompany payables	—		298.9		298.0		(596.9		)	—
Notes payable	2,697.8		1.9		922.7		—			3,622.4
Total Liabilities	3,323.0		1,334.9		1,492.8		(677.7		)	5,473.0
Stockholders’ equity	9,378.0		6,004.5		735.7		(6,757.9		)	9,360.3
Noncontrolling interests	—		—		172.0		1.7			173.7
Total Equity	9,378.0		6,004.5		907.7		(6,756.2		)	9,534.0
Total Liabilities & Equity	$	12,701.0	$	7,339.4	$	2,400.5	$	(7,433.9	)	$	15,007.0

33

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Balance Sheet

September 30, 2018

	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
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		90.2		(45.2		)	712.9
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

34

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Three Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	1,575.2		$	2,419.7		$	173.5		$	(39.7	)	$	4,128.7
Cost of sales	1,249.8			1,989.5			52.4			(35.0		)	3,256.7
Selling, general and administrative expense	193.3			164.9			86.0			—			444.2
Gain on sale of assets	—			—			(26.8		)	(2.5		)	(29.3		)
Other (income) expense	(1.1		)	(0.4		)	(4.2		)	—			(5.7		)
Income before income taxes	133.2			265.7			66.1			(2.2		)	462.8
Income tax expense	31.4			62.3			15.2			(0.5		)	108.4
Equity in net income of subsidiaries, net of tax	253.5			—			—			(253.5		)	—
Net income	355.3			203.4			50.9			(255.2		)	354.4
Net income attributable to noncontrolling interests	—			—			0.6			2.5			3.1
Net income attributable to D.R. Horton, Inc.	$	355.3		$	203.4		$	50.3		$	(257.7	)	$	351.3

35

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Six Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	2,910.9		$	4,501.4		$	304.1		$	(68.7	)	$	7,647.7
Cost of sales	2,307.0			3,670.9			90.4			(60.5		)	6,007.8
Selling, general and administrative expense	351.2			330.8			165.0			—			847.0
Gain on sale of assets	(2.0		)	—			(26.8		)	(2.5		)	(31.3		)
Other (income) expense	(2.0		)	(0.8		)	(11.5		)	—			(14.3		)
Income before income taxes	256.7			500.5			87.0			(5.7		)	838.5
Income tax expense	60.6			118.1			20.0			(1.3		)	197.4
Equity in net income of subsidiaries, net of tax	449.4			—			—			(449.4		)	—
Net income	645.5			382.4			67.0			(453.8		)	641.1
Net income attributable to noncontrolling interests	—			—			—			2.7			2.7
Net income attributable to D.R. Horton, Inc.	$	645.5		$	382.4		$	67.0		$	(456.5	)	$	638.4

36

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Three Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	1,288.0		$	2,402.7		$	117.5		$	(13.5	)	$	3,794.7
Cost of sales	1,026.2			1,926.9			19.4			(10.9		)	2,961.6
Selling, general and administrative expense	156.9			164.8			79.2			—			400.9
Gain on sale of assets	—			—			(1.1		)	—			(1.1		)
Other (income) expense	(1.7		)	(0.7		)	(9.1		)	—			(11.5		)
Income before income taxes	106.6			311.7			29.1			(2.6		)	444.8
Income tax expense	20.7			67.4			5.9			—			94.0
Equity in net income of subsidiaries, net of tax	267.5			—			—			(267.5		)	—
Net income	353.4			244.3			23.2			(270.1		)	350.8
Net loss attributable to noncontrolling interests	—			—			(0.2		)	—			(0.2		)
Net income attributable to D.R. Horton, Inc.	$	353.4		$	244.3		$	23.4		$	(270.1	)	$	351.0

37

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Six Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	2,451.9		$	4,455.1		$	234.1		$	(13.5	)	$	7,127.6
Cost of sales	1,941.6			3,567.0			44.1			(10.9		)	5,541.8
Selling, general and administrative expense	309.1			316.4			159.6			—			785.1
Gain on sale of assets	—			—			(14.5		)	—			(14.5		)
Other (income) expense	(2.1		)	(0.7		)	(18.1		)	—			(20.9		)
Income before income taxes	203.3			572.4			63.0			(2.6		)	836.1
Income tax expense	71.8			205.3			19.3			—			296.4
Equity in net income of subsidiaries, net of tax	410.8			—			—			(410.8		)	—
Net income	$	542.3		$	367.1		$	43.7		$	(413.4	)	$	539.7
Net loss attributable to noncontrolling interests	—			—			(0.6		)	—			(0.6		)
Net income attributable to D.R. Horton, Inc.	$	542.3		$	367.1		$	44.3		$	(413.4	)	$	540.3

38

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Cash Flows

Six Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
OPERATING ACTIVITIES
Net cash used in operating activities	$	(76.5	)	$	(61.5	)	$	(245.0	)	$	(78.7	)	$	(461.7	)
INVESTING ACTIVITIES
Expenditures for property and equipment	(16.7		)	(16.9		)	(36.2		)	—			(69.8		)
Proceeds from sale of assets	10.4			—			73.4			—			83.8
Expenditures related to multi-family rental properties	—			—			(28.3		)	—			(28.3		)
Return of investment in unconsolidated entities	—			—			4.4			—			4.4
Net principal increase of other mortgage loans and real estate owned	—			—			(1.6		)	—			(1.6		)
Intercompany advances	(42.4		)	—			—			42.4			—
Payments related to business acquisitions	(301.3		)	—			(8.3		)	—			(309.6		)
Net cash (used in) provided by investing activities	(350.0		)	(16.9		)	3.4			42.4			(321.1		)
FINANCING ACTIVITIES
Proceeds from notes payable	1,775.0			—			40.0			—			1,815.0
Repayment of notes payable	(1,524.9		)	(1.1		)	(5.0		)	—			(1,531.0		)
Advances on mortgage repurchase facility, net	—			—			53.0			—			53.0
Intercompany advances	—			24.9			17.5			(42.4		)	—
Proceeds from stock associated with certain employee benefit plans	22.3			—			—			—			22.3
Cash paid for shares withheld for taxes	(19.5		)	—			—			—			(19.5		)
Cash dividends paid	(111.9		)	—			(78.7		)	78.7			(111.9		)
Repurchases of common stock	(216.2		)	—			—			—			(216.2		)
Distributions to noncontrolling interests, net	—			—			(3.7		)	—			(3.7		)
Net cash (used in) provided by financing activities	(75.2		)	23.8			23.1			36.3			8.0
Decrease in cash, cash equivalents and restricted cash	(501.7		)	(54.6		)	(218.5		)	—			(774.8		)
Cash, cash equivalents and restricted cash at beginning of period	914.7			160.7			430.6			—			1,506.0
Cash, cash equivalents and restricted cash at end of period	$	413.0		$	106.1		$	212.1		$	—		$	731.2

39

D.R. HORTON, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2019

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Cash Flows

Six Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(147.3	)	$	269.9		$	(184.4	)	$	(37.0	)	$	(98.8	)
INVESTING ACTIVITIES
Expenditures for property and equipment	(21.4		)	(15.0		)	(3.1		)	—			(39.5		)
Proceeds from sale of assets	—			—			253.4			—			253.4
Expenditures related to multi-family rental properties	—			—			(44.5		)	5.0			(39.5		)
Return of investment in unconsolidated entities	—			—			15.1			—			15.1
Intercompany advances	266.3			—			—			(266.3		)	—
Payments related to business acquisitions, net of cash acquired	(560.0		)	—			401.9			—			(158.1		)
Net cash (used in) provided by investing activities	(315.1		)	(15.0		)	622.8			(261.3		)	31.4
FINANCING ACTIVITIES
Proceeds from notes payable	1,912.3			—			1.3			—			1,913.6
Repayment of notes payable	(1,740.2		)	(2.3		)	(10.0		)	—			(1,752.5		)
Advances on mortgage repurchase facility, net	—			—			69.8			—			69.8
Intercompany advances	—			(291.0		)	24.7			266.3			—
Proceeds from stock associated with certain employee benefit plans	32.7			—			—			—			32.7
Cash paid for shares withheld for taxes	(10.3		)	—			—			—			(10.3		)
Cash dividends paid	(94.1		)	—			(32.0		)	32.0			(94.1		)
Repurchases of common stock	(47.9		)	—			—			—			(47.9		)
Distributions to noncontrolling interests, net	—			—			(2.0		)	—			(2.0		)
Net cash provided by (used in) financing activities	52.5			(293.3		)	51.8			298.3			109.3
(Decrease) increase in cash, cash equivalents and restricted cash	(409.9		)	(38.4		)	490.2			—			41.9
Cash, cash equivalents and restricted cash at beginning of period	788.7			156.0			79.6			—			1,024.3
Cash, cash equivalents and restricted cash at end of period	$	378.8		$	117.6		$	569.8		$	—		$	1,066.2

40

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in this quarterly report and with our annual report on Form 10-K for the fiscal year ended September 30, 2018. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those described in the “Forward-Looking Statements” section following this discussion.

BUSINESS

D.R. Horton, Inc. is the largest homebuilding company in the United States as measured by number of homes closed. We construct and sell homes through our operating divisions in 84 markets in 29 states, primarily under the names of D.R. Horton, America’s Builder; Emerald Homes; Express Homes and Freedom Homes. Unless the context otherwise requires, the terms “D.R. Horton,” the “Company,” “we” and “our” used herein refer to D.R. Horton, Inc., a Delaware corporation, and its predecessors and subsidiaries.

Our business operations consist of homebuilding, a majority-owned residential lot development company, financial services and other activities. Our homebuilding operations primarily include the construction and sale of single-family homes with sales prices generally ranging from $100,000 to more than $1,000,000, with an average closing price of $295,900 during the six months ended March 31, 2019. Approximately 91% of our home sales revenues in the six months ended March 31, 2019 were generated from the sale of single-family detached homes, with the remainder from the sale of attached homes, such as townhomes, duplexes and triplexes.

During fiscal 2018, we acquired 75% of the outstanding shares of Forestar Group Inc. (Forestar), for $558.3 million in cash. Forestar is a publicly traded residential lot development company listed on the New York Stock Exchange under the ticker symbol “FOR.” The acquisition is a component of our strategy to expand relationships with land developers and increase the optioned portion of our homebuilding land and lot position to enhance operational efficiency and returns.

Our financial services operations provide mortgage financing and title agency services to homebuyers in many of our homebuilding markets. DHI Mortgage, our 100% owned subsidiary, provides mortgage financing services primarily to our homebuyers and generally sells the mortgages it originates and the related servicing rights to third-party purchasers. DHI Mortgage originates loans in accordance with purchaser guidelines and sells substantially all of its mortgage production shortly after origination. Our 100% owned subsidiary title companies serve as title insurance agents by providing title insurance policies, examination and closing services, primarily to our homebuyers.

In addition to our homebuilding, Forestar and financial services operations, we have 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, constructs multi-family rental properties and has four projects under active construction and two projects that are substantially complete at March 31, 2019. In January 2019, DHI Communities sold its first multi-family rental property for $73.4 million and recorded a gain on the sale of $29.3 million, which is included in our consolidated statements of operations for the three and six months ended March 31, 2019. At March 31, 2019 and September 30, 2018, our consolidated balance sheets included $170.2 million and $173.2 million, respectively, of assets related to DHI Communities. The combined assets of all of our subsidiaries engaged in other business activities totaled $263.3 million and $198.9 million at March 31, 2019 and September 30, 2018, respectively, and the combined pre-tax income of these subsidiaries was $27.5 million and $28.5 million in the three and six months ended March 31, 2019, respectively, compared to pre-tax losses of $2.2 million and $3.3 million in the same periods of fiscal 2018. The operating results of these subsidiaries are immaterial for separate reporting and therefore are grouped together and presented as other.

41

OVERVIEW

Sales prices for both new and resale homes have increased across most of our markets over the past several years, which has generally reduced housing affordability. During fiscal 2018, interest rates on mortgage loans increased, which further impacted affordability. These conditions have resulted in some recent moderation of demand for new homes in late fiscal 2018 and early fiscal 2019, with variations across our markets. However, we continue to see solid economic fundamentals and a limited supply of homes at affordable prices across most of our markets.

During the six months ended March 31, 2019, our number and value of net sales orders increased5% and 3%, respectively, compared to the prior year period. During the six months ended March 31, 2019, our number of homes closed and home sales revenues both increased8% compared to the prior year period. Our pre-tax income was $838.5 million in the current year six month period compared to $836.1 million in the prior year period, and our pre-tax operating margin was 11.0% compared to 11.7%. We are monitoring our sales pace, pricing and homes in inventory in each of our communities, and we will adjust sales pace, home pricing and incentives based on local housing market conditions.

We believe our business is well positioned with a broad geographic footprint, affordable product offerings, a balanced supply of finished lots, land and homes, a strong balance sheet and liquidity and experienced personnel across our operating markets. We remain focused on growing our revenues and profitability, generating positive annual cash flows from operations and managing our product offerings, pricing, sales pace and inventory levels to optimize the return on our inventory investments.

Within our homebuilding land and lot portfolio, our lots controlled under purchase contracts represent 62% of the lots owned and controlled at March 31, 2019 compared to 57% at September 30, 2018 and 52% at March 31, 2018. Forestar’s inventory growth is advancing our homebuilding strategy of increasing our access to optioned land and lots.

We believe that housing demand in our individual operating markets is tied closely to each market’s economy. Therefore, we expect that housing market conditions will continue to vary across our markets. If the U.S. economy continues to grow, we expect to see solid housing demand, concentrated in markets where job growth is occurring and new home prices remain affordable relative to household incomes. The pace and sustainability of new home demand and our future results could be negatively affected by weakening economic conditions, decreases in the level of employment and housing demand, decreased home affordability, increases in mortgage interest rates or tightening of mortgage lending standards.

42

STRATEGY

Our operating strategy focuses on leveraging our financial and competitive position to increase the returns on our inventory investments and generate strong profitability and cash flows, while managing risk and maintaining financial flexibility to make opportunistic strategic investments. This strategy includes the following initiatives:

• 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 purchase contracts by expanding relationships with land developers across the country and growing our majority-owned Forestar lot development operations.

• Opportunistically pursuing acquisitions to enhance our operations and improve returns.

• 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.

We believe our operating strategy, which has produced positive results in recent years, will allow us to maintain and improve our financial and competitive position and balance sheet strength. However, we cannot provide any assurances that the initiatives listed above will continue to be successful, and we may need to adjust components of our strategy to meet future market conditions.

43

KEY RESULTS

Key financial results as of and for the three months ended March 31, 2019, as compared to the same period of 2018, were as follows:

Homebuilding:

• Homebuilding revenues increased8% to $4.0 billion compared to $3.7 billion.

• Homes closed increased10% to 13,480 homes, and the average closing price of those homes was $295,300.

• Net sales orders increased6% to 16,805 homes, and the value of net sales orders increased4% to $4.9 billion.

• Sales order backlog increased7% to 16,890 homes, and the value of sales order backlog increased3% to $5.0 billion.

• Home sales gross margin was 19.3% compared to 20.8%.

• Homebuilding SG&A expense was 9.0% of homebuilding revenues compared to 8.8%.

• Homebuilding pre-tax income was $400.4 million compared to $416.0 million.

• Homebuilding pre-tax income was 10.0% of homebuilding revenues compared to 11.3%.

• Homebuilding cash and cash equivalents totaled $557.3 million compared to $1.1 billion and $528.9 million at September 30, 2018 and March 31, 2018, respectively.

• Homebuilding inventories totaled $11.1 billion compared to $9.9 billion and $9.8 billion at September 30, 2018 and March 31, 2018, respectively.

• Homes in inventory totaled 32,100 compared to 27,900 and 27,700 at September 30, 2018 and March 31, 2018, respectively.

• Owned lots totaled 120,900 compared to 124,300 and 124,200 at September 30, 2018 and March 31, 2018, respectively. Lots controlled through purchase contracts totaled 195,500 compared to 164,200 and 133,500 at September 30, 2018 and March 31, 2018, respectively.

• Homebuilding debt was $2.8 billion compared to $2.4 billion and $2.6 billion at September 30, 2018 and March 31, 2018, respectively.

• Homebuilding debt to total capital was 22.9% compared to 21.4% at September 30, 2018 and 24.2% at March 31, 2018.

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Forestar:

• Forestar’s revenues increased189% to $65.4 million compared to $22.6 million. Revenues in the current and prior year quarters included $39.7 million and $8.5 million, respectively, of revenue from land and lot sales to our homebuilding segment.

• Forestar’s pre-tax income increased257% to $16.4 million compared to $4.6 million.

• Owned and controlled lots totaled 31,400 compared to 20,100 at September 30, 2018. Of these lots, 21,700 and 13,600, respectively, 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 $66.4 million compared to $318.8 million at September 30, 2018.

• Forestar’s inventories totaled $851.5 million compared to $498.0 million at September 30, 2018.

Financial Services:

• Financial services revenues increased7% to $101.6 million compared to $94.9 million.

• Financial services pre-tax income increased8% to $34.0 million compared to $31.4 million.

• Financial services pre-tax income was 33.5% of financial services revenues compared to 33.1%.

Consolidated Results:

•  Consolidated pre-tax income was $462.8 million compared to $444.8 million.

•  Consolidated pre-tax income was 11.2% of consolidated revenues compared to 11.7%.

•  Income tax expense was $108.4 million compared to $94.0 million.

•  Net income attributable to D.R. Horton was $351.3 million compared to $351.0 million.

• Diluted net income per common share attributable to D.R. Horton was $0.93 compared to $0.91.

• Stockholders’ equity was $9.4 billion compared to $9.0 billion and $8.2 billion at September 30, 2018 and March 31, 2018, respectively.

• Book value per common share increased to $25.09 compared to $23.88 and $21.72 at September 30, 2018 and March 31, 2018, respectively.

• Debt to total capital was 27.9% compared to 26.3% at September 30, 2018 and 28.3% at March 31, 2018.

45

Key financial results for the six months ended March 31, 2019, as compared to the same period of 2018 (or from the acquisition date of October 5, 2017 through March 31, 2018 for Forestar’s results), were as follows:

Homebuilding:

• Homebuilding revenues increased7% to $7.4 billion compared to $6.9 billion.

• Homes closed increased8% to 24,980 homes, and the average closing price of those homes was $295,900.

• Net sales orders increased5% to 27,847 homes, and the value of net sales orders increased3% to $8.2 billion.

• Home sales gross margin was 19.6% compared to 20.8%.

• Homebuilding SG&A expense was 9.2% of homebuilding revenues compared to 9.1%.

• Homebuilding pre-tax income was $754.8 million compared to $789.8 million.

• Homebuilding pre-tax income was 10.2% of homebuilding revenues compared to 11.4%.

• Net cash used in homebuilding operations was $215.9 million compared to cash provided by homebuilding operations of $90.7 million.

Forestar:

• Forestar’s revenues increased94% to $103.8 million compared to $53.5 million. Revenues in the current and prior year periods included $68.7 million and $8.5 million, respectively, of revenue from land and lot sales to our homebuilding segment.

• Forestar’s pre-tax income increased145% to $21.3 million compared to $8.7 million.

Financial Services:

• Financial services revenues increased6% to $186.9 million compared to $176.0 million.

• Financial services pre-tax income increased7% to $57.6 million compared to $53.7 million.

• Financial services pre-tax income was 30.8% of financial services revenues compared to 30.5%.

Consolidated Results:

•  Consolidated pre-tax income was $838.5 million compared to $836.1 million.

•  Consolidated pre-tax income was 11.0% of consolidated revenues compared to 11.7%.

•  Income tax expense was $197.4 million compared to $296.4 million. Income tax expense in the prior year period included a charge of $108.7 million as a result of the Tax Cuts and Jobs Act (Tax Act).

•  Net income attributable to D.R. Horton increased18% to $638.4 million compared to $540.3 million.

• Diluted net income per common share attributable to D.R. Horton increased19% to $1.68 compared to $1.41.

• Net cash used in operations was $461.7 million compared to $98.8 million.

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RESULTS OF OPERATIONS - HOMEBUILDING

We conduct our homebuilding operations in the geographic regions, states and markets listed below, and we conduct our financial services operations in many of these markets. Our homebuilding operating divisions are aggregated into six reporting segments, also referred to as reporting regions, which comprise the markets below. Our financial statements and the notes thereto contain additional information regarding segment performance.

State	Reporting Region/Market	State	Reporting Region/Market
	East Region		Southeast Region
Delaware	Central Delaware	Alabama	Birmingham
	Northern Delaware		Huntsville
Georgia	Savannah		Mobile/Baldwin County
Maryland	Baltimore		Montgomery
	Suburban Washington, D.C.		Tuscaloosa
New Jersey	Northern New Jersey	Florida	Fort Myers/Naples
	Southern New Jersey		Gainesville
North Carolina	Charlotte		Jacksonville
	Greensboro/Winston-Salem		Lakeland
	Raleigh/Durham		Melbourne/Vero Beach
	Wilmington		Miami/Fort Lauderdale
Pennsylvania	Philadelphia		Ocala
South Carolina	Charleston		Orlando
	Columbia		Pensacola/Panama City
	Greenville/Spartanburg		Port St. Lucie
	Hilton Head		Tampa/Sarasota
	Myrtle Beach		Volusia County
Virginia	Northern Virginia		West Palm Beach
	Southern Virginia	Georgia	Atlanta
			Augusta
	Midwest Region	Mississippi	Gulf Coast
Colorado	Denver	Tennessee	Knoxville
	Fort Collins		Nashville
Illinois	Chicago
Indiana	Fort Wayne		West Region
	Indianapolis	California	Bakersfield
Iowa	Des Moines		Bay Area
Minnesota	Minneapolis/St. Paul		Fresno
Ohio	Columbus		Los Angeles County
			Riverside County
	South Central Region		Sacramento
Louisiana	Baton Rouge		San Bernardino County
	Lafayette		San Diego County
Oklahoma	Oklahoma City		Ventura County
Texas	Austin	Hawaii	Hawaii
	Dallas		Kauai
	Fort Worth		Maui
	Houston		Oahu
	Killeen/Temple/Waco	Nevada	Las Vegas
	Midland/Odessa		Reno
	New Braunfels/San Marcos	Oregon	Portland/Salem
	San Antonio	Utah	Salt Lake City
		Washington	Seattle/Tacoma/Everett
	Southwest Region		Spokane
Arizona	Phoenix		Vancouver
	Tucson
New Mexico	Albuquerque

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The following tables and related discussion set forth key operating and financial data for our homebuilding operations by reporting segment as of and for the three and six months ended March 31, 2019 and 2018.

	Net Sales Orders (1)
	Three Months Ended March 31,
	Net Homes Sold				Value (In millions)						Average Selling Price
	2019	2018	% Change		2019		2018		% Change		2019		2018		% Change
East	2,426	1,991	22	%	$	693.1	$	566.8	22	%	$	285,700	$	284,700	—	%
Midwest	1,036	790	31	%	361.3		306.5		18	%	348,700		388,000		(10	)%
Southeast	5,605	5,054	11	%	1,488.4		1,352.6		10	%	265,500		267,600		(1	)%
South Central	4,779	4,788	—	%	1,203.2		1,200.5		—	%	251,800		250,700		—	%
Southwest	797	889	(10	)%	206.2		211.7		(3	)%	258,700		238,100		9	%
West	2,162	2,316	(7	)%	989.8		1,103.4		(10	)%	457,800		476,400		(4	)%
	16,805	15,828	6	%	$	4,942.0	$	4,741.5	4	%	$	294,100	$	299,600	(2	)%
	Six Months Ended March 31,
	Net Homes Sold				Value (In millions)						Average Selling Price
	2019	2018	% Change		2019		2018		% Change		2019		2018		% Change
East	3,996	3,421	17	%	$	1,138.0	$	965.3	18	%	$	284,800	$	282,200	1	%
Midwest	1,568	1,167	34	%	558.2		451.5		24	%	356,000		386,900		(8	)%
Southeast	9,221	8,686	6	%	2,451.7		2,329.0		5	%	265,900		268,100		(1	)%
South Central	8,174	7,814	5	%	2,059.0		1,961.2		5	%	251,900		251,000		—	%
Southwest	1,327	1,590	(17	)%	341.1		376.8		(9	)%	257,000		237,000		8	%
West	3,561	3,903	(9	)%	1,619.2		1,880.3		(14	)%	454,700		481,800		(6	)%
	27,847	26,581	5	%	$	8,167.2	$	7,964.1	3	%	$	293,300	$	299,600	(2	)%

	Sales Order Cancellations
	Three Months Ended March 31,
	Cancelled Sales Orders		Value (In millions)				Cancellation Rate (2)
	2019	2018	2019		2018		2019		2018
East	573	487	$	162.8	$	138.1	19	%	20	%
Midwest	162	70	55.3		26.2		14	%	8	%
Southeast	1,378	1,499	367.6		397.1		20	%	23	%
South Central	1,234	1,194	307.4		293.8		21	%	20	%
Southwest	234	244	57.9		56.1		23	%	22	%
West	315	326	147.8		148.8		13	%	12	%
	3,896	3,820	$	1,098.8	$	1,060.1	19	%	19	%
	Six Months Ended March 31,
	Cancelled Sales Orders		Value (In millions)				Cancellation Rate (2)
	2019	2018	2019		2018		2019		2018
East	1,072	877	$	302.8	$	249.3	21	%	20	%
Midwest	269	122	93.4		47.0		15	%	9	%
Southeast	2,597	2,620	694.3		691.6		22	%	23	%
South Central	2,290	2,127	571.1		525.0		22	%	21	%
Southwest	520	452	129.0		103.9		28	%	22	%
West	634	604	295.2		284.7		15	%	13	%
	7,382	6,802	$	2,085.8	$	1,901.5	21	%	20	%

___________________________________________

(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.

(2) Cancellation rate represents the number of cancelled sales orders divided by gross sales orders.

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Net Sales Orders

The number of net sales orders increased6% and 5% in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. The value of net sales orders increased4% to $4.9 billion (16,805 homes) and 3% to $8.2 billion (27,847 homes) for the three and six months ended March 31, 2019, respectively, compared to $4.7 billion (15,828 homes) and $8.0 billion (26,581 homes) in the prior year periods. Increases in the East, Midwest and Southeast regions were partially offset by decreases in the Southwest and West regions. The average selling price of net sales orders during the three and six months ended March 31, 2019 was $294,100 and $293,300, respectively, both down 2% from the prior year periods.

Higher sales volumes in our East and Midwest regions reflect our recent acquisitions of the homebuilding operations of Terramor Homes, Westport Homes and Classic Builders, which added 105 and 119 net sales orders to the East region’s results and 387 and 497 net sales orders to the Midwest region's results in the three and six months ended March 31, 2019, respectively. The decreases in net sales orders in our Southwest and West regions were primarily due to decreases in sales orders in our Phoenix and California markets. Our sales order cancellation rate (cancelled sales orders divided by gross sales orders for the period) was 19% and 21% in the three and six months ended March 31, 2019, respectively, compared to 19% and 20% in the prior year periods.

We believe our business is well positioned to continue to generate increased sales volume; however, our future sales volumes will depend on new home demand in each of our operating markets and our ability to successfully implement our operating strategies.

	Sales Order Backlog
	As of March 31,
	Homes in Backlog				Value (In millions)						Average Selling Price
	2019	2018	% Change		2019		2018		% Change		2019		2018		% Change
East	2,550	2,046	25	%	$	744.1	$	589.7	26	%	$	291,800	$	288,200	1	%
Midwest	1,228	664	85	%	417.7		258.9		61	%	340,100		389,900		(13	)%
Southeast	5,132	5,064	1	%	1,414.5		1,404.2		1	%	275,600		277,300		(1	)%
South Central	5,246	4,956	6	%	1,351.5		1,257.8		7	%	257,600		253,800		1	%
Southwest	1,013	1,028	(1	)%	275.9		244.8		13	%	272,400		238,100		14	%
West	1,721	2,083	(17	)%	794.0		1,078.1		(26	)%	461,400		517,600		(11	)%
	16,890	15,841	7	%	$	4,997.7	$	4,833.5	3	%	$	295,900	$	305,100	(3	)%

Sales Order Backlog

Sales order backlog represents homes under contract but not yet closed at the end of the period. Many of the contracts in our sales order backlog are subject to contingencies, including mortgage loan approval and buyers selling their existing homes, which can result in cancellations. A portion of the contracts in backlog will not result in closings due to cancellations.

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	Homes Closed and Home Sales Revenue
	Three Months Ended March 31,
	Homes Closed				Value (In millions)						Average Selling Price
	2019	2018	% Change		2019		2018		% Change		2019		2018		% Change
East	1,791	1,531	17	%	$	518.0	$	435.4	19	%	$	289,200	$	284,400	2	%
Midwest	701	514	36	%	246.4		203.6		21	%	351,500		396,100		(11	)%
Southeast	4,527	3,935	15	%	1,196.1		1,041.0		15	%	264,200		264,500		—	%
South Central	3,942	3,636	8	%	986.9		913.3		8	%	250,400		251,200		—	%
Southwest	681	713	(4	)%	173.2		168.8		3	%	254,300		236,700		7	%
West	1,838	1,952	(6	)%	859.9		910.0		(6	)%	467,800		466,200		—	%
	13,480	12,281	10	%	$	3,980.5	$	3,672.1	8	%	$	295,300	$	299,000	(1	)%
	Six Months Ended March 31,
	Homes Closed				Value (In millions)						Average Selling Price
	2019	2018	% Change		2019		2018		% Change		2019		2018		% Change
East	3,349	2,919	15	%	$	963.9	$	828.4	16	%	$	287,800	$	283,800	1	%
Midwest	1,372	922	49	%	491.2		365.0		35	%	358,000		395,900		(10	)%
Southeast	8,310	7,679	8	%	2,209.5		2,029.7		9	%	265,900		264,300		1	%
South Central	7,420	6,814	9	%	1,859.3		1,721.6		8	%	250,600		252,700		(1	)%
Southwest	1,242	1,405	(12	)%	316.8		324.6		(2	)%	255,100		231,000		10	%
West	3,287	3,330	(1	)%	1,550.5		1,587.3		(2	)%	471,700		476,700		(1	)%
	24,980	23,069	8	%	$	7,391.2	$	6,856.6	8	%	$	295,900	$	297,200	—	%

Home Sales Revenue

Revenues from home sales increased8% to $4.0 billion (13,480 homes closed) for the three months ended March 31, 2019 from $3.7 billion (12,281 homes closed) in the prior year period. Revenues from home sales increased8% to $7.4 billion (24,980 homes closed) for the six months ended March 31, 2019 from $6.9 billion (23,069 homes closed) in the prior year period. Home sales revenues increased in most of our regions primarily due to an increase in the number of homes closed.

The number of homes closed increased10% and 8% in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. The increases in our East and Midwest regions reflect our recent acquisitions of the homebuilding operations of Terramor Homes, Westport Homes and Classic Builders, which added 68 and 88 closings to the East region’s results and 198 and 379 closings to the Midwest region's results in the three and six months ended March 31, 2019, respectively. The decreases in home closings in our Southwest and West regions were primarily due to decreases in homes closed in our Phoenix and California markets, respectively. The average selling price of homes closed during the three and six months ended March 31, 2019 was $295,300 and $295,900, respectively, down slightly from the prior year periods. Decreases in the average selling price of homes closed in the Midwest region were largely offset by an increase in the average selling price in the Southwest region.

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Homebuilding Operating Margin Analysis
	Percentages of Related Revenues
	Three Months Ended   March 31,				Six Months Ended   March 31,
	2019		2018		2019		2018
Gross profit – home sales	19.3	%	20.8	%	19.6	%	20.8	%
Gross profit – land/lot sales and other	37.6	%	11.8	%	33.2	%	13.4	%
Inventory and land option charges	(0.3	)%	(0.8	)%	(0.3	)%	(0.5	)%
Gross profit – total homebuilding	19.0	%	20.0	%	19.3	%	20.3	%
Selling, general and administrative expense	9.0	%	8.8	%	9.2	%	9.1	%
Gain on sale of assets	—	%	—	%	—	%	(0.2	)%
Other (income) expense	—	%	(0.1	)%	—	%	—	%
Homebuilding pre-tax income	10.0	%	11.3	%	10.2	%	11.4	%

Home Sales Gross Profit

Gross profit from home sales was $766.3 million in the three months ended March 31, 2019 compared to $764.6 million in the prior year period and decreased150 basis points to 19.3% as a percentage of home sales revenues. The percentage decrease resulted from a decrease of 180 basis points due to the average selling price of our homes closed decreasing while the average cost increased and 10 basis points from an increase in the amount of purchase accounting adjustments for recent acquisitions, partially offset by a decrease of 20 basis points in the amortization of capitalized interest and 20 basis points from warranty and construction defect expenses.

Gross profit from home sales increased1% in the six months ended March 31, 2019 from the prior year period and decreased120 basis points to 19.6% as a percentage of home sales revenues. The percentage decrease resulted from a decrease of 150 basis points due to the average cost of our homes closed increasing while the average selling price decreased and 10 basis points from an increase in the amount of purchase accounting adjustments for recent acquisitions, partially offset by a decrease of 20 basis points in the amortization of capitalized interest and 20 basis points from warranty and construction defect expenses.

We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand. These actions could cause our gross profit margins to fluctuate in future periods.

Land Sales and Other Revenues

Land sales and other revenues from our homebuilding operations were $14.9 million and $21.7 million in the three and six months ended March 31, 2019, respectively, and $13.6 million and $50.0 million in the comparable periods of fiscal 2018. Land sales revenues during the six months ended March 31, 2018 included $26.5 million from the sale of a parcel of land in California. We continually evaluate our land and lot supply, and fluctuations in revenues and profitability from land sales occur based on how we manage our inventory levels in various markets. We generally purchase land and lots with the intent to build and sell homes on them. However, some of the land that we purchase includes commercially zoned parcels that we may sell to commercial developers. We may also sell residential lots or land parcels to manage our supply or for other strategic reasons. As of March 31, 2019, our homebuilding operations had $49.0 million of land held for sale that we expect to sell in the next twelve months.

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Inventory and Land Option Charges

At March 31, 2019, we reviewed the performance and outlook for all of our communities and land inventories for indicators of potential impairment and performed detailed impairment evaluations and analyses when necessary. We performed detailed impairment evaluations of communities and land inventories with a combined carrying value of $95.5 million and recorded impairment charges of $7.7 million during the three months ended March 31, 2019 to reduce the carrying value of impaired communities to fair value. During the six months ended March 31, 2019, impairment charges totaled $11.9 million. There were $3.0 million and $4.4 million of impairment charges recorded in the three and six months ended March 31, 2018, respectively.

As we manage our inventory investments across our operating markets to optimize returns and cash flows, we may modify our pricing and incentives, construction and development plans or land sale strategies in individual active communities and land held for development, which could result in the affected communities being evaluated for potential impairment. Also, if housing or economic conditions weaken in specific markets in which we operate, or if conditions weaken in the broader economy or homebuilding industry, we may be required to evaluate additional communities for potential impairment. These evaluations could result in additional impairment charges.

During the three and six months ended March 31, 2019, we wrote off $6.1 million and $9.9 million, respectively, of earnest money deposits and pre-acquisition costs related to land contracts that we have terminated or expect to terminate. Earnest money and pre-acquisition cost write-offs for the three and six months ended March 31, 2018 were $2.6 million and $4.9 million, respectively. Inventory and land option charges for the three and six months ended March 31, 2018 also included a charge of $24.5 million related to the settlement of an outstanding dispute associated with a land transaction.

Selling, General and Administrative (SG&A) Expense

SG&A expense from homebuilding activities increased11% to $359.3 million and 9% to $683.9 million in the three and six months ended March 31, 2019, respectively, from $322.7 million and $627.5 million in the prior year periods. SG&A expense as a percentage of homebuilding revenues was 9.0% and 9.2% in the three and six months ended March 31, 2019, respectively, compared to 8.8% and 9.1% in the prior year periods.

Employee compensation and related costs represented 73% and 72% of SG&A costs in the three and six months ended March 31, 2019, respectively, compared to 73% and 71% in the prior year periods. These costs increased11% to $262.8 million and 9% to $489.1 million in the three and six months ended March 31, 2019, respectively, due to increases in the number of employees as compared to the prior year periods. Our homebuilding operations employed 6,904 and 6,127 employees at March 31, 2019 and 2018, respectively.

We attempt to control our SG&A costs while ensuring that our infrastructure adequately supports our operations; however, we cannot make assurances that we will be able to maintain or improve upon the current SG&A expense as a percentage of revenues.

Interest Incurred

We capitalize 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. Interest incurred by our homebuilding operations increased9% to $30.5 million and 1% to $57.6 million in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. The increases correspond to increases in our average homebuilding debt of 7% and 1%, respectively. Interest charged to cost of sales was 0.9% of total cost of sales (excluding inventory and land option charges) in both the three and six months ended March 31, 2019, compared to 1.1% in both prior year periods.

Gain on Sale of Assets

Gain on sale of assets from our homebuilding operations was $2.0 million in the six months ended March 31, 2019 compared to $13.4 million in the prior year period. The gain on sale during both periods resulted from the sale of multi-family rental units in our Southeast region.

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Other Income

Other income, net of other expenses, included in our homebuilding operations was $1.6 million and $3.5 million in the three and six months ended March 31, 2019, respectively, compared to $2.6 million and $3.4 million in the prior year periods. Other income consists of interest income, rental income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots. The activities that result in this ancillary income or expense are not significant, either individually or in the aggregate.

Business Acquisitions

During the first quarter of fiscal 2019, we acquired the homebuilding operations of Westport Homes, Classic Builders and Terramor Homes for $325.9 million. The assets acquired included approximately 700 homes in inventory, 4,500 lots and control of approximately 4,300 additional lots through land purchase contracts. We also acquired a sales order backlog of approximately 700 homes. Westport Homes operates in Indianapolis and Fort Wayne, Indiana, and Columbus, Ohio; Classic Builders operates in Des Moines, Iowa; and Terramor Homes operates in Raleigh, North Carolina.

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Homebuilding Results by Reporting Region

	Three Months Ended March 31,
	2019						2018
	Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues		Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues
	(In millions)
East	$	518.2	$	45.9	8.9	%	$	435.8	$	46.7	10.7	%
Midwest	248.1		9.5		3.8	%	203.6		18.7		9.2	%
Southeast	1,205.3		131.0		10.9	%	1,042.0		96.3		9.2	%
South Central	990.2		119.3		12.0	%	919.0		120.5		13.1	%
Southwest	173.2		18.6		10.7	%	172.1		22.0		12.8	%
West	860.4		76.1		8.8	%	913.2		111.8		12.2	%
	$	3,995.4	$	400.4	10.0	%	$	3,685.7	$	416.0	11.3	%
	Six Months Ended March 31,
	2019						2018
	Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues		Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues
	(In millions)
East	$	965.7	$	83.9	8.7	%	$	828.9	$	91.7	11.1	%
Midwest	497.2		20.2		4.1	%	365.0		32.0		8.8	%
Southeast	2,219.2		243.2		11.0	%	2,030.6		218.8		10.8	%
South Central	1,862.7		225.3		12.1	%	1,727.8		222.0		12.8	%
Southwest	316.9		36.3		11.5	%	328.5		36.7		11.2	%
West	1,551.2		145.9		9.4	%	1,625.8		188.6		11.6	%
	$	7,412.9	$	754.8	10.2	%	$	6,906.6	$	789.8	11.4	%

______________

(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 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.

East Region — Homebuilding revenues increased19% and 17% in the three and six months ended March 31, 2019, respectively, compared to the prior year periods, primarily due to increases in the number of homes closed in our Carolina markets. The acquisition of Terramor Homes in the first quarter of fiscal 2019 contributed $23.0 million and $30.1 million of revenues in the current year three and six month periods, respectively. The region generated pre-tax income of $45.9 million and $83.9 million in the three and six months ended March 31, 2019, respectively, compared to $46.7 million and $91.7 million in the prior year periods. Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) decreased by 190 and 240 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods, due to increases in the average cost of homes closed. As a percentage of homebuilding revenues, SG&A expense was unchanged in the three month period and decreased by 10 basis points in the six month period ended March 31, 2019 compared to the prior year periods.

54

Midwest Region — Homebuilding revenues increased22% and 36% in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. The increases were largely due to the acquisitions of Westport Homes and Classic Builders in the first quarter of fiscal 2019 which contributed $57.0 million and $108.7 million of revenues in the current year three and six month periods, respectively. The region generated pre-tax income of $9.5 million and $20.2 million in the three and six months ended March 31, 2019, respectively, compared to $18.7 million and $32.0 million in the prior year periods. Home sales gross profit percentage decreased by 400 and 480 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. The decreases in home sales gross profit percentage were due to the average selling price of homes closed decreasing by more than the average cost. As a percentage of homebuilding revenues, SG&A expense increased by 150 basis points and decreased by 10 basis points in the three and six months ended March 31, 2019, respectively. The increase in the three month period was primarily due to an increase in employee compensation and other costs related to the recent acquisitions.

Southeast Region — Homebuilding revenues increased16% and 9% in the three and six months ended March 31, 2019, respectively, compared to the prior year periods, primarily due to increases in many of our Florida markets. The region generated pre-tax income of $131.0 million and $243.2 million in the three and six months ended March 31, 2019, respectively, compared to $96.3 million and $218.8 million in the prior year periods. The region’s results in both prior year periods include a $24.5 million inventory and land option charge related to the settlement of an outstanding dispute associated with a land transaction. The region’s pre-tax income in the prior year six month period included a $13.4 million gain on sale of multi-family rental units in one community. Home sales gross profit percentage decreased by 80 and 30 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. As a percentage of homebuilding revenues, SG&A expense decreased by 20 basis points and increased by 10 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods.

South Central Region — Homebuilding revenues increased8% in both the three and six months ended March 31, 2019 compared to the prior year periods, primarily due to increases in the number of homes closed in our Houston and Fort Worth markets. The region generated pre-tax income of $119.3 million and $225.3 million in the three and six months ended March 31, 2019, respectively, compared to $120.5 million and $222.0 million in the prior year periods. Home sales gross profit percentage decreased by 130 and 120 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods, due to the average selling price of homes closed decreasing while the average cost increased slightly. As a percentage of homebuilding revenues, SG&A expense decreased by 10 and 20 basis points in the three and six month period ended March 31, 2019, respectively, compared to the prior year periods.

Southwest Region — Homebuilding revenues increased1% and decreased4% in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. In both periods, the number of homes closed in the region decreased, particularly in our Phoenix market, while the average selling price of homes closed increased. The region generated pre-tax income of $18.6 million and $36.3 million in the three and six months ended March 31, 2019, respectively, compared to $22.0 million and $36.7 million in the prior year periods. Home sales gross profit percentage decreased by 220 basis points and increased by 20 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. The gross profit percentage in the current year three month period was negatively affected by an increase in warranty and construction defect costs. As a percentage of homebuilding revenues, SG&A expense increased by 30 and 40 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods.

West Region — Homebuilding revenues decreased6% and 5% in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. The decrease in the three month period was due to a decrease in the number of homes closed, particularly in our California markets. The decrease in the six month period was primarily due to land sales of $38.6 million in the prior year period compared to $0.3 million in the current year period. The region generated pre-tax income of $76.1 million and $145.9 million in the three and six months ended March 31, 2019, respectively, compared to $111.8 million and $188.6 million in the prior year periods. Home sales gross profit percentage decreased by 180 and 90 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods, due to the average cost of homes increasing more than the average selling price. As a percentage of homebuilding revenues, SG&A expense increased by 80 and 70 basis points in the three and six months ended March 31, 2019, respectively, compared to the prior year periods, primarily due to a decrease in homebuilding revenues.

55

HOMEBUILDING INVENTORIES, LAND AND LOT POSITION AND HOMES IN INVENTORY

We routinely enter into contracts to purchase land or developed residential lots at predetermined prices on a defined schedule commensurate with planned development or anticipated new home demand. We also purchase undeveloped land that generally is vested with the rights to begin development or construction work, and we plan and coordinate the development of our land into residential lots for use in our homebuilding business. We manage our inventory of owned land and lots and 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.

Our homebuilding segment’s inventories at March 31, 2019 and September 30, 2018 are summarized as follows:

	As of March 31, 2019
	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	$	829.2	$	512.5	$	10.3	$	2.4	$	1,354.4
Midwest	444.6		370.6		1.8		0.7		817.7
Southeast	1,603.8		1,213.6		31.8		2.9		2,852.1
South Central	1,447.9		1,272.4		0.3		—		2,720.6
Southwest	251.6		374.8		1.7		—		628.1
West	1,378.8		1,030.1		15.6		42.4		2,466.9
Corporate and unallocated (1)	130.2		105.4		0.8		0.6		237.0
	$	6,086.1	$	4,879.4	$	62.3	$	49.0	$	11,076.8

	As of 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

__________

(1) Corporate and unallocated inventory consists primarily of capitalized interest and property taxes.

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Our homebuilding segment’s land and lot position and homes in inventory at March 31, 2019 and September 30, 2018 are summarized as follows:

	As of March 31, 2019
	Land/Lots Owned (1)		Lots Controlled Under Land and Lot Purchase Contracts (2)(3)		Total Land/Lots Owned and Controlled		Homes in Inventory (4)
East	9,800		25,800		35,600		4,700
Midwest	7,300		14,300		21,600		2,100
Southeast	34,600		84,800		119,400		9,700
South Central	42,200		50,900		93,100		9,400
Southwest	6,700		6,200		12,900		1,700
West	20,300		13,500		33,800		4,500
	120,900		195,500		316,400		32,100
	38	%	62	%	100	%

	As of September 30, 2018
	Land/Lots Owned (1)		Lots Controlled Under Land and Lot Purchase Contracts (2)(3)		Total Land/Lots Owned and Controlled		Homes in Inventory (4)
East	11,900		19,400		31,300		3,700
Midwest	3,800		9,300		13,100		1,700
Southeast	37,100		70,400		107,500		8,900
South Central	42,900		45,700		88,600		8,400
Southwest	7,600		5,000		12,600		1,400
West	21,000		14,400		35,400		3,800
	124,300		164,200		288,500		27,900
	43	%	57	%	100	%

___________________

(1) Land/lots owned include approximately 34,900 and 35,100 owned lots that are fully developed and ready for home construction at March 31, 2019 and September 30, 2018, respectively. Land/lots owned also include land held for development representing 1,800 and 1,700 lots at March 31, 2019 and September 30, 2018, respectively.

(2) The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2019 and September 30, 2018 was $7.4 billion and $6.5 billion, respectively, secured by earnest money deposits of $461.0 million and $401.1 million, respectively. The total remaining purchase price of lots controlled at March 31, 2019 included $895.8 million related to lot purchase contracts with Forestar, secured by $76.5 million of earnest money. The total remaining purchase price of lots controlled at September 30, 2018 included $522.2 million related to lot purchase contracts with Forestar, secured by $48.0 million of earnest money.

(3) Lots controlled at March 31, 2019 include approximately 21,700 lots owned or controlled by Forestar, 12,100 of which our homebuilding divisions have under contract to purchase and 9,600 of which our homebuilding divisions have a right of first offer to purchase. Of these, approximately 7,600 lots were in our Southeast region, 4,600 lots were in our South Central region, 4,200 lots were in our West region, 2,300 lots were in our East region, 2,200 lots were in our Southwest region and 800 lots were in our Midwest region. Lots controlled at September 30, 2018 included approximately 13,600 lots owned or controlled by Forestar, 5,500 of which our homebuilding divisions had under contract to purchase and 8,100 of which our homebuilding divisions had a right of first offer to purchase.

(4) Approximately 17,800 and 16,400 of our homes in inventory were unsold at March 31, 2019 and September 30, 2018, respectively. At March 31, 2019, approximately 5,300 of our unsold homes were completed, of which approximately 500 homes had been completed for more than six months. 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. Homes in inventory exclude approximately 1,900 and 1,800 model homes at March 31, 2019 and September 30, 2018, respectively.

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RESULTS OF OPERATIONS – FORESTAR

On October 5, 2017, we acquired 75% of the outstanding shares of Forestar, a publicly traded residential lot development company with operations in 41 markets and 17 states as of March 31, 2019. Forestar’s segment results are presented on their historical cost basis, consistent with the manner in which management evaluates segment performance. (See Note B for additional Forestar segment information and purchase accounting adjustments.)

Results of operations for the Forestar segment for the three and six months ended March 31, 2019 and 2018 were as follows. For fiscal 2018, the six month period refers to the period from the acquisition date of October 5, 2017 through March 31, 2018.

	Three Months Ended   March 31,						Six Months Ended   March 31, 2019			For the Period from   October 5, 2017 to   March 31, 2018
	2019			2018
	(In millions)
Residential land and lot sales	$	50.4		$	20.6		$	85.3		$	44.4
Commercial lot sales	15.0			2.0			18.5			9.1
Total revenues	$	65.4		$	22.6		$	103.8		$	53.5
Cost of sales	43.7			16.2			74.3			35.5
Selling, general and administrative expense	6.2			5.6			11.9			19.1
Gain on sale of assets	—			(2.7		)	(0.9		)	(2.7		)
Interest expense	—			2.1			—			4.2
Other (income) expense	(0.9		)	(3.2		)	(2.8		)	(11.3		)
Income before income taxes	$	16.4		$	4.6		$	21.3		$	8.7

Residential land and lot sales primarily consist of the sale of single-family lots to local, regional and national homebuilders. During the three and six months ended March 31, 2019, Forestar lot sales, including the portion sold to D.R. Horton and the revenues generated from those sales, were as follows.

	Three Months Ended   March 31,				Six Months Ended   March 31, 2019		For the Period from   October 5, 2017 to   March 31, 2018
	2019		2018
	($ in millions)
Total residential single-family lots sold	548		304		1,066		559
Residential single-family lots sold to D.R. Horton	453		183		908		183
Residential land and lot sales revenues from sales to D.R. Horton	$	39.7	$	8.5	$	68.7	$	8.5

SG&A expense for the three and six months ended March 31, 2019 includes charges of $0.5 million and $1.0 million, respectively, related to the shared services agreement between Forestar and D.R. Horton whereby D.R. Horton provides Forestar with certain administrative, compliance, operational and procurement services. Shared services charges were $0.3 million in both periods of fiscal 2018. SG&A expense for the six month period ended March 31, 2018 includes $6.3 million of severance and change of control charges for Forestar’s executive officers that were triggered shortly after the acquisition date.

Other income includes equity in earnings of unconsolidated entities of $0.6 million in the six months ended March 31, 2019 and $1.5 million and $9.1 million in the three and six months ended March 31, 2018, respectively. The amount for the prior year six month period primarily relates to the sale of a multi-family joint venture project in Nashville, Tennessee.

At March 31, 2019, Forestar owned directly or controlled through land and lot purchase contracts approximately 31,400 residential lots, of which approximately 3,600 are fully developed. Approximately 21,700 of these lots are under contract to sell to D.R. Horton or subject to a right of first offer under the master supply agreement with D.R. Horton. Approximately 300 of these lots are under contract to sell to other builders.

58

RESULTS OF OPERATIONS – FINANCIAL SERVICES

The following tables and related discussion set forth key operating and financial data for our financial services operations, comprising DHI Mortgage and our subsidiary title companies, for the three and six months ended March 31, 2019 and 2018.

	Three Months Ended March 31,						Six Months Ended March 31,
	2019		2018		% Change		2019		2018		% Change
Number of first-lien loans originated or brokered by DHI Mortgage for D.R. Horton homebuyers	7,518		7,046		7	%	13,762		13,060		5	%
Number of homes closed by D.R. Horton	13,480		12,281		10	%	24,980		23,069		8	%
Percentage of D.R. Horton homes financed by DHI Mortgage	56	%	57	%			55	%	57	%
Number of total loans originated or brokered by DHI Mortgage for D.R. Horton homebuyers	7,536		7,081		6	%	13,797		13,127		5	%
Total number of loans originated or brokered by DHI Mortgage	7,662		7,278		5	%	14,060		13,566		4	%
Captive business percentage	98	%	97	%			98	%	97	%
Loans sold by DHI Mortgage to third parties	6,949		6,758		3	%	13,996		13,100		7	%

	Three Months Ended March 31,								Six Months Ended March 31,
	2019			2018			% Change		2019			2018			% Change
	(In millions)
Loan origination fees	$	3.5		$	3.8		(8	)%	$	6.8		$	7.3		(7	)%
Sale of servicing rights and gains from sale of mortgage loans	73.1			68.8			6	%	132.9			125.7			6	%
Other revenues	5.2			4.5			16	%	9.7			8.6			13	%
Total mortgage operations revenues	81.8			77.1			6	%	149.4			141.6			6	%
Title policy premiums	19.8			17.8			11	%	37.5			34.4			9	%
Total revenues	101.6			94.9			7	%	186.9			176.0			6	%
General and administrative expense	71.3			66.7			7	%	137.0			128.4			7	%
Other (income) expense	(3.7		)	(3.2		)	16	%	(7.7		)	(6.1		)	26	%
Financial services pre-tax income	$	34.0		$	31.4		8	%	$	57.6		$	53.7		7	%

Financial Services Operating Margin Analysis

	Percentages of  Financial Services Revenues
	Three Months Ended   March 31,				Six Months Ended   March 31,
	2019		2018		2019		2018
General and administrative expense	70.2	%	70.3	%	73.3	%	73.0	%
Other (income) expense	(3.6	)%	(3.4	)%	(4.1	)%	(3.5	)%
Financial services pre-tax income	33.5	%	33.1	%	30.8	%	30.5	%

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Mortgage Loan Activity

The volume of loans originated by our mortgage operations is directly related to the number of homes closed by our homebuilding operations. In the three and six months ended March 31, 2019, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers increased7% and 5%, respectively, primarily as a result of increases in the number of homes closed by our homebuilding operations of 10% and 8%. The percentage of homes closed for which DHI Mortgage handled the homebuyers’ financing was 56% and 55% in the three and six months ended March 31, 2019, respectively, compared to 57% in both prior year periods.

Homes closed by our homebuilding operations constituted 98% of DHI Mortgage loan originations in both the three and six months ended March 31, 2019 compared to 97% in both prior year periods. These percentages reflect DHI Mortgage’s consistent focus on the captive business provided by our homebuilding operations.

The number of loans sold increased3% and 7% in the three and six months ended March 31, 2019, respectively, compared to the prior year periods. Virtually all of the mortgage loans held for sale on March 31, 2019 were eligible for sale to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Government National Mortgage Association (Ginnie Mae). Approximately 93% of the mortgage loans sold by DHI Mortgage during the six months ended March 31, 2019 were sold to four major financial entities, the largest of which purchased 32% of the total loans sold.

Financial Services Revenues and Expenses

Revenues from our mortgage operations increased6% to $81.8 million and $149.4 million in the three and six months ended March 31, 2019, respectively, from $77.1 million and $141.6 million in the prior year periods, while the number of loan originations increased5% and 4% over those same periods.

General and administrative (G&A) expense related to our financial services operations increased7% to $71.3 million and $137.0 million in the three and six months ended March 31, 2019, respectively, from $66.7 million and $128.4 million in the prior year periods. The increases were primarily due to increases in employee related costs. Our financial services operations employed 1,923 and 1,862 employees at March 31, 2019 and 2018, respectively.

As a percentage of financial services revenues, G&A expense was 70.2% and 73.3% in the three and six months ended March 31, 2019, respectively, compared to 70.3% and 73.0% in the prior year periods. Fluctuations in financial services G&A expense as a percentage of revenues can be expected to occur, as some components of revenue may fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned.

Other income, net of other expense, included in our financial services operations consists primarily of the interest income of our mortgage subsidiary.

60

RESULTS OF OPERATIONS - CONSOLIDATED

Income before Income Taxes

Pre-tax income for the three and six months ended March 31, 2019 was $462.8 million and $838.5 million, respectively, compared to $444.8 million and $836.1 million in the prior year periods.

Income Taxes

Our income tax expense for the three and six months ended March 31, 2019 was $108.4 million and $197.4 million, respectively, compared to $94.0 million and $296.4 million in the prior year periods. Our effective tax rate was 23.4% and 23.5% for the three and six months ended March 31, 2019, respectively, compared to 21.1% and 35.5% in the prior year periods. The higher effective tax rate for the six months ended March 31, 2018 was primarily due to the remeasurement of our deferred tax assets and liabilities as a result of the Tax Act, which was enacted into law on December 22, 2017. The effective tax rates for all periods include an expense for state income taxes, reduced by tax benefits related to stock-based compensation.

The Tax Act reduced the federal corporate tax rate from 35% to 21% for all corporations effective January 1, 2018. For fiscal year companies, the change in law required the application of a blended tax rate in the year of change, which for us was 24.5% for the fiscal year ended September 30, 2018. For the fiscal year ending September 30, 2019 and thereafter, the applicable statutory federal tax rate is 21%. The Tax Act also repealed the domestic production activities deduction effective for us for fiscal 2019.

Our deferred tax assets, net of deferred tax liabilities, were $188.9 million at March 31, 2019 compared to $211.7 million at September 30, 2018. We have a valuation allowance related to state deferred tax assets for net operating loss (NOL) carryforwards of $17.0 million at March 31, 2019 and $17.7 million at September 30, 2018. We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to our remaining state NOL carryforwards. Any reversal of the valuation allowance in future periods will impact our effective tax rate.

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 our 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 our deferred tax assets.

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CAPITAL RESOURCES AND LIQUIDITY

We have historically funded our operations with cash flows from operating activities, borrowings under bank credit facilities and the issuance of new debt securities. Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in market conditions and allow us to increase our investments in homes, finished lots, land and land development to expand our operations and grow our revenues and profitability.

At March 31, 2019, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 27.9% compared to 26.3% at September 30, 2018 and 28.3% at March 31, 2018. Our ratio of homebuilding debt to total capital (homebuilding notes payable divided by stockholders’ equity plus homebuilding notes payable) was 22.9% compared to 21.4% at September 30, 2018 and 24.2% at March 31, 2018. Over the long term, we intend to maintain our ratio of homebuilding debt to total capital below 35%, and we expect it to remain significantly lower than 35% throughout fiscal 2019. We believe that the ratio of homebuilding debt to total capital is useful in understanding the leverage employed in our homebuilding operations and comparing our capital structure with other homebuilders. We exclude the debt of Forestar and our financial services business because they are separately capitalized and not guaranteed by our parent company or any of our homebuilding entities.

We regularly assess our projected capital requirements to fund growth in our business, repay debt obligations, and support other general corporate and operational needs, and we regularly evaluate our opportunities to raise additional capital. D.R. Horton 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 may be issued from time to time in amounts to be determined. Forestar also has an effective shelf registration statement filed with the SEC in September 2018, registering $500 million of equity securities. As market conditions permit, we may issue new debt or equity securities through the capital markets or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity. We believe that our existing cash resources, revolving credit facilities, mortgage repurchase facility and ability to access the capital markets will provide sufficient liquidity to fund our near-term working capital needs and debt obligations.

Capital Resources - Homebuilding

Cash and Cash Equivalents — At March 31, 2019, cash and cash equivalents of our homebuilding segment totaled $557.3 million.

Bank Credit Facility — We have a $1.325 billion senior unsecured homebuilding revolving credit facility with 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. The maturity date of the facility is September 25, 2023. Borrowings and repayments under the facility were $1.8 billion and $1.0 billion, respectively, during the six months ended March 31, 2019. At March 31, 2019, there were $750 million of borrowings outstanding at a 3.7% annual interest rate and $128.0 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $447.0 million.

Our homebuilding revolving credit facility imposes restrictions on our operations and activities, including requiring the maintenance of a maximum allowable ratio of debt to tangible net worth and a borrowing base restriction if our 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 imposes restrictions on the creation of secured debt and liens. At March 31, 2019, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility.

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Public Unsecured Debt — We have $1.95 billion principal amount of homebuilding senior notes outstanding as of March 31, 2019 that mature from February 2020 through August 2023. On March 1, 2019, we repaid $500 million principal amount of our 3.75% senior notes at maturity. The indenture governing our senior notes imposes restrictions on the creation of secured debt and liens. At March 31, 2019, we were in compliance with all of the limitations and restrictions associated with our public debt obligations.

Repurchases of Common Stock — During the three and six months ended March 31, 2019, we repurchased 2.0 million and 6.1 million shares, respectively, of our common stock for $75.6 million and $216.2 million.

Debt and Equity Repurchase Authorizations — Effective August 1, 2018, our Board of Directors authorized the repurchase of up to $500 million of debt securities and $400 million of our common stock effective through September 30, 2019. The full amount of the debt authorization was remaining at March 31, 2019. Repurchases of common stock from August 1, 2018 through March 31, 2019 totaled $240.7 million, reducing the stock repurchase authorization to $159.3 million.

Capital Resources - Forestar

At March 31, 2019, Forestar had cash and cash equivalents of $66.4 million. In August 2018, Forestar entered into a $380 million senior unsecured bank credit facility. In September 2018, Forestar filed an effective shelf registration statement with the SEC, registering $500 million of equity securities. Forestar’s ability to achieve its long-term growth objectives will depend on its ability to obtain financing in sufficient capacities. As market conditions permit, Forestar may issue new debt or equity securities through the capital markets or obtain additional bank financing to provide capital for future growth and additional liquidity. In April 2019, Forestar raised capital through the issuance of senior notes as discussed below.

Bank Credit Facility — Forestar has 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 March 31, 2019, there were $35 million of borrowings outstanding at a 4.8% annual interest rate and $3.8 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 March 31, 2019, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

Letter of Credit Facility — Forestar has a secured letter of credit agreement that requires it to deposit cash as collateral with the issuing bank. At March 31, 2019, letters of credit outstanding under the letter of credit facility totaled $15.0 million, secured by $15.7 million in cash, which is included in restricted cash in the consolidated balance sheet.

Unsecured Debt — Forestar has $118.9 million principal amount of 3.75% convertible senior notes outstanding as of March 31, 2019 that are expected to be settled in cash upon their maturity at March 1, 2020. In April 2019, Forestar issued $350 million principal amount of 8.0% senior notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The notes are due April 15, 2024, with interest payable semi-annually, and represent unsecured obligations of Forestar. The annual effective interest rate of these notes after giving effect to the amortization of financing costs is 8.5%. These notes may be redeemed prior to maturity, subject to certain limitations and premiums defined in the indenture agreement.

Forestar’s revolving credit facility, its senior notes and its convertible senior notes are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee our homebuilding debt.

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Capital Resources - Financial Services

Cash and Cash Equivalents — At March 31, 2019, cash and cash equivalents of our financial services operations totaled $61.1 million.

Mortgage Repurchase Facility — Our mortgage subsidiary, DHI Mortgage, has a mortgage repurchase facility that provides financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to the counterparties upon receipt of funds from the counterparties. 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. In February 2019, the mortgage repurchase facility was amended to extend its maturity date to February 21, 2020. 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 of the facility can also be increased to $1.0 billion subject to the availability of additional commitments. Additional commitments were obtained to increase the capacity of the facility to $800 million for approximately 30 days at the March 2019 quarter end.

As of March 31, 2019, $784.5 million of mortgage loans held for sale with a collateral value of $759.4 million were pledged under the mortgage repurchase facility. DHI Mortgage had an obligation of $690.7 million outstanding under the mortgage repurchase facility at March 31, 2019 at a 4.2% annual interest rate.

The mortgage repurchase facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee our 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 March 31, 2019, 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 our 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.

Operating Cash Flow Activities

In the six months ended March 31, 2019, net cash used in operating activities was $461.7 million compared to $98.8 million in the prior year period. Cash used in operating activities in the current year period primarily consisted of $215.9 million and $287.8 million of cash used in our homebuilding and Forestar segments, respectively, partially offset by $48.8 million of cash provided by our financial services segment.

We used $755.2 million of cash to increase our construction in progress and finished home inventory compared to $514.5 million in the prior year period. In both periods, the expenditures were made to support the current period increase in sales and closing volumes, as well as the expected increase in future periods. Cash used to increase residential land and lots in the current year period was $445.6 million, of which $341.8 million related to Forestar, compared to $271.5 million in the prior year period, of which $167.6 million related to Forestar. The most significant source of cash provided by operating activities in both periods was net income.

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Investing Cash Flow Activities

In the six months ended March 31, 2019, net cash used in investing activities was $321.1 million compared to cash provided by investing activities of $31.4 million in the prior year period. The most significant investing uses of cash in the current year period were the purchases of the homebuilding operations of Westport Homes, Classic Builders and Terramor Homes, whereby $309.6 million of the aggregate purchase price was paid during the current year period. Proceeds from the sale of assets in the current year period included $73.4 million related to the sale of the first multi-family rental property constructed by DHI Communities. In the prior year period, we paid $558.3 million to purchase 75% of the outstanding shares of Forestar, which had $401.9 million of cash on the acquisition date. Proceeds from the sale of assets in the prior year period included $228.6 million related to Forestar, primarily from the strategic sale of assets.

Financing Cash Flow Activities

We expect the short-term financing needs of our operations will be funded with existing cash, cash generated from operations and borrowings under our credit facilities. Long-term financing needs for the growth of our homebuilding and Forestar operations may be funded with the issuance of senior unsecured debt securities or equity securities through the capital markets.

During the six months ended March 31, 2019, net cash provided by financing activities was $8.0 million, consisting primarily of note proceeds, largely offset by note repayments, repurchases of common stock and payments of cash dividends. Note proceeds of $1.8 billion were due to draws on our revolving credit facilities. Note repayments of $1.5 billion included repayments of amounts drawn on our homebuilding revolving credit facility of $1.0 billion and repayment of $500 million principal amount of our 3.75% senior notes at maturity. We also used cash of $216.2 million to repurchase 6.1 million shares of our common stock and $111.9 million to pay dividends to our common stockholders. During the six months ended March 31, 2018, net cash provided by financing activities was $109.3 million, consisting primarily of note proceeds, partially offset by note repayments, payments of cash dividends and repurchases of common stock. Note proceeds of $1.9 billion included draws of $1.5 billion on our homebuilding revolving credit facility and our issuance of $400 million principal amount of 2.55% senior notes due December 2020. Note repayments of $1.8 billion included our early redemption of the $400 million principal amount of our 3.625% senior notes due February 2018 and repayments of amounts drawn on our homebuilding revolving credit facility of $1.3 billion. We also used cash to repurchase 1.0 million shares of our common stock for $47.9 million during the prior year period.

During the three months ended March 31, 2019, our Board of Directors approved a quarterly cash dividend of $0.15 per common share, which was paid on February 25, 2019 to stockholders of record on February 11, 2019. In April 2019, our Board of Directors approved a quarterly cash dividend of $0.15 per common share, payable on May 28, 2019 to stockholders of record on May 13, 2019. Cash dividends of $0.125 per common share were approved and paid in each quarter of fiscal 2018. The declaration of future cash dividends is at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.

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CONTRACTUAL CASH OBLIGATIONS, COMMERCIAL COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS

Our primary contractual cash obligations are payments under our debt agreements and lease payments under operating leases. We expect to fund our contractual obligations in the ordinary course of business through a combination of our existing cash resources, cash flows generated from profits, our credit facilities or other bank financing, and the issuance of new debt or equity securities through the public capital markets as market conditions may permit.

At March 31, 2019, we had outstanding letters of credit of $148.3 million and surety bonds of $1.6 billion, issued by third parties to secure performance under various contracts. We expect that our performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms. When we complete our performance obligations, the related letters of credit and bonds are generally released shortly thereafter, leaving us with no continuing obligations. We have no material third-party guarantees.

Our mortgage subsidiary enters into various commitments related to the lending activities of our mortgage operations. Further discussion of these commitments is provided in Item 3 “Quantitative and Qualitative Disclosures about Market Risk” under Part I of this quarterly report on Form 10-Q.

We enter into land and lot purchase contracts to acquire land or lots for the construction of homes. Lot purchase contracts enable us to control significant lot positions with limited capital investment. Among our homebuilding land and lot purchase contracts at March 31, 2019, there were a limited number of contracts, representing $96.8 million of remaining purchase price, subject to specific performance provisions that may require us to purchase the land or lots upon the land sellers meeting their respective contractual obligations. Of this amount, $50.9 million related to contracts between our homebuilding segment and Forestar. Further information about our land purchase contracts is provided in the “Homebuilding Inventories, Land and Lot Position and Homes in Inventory” section included herein.

CRITICAL ACCOUNTING POLICIES

As disclosed in our annual report on Form 10-K for the fiscal year ended September 30, 2018, our most critical accounting policies relate to revenue recognition, inventories and cost of sales, business acquisitions, goodwill, warranty claims, legal claims and insurance, income taxes, stock-based compensation and fair value measurements. Since September 30, 2018, there have been no significant changes to those critical accounting policies.

As disclosed in our critical accounting policies in our Form 10-K for the fiscal year ended September 30, 2018, our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims. At March 31, 2019 and September 30, 2018, we had reserves for approximately 160 and 155 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During the six months ended March 31, 2019, we established reserves for approximately 50 new construction defect claims and resolved 45 construction defect claims for a total cost of $5.4 million. At March 31, 2018 and September 30, 2017, we had reserves for approximately 135 and 140 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During the six months ended March 31, 2018, we established reserves for approximately 45 new construction defect claims and resolved 50 construction defect claims for a total cost of $12.3 million.

SEASONALITY

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and operating income in the third and fourth quarters of our fiscal year. The seasonal nature of our business can also cause significant variations in our working capital requirements in both our homebuilding and financial services operations. As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year.

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Forward-Looking Statements

Some of the statements contained in this report, as well as in other materials we have filed or will file with the Securities and Exchange Commission (SEC), statements made by us in periodic press releases and oral statements we make to analysts, stockholders and the press in the course of presentations about us, may be construed as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management. These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “projection,” “seek,” “should,” “strategy,” “target,” “will,” “would” or other words of similar meaning. Any or all of the forward-looking statements included in this report and in any other of our reports or public statements may not approximate actual experience, and the expectations derived from them may not be realized, due to risks, uncertainties and other factors. As a result, actual results may differ materially from the expectations or results we discuss in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:

• 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.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. Additional information about issues that could lead to material changes in performance and risk factors that have the potential to affect us is contained in our annual report on Form 10-K for the fiscal year ended September 30, 2018, including the section entitled “Risk Factors,” which is filed with the SEC.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to interest rate risk on our long-term debt. We monitor our exposure to changes in interest rates and utilize both fixed and variable rate debt. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not impact the fair value of the debt instrument, but may affect our future earnings and cash flows. Except in very limited circumstances, we do not have an obligation to prepay fixed-rate debt prior to maturity and, as a result, interest rate risk and changes in fair value would not have a significant impact on our cash flows related to our fixed-rate debt until such time as we are required to refinance, repurchase or repay such debt.

We are exposed to interest rate risk associated with our mortgage loan origination services. We manage interest rate risk through the use of forward sales of mortgage-backed securities, which are referred to as “hedging instruments” in the following discussion. We do not enter into or hold derivatives for trading or speculative purposes.

Interest rate lock commitments (IRLCs) are extended to borrowers who have applied for loan funding and who meet defined credit and underwriting criteria. Typically, the IRLCs have a duration of less than six months. Some IRLCs are committed immediately to a specific purchaser through the use of best-efforts whole loan delivery commitments, while other IRLCs are funded prior to being committed to third-party purchasers. The hedging instruments related to IRLCs are classified and accounted for as derivative instruments in an economic hedge, with gains and losses recognized in revenues in the consolidated statements of operations. Hedging instruments related to funded, uncommitted loans are accounted for at fair value, with changes recognized in revenues in the consolidated statements of operations, along with changes in the fair value of the funded, uncommitted loans. The fair value change related to the hedging instruments generally offsets the fair value change in the uncommitted loans. The net fair value change, which for the three and six months ended March 31, 2019 and 2018 was not significant, is recognized in current earnings. At March 31, 2019, hedging instruments used to mitigate interest rate risk related to uncommitted mortgage loans held for sale and uncommitted IRLCs totaled a notional amount of $1.2 billion. Uncommitted IRLCs totaled a notional amount of approximately $663.9 million and uncommitted mortgage loans held for sale totaled a notional amount of approximately $567.1 million at March 31, 2019.

The following table sets forth principal cash flows by scheduled maturity, effective weighted average interest rates and estimated fair value of our debt obligations as of March 31, 2019. Because the mortgage repurchase facility is effectively secured by certain mortgage loans held for sale that are typically sold within 60 days, its outstanding balance is included in the most current period presented. The interest rate for our variable rate debt represents the weighted average interest rate in effect at March 31, 2019.

	Six Months Ending September 30, 2019			Fiscal Year Ending September 30,																					Fair Value at March 31, 2019
				2020			2021			2022			2023			2024			Thereafter			Total
	($ in millions)
Debt:
Fixed rate	$	3.1		$	696.4		$	403.3		$	350.0		$	700.0		$	—		$	—		$	2,152.8		$	2,208.2
Average interest rate	4.1		%	3.8		%	2.8		%	4.5		%	5.5		%	—		%	—		%	4.3		%
Variable rate	$	690.7		$	—		$	35.0		$	—		$	750.0		$	—		$	—		$	1,475.7		$	1,475.7
Average interest rate	4.2		%	—		%	4.8		%	—		%	3.7		%	—		%	—		%	3.9		%

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ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures as of March 31, 2019 were effective in providing reasonable assurance that information required to be disclosed in the reports the Company files, furnishes, submits or otherwise provides the SEC under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed in reports filed by the Company under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and CFO, in such a manner as to allow timely decisions regarding the required disclosure.

There have been no changes in the Company’s internal controls over financial reporting during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

We are involved in lawsuits and other contingencies in the ordinary course of business. While the outcome of such contingencies cannot be predicted with certainty, we believe that the liabilities arising from these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, to the extent the liability arising from the ultimate resolution of any matter exceeds our estimates reflected in the recorded reserves relating to such matter, we could incur additional charges that could be significant.

In fiscal 2013, our mortgage subsidiary was subpoenaed by the United States Department of Justice (DOJ) regarding the adequacy of certain underwriting and quality control processes related to Federal Housing Administration loans originated and sold in prior years. We have provided information related to these loans and our processes to theDOJ, and communications are ongoing. The DOJ has to date not asserted any formal claim amount, penalty or fine.

In May and July of 2014, we received Notices of Violation from the United States Environmental Protection Agency (EPA) related to stormwater compliance at certain of our sites in our Southeast region. This matter could potentially result in monetary sanctions to the Company; however, we do not believe it is reasonably possible that this matter would result in a loss that would have a material effect on our consolidated financial position, results of operations or cash flows.

In October 2018, we reached an agreement in principle with the EPA to settle an alleged violation of the wetlands provisions of the Clean Water Act at one of our development sites in our Southeast region. Upon finalizing the agreement in March 2019, we paid a penalty of $267,000 without an admission of liability. We also are participating in settlement discussions with the U.S. Army Corps of Engineers (ACOE) and DOJ concerning alleged violations of the wetlands provisions of the Clean Water Act at another development site in our Southeast region relating to a violation notice the ACOE issued in April 2017. This matter could potentially result in a penalty that could range between $100,000 and $350,000 without an admission of liability, but the final scope of the potential penalty is not known at this time. We do not believe it is reasonably possible that this matter would result in a loss that would have a material effect on our consolidated financial position, results of operations or cash flows.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

We may repurchase shares of our common stock from time to time pursuant to our common stock repurchase authorization. The following table sets forth information concerning our common stock repurchases during the three months ended March 31, 2019. All share repurchases were made in accordance with the safe harbor provisions of Rule 10b-18 under the Securities Exchange Act of 1934.

	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)
January 1, 2019 - January 31, 2019	—	$	—	—	$	234.9
February 1, 2019 - February 28, 2019	2,000,000	37.84		2,000,000	159.3
March 1, 2019 - March 31, 2019	—	—		—	159.3
Total	2,000,000	$	37.84	2,000,000	$	159.3

______________

(1) Shares purchased during the three months ended March 31, 2019 were part of a $400 million common stock repurchase authorization approved by our Board of Directors effective from August 1, 2018 through September 30, 2019. At March 31, 2019, there was $159.3 million remaining on the repurchase authorization.

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ITEM 6.  EXHIBITS

(a)	Exhibits.
	2.1	Agreement and Plan of Merger dated June 29, 2017 by and among D.R. Horton, Inc., Force Merger Sub, Inc. and Forestar Group Inc. (1)
	3.1	Certificate of Amendment of the Amended and Restated Certificate of Incorporation, as amended, of the Company dated January 31, 2006, and the Amended and Restated Certificate of Incorporation, as amended, of the Company dated March 18, 1992. (2)
	3.2	Amended and Restated Bylaws of the Company. (3)
	10.1	Amendment No. 8 to Credit Agreement, dated February 15, 2019 by and among the Registrant, Mizuho Bank, Ltd., as successor Administrative Agent, and the Lenders named therein. (*)
	10.2	Sixth Amendment to Second Amended and Restated Master Repurchase Agreement, dated February 22, 2019, among DHI Mortgage Company, Ltd., U.S. Bank National Association, as Administrative Agent, Sole Book Runner, Lead Arranger, and a Buyer, and all other Buyers. (4)
	31.1	Certificate of Chief Executive Officer provided pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002. (*)
	31.2	Certificate of Chief Financial Officer provided pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002. (*)
	32.1	Certificate provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Company’s Chief Executive Officer. (*)
	32.2	Certificate provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Company’s Chief Financial Officer. (*)
	101	The following financial statements from D.R. Horton, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, filed on April 30, 2019, formatted in XBRL (Extensible Business Reporting Language); (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Total Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements. (*)

*	Filed herewith.
(1)	Incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K dated June 29, 2017, filed with the SEC on June 29, 2017.
(2)	Incorporated by reference from Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2005, filed with the SEC on February 2, 2006.
(3)	Incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K dated November 2, 2017, filed with the SEC on November 8, 2017.
(4)	Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 22, 2019, filed with the SEC on February 22, 2019.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			D.R. HORTON, INC.
Date:	April 30, 2019	By:	/s/ Bill W. Wheat
			Bill W. Wheat, on behalf of D.R. Horton, Inc.,
			as Executive Vice President and Chief Financial Officer
			(Principal Financial and Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

AMENDMENT NO. 8

AMENDMENT NO. 8, dated as of February 15, 2019 (this “Agreement”), to the Credit Agreement dated as of September 7, 2012, as amended prior to the date hereof (as so amended, the “Credit Agreement”), among D.R. HORTON, INC., a Delaware corporation (the “Borrower”), MIZUHO BANK, LTD., as successor administrative agent (in such capacity, the “Administrative Agent”), and the Lenders party thereto. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

WHEREAS, the Credit Agreement has previously been amended on November 1, 2012, August 8, 2013, August 22, 2014, June 18, 2015, August 26, 2015, September 25, 2017 and September 25,2018;

WHEREAS, the Borrower, the Administrative Agent and the Lenders party hereto desire to amend the Credit Agreement in accordance with Section 9.2 thereof; and

NOW, THEREFORE, in consideration of the premises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

Section 1.Amendment. Subject to the occurrence of the Amendment Effective Date (as defined below), Section 1.1 of the Credit Agreement is hereby amended by replacing the definition of "Publicly Traded Debt Securities" set forth therein with the following:

“Publicly Traded Debt Securities” means (i) any issue of debt securities of the Borrower issued under the Indenture, dated as of May 1, 2012 or the Indenture dated as of June 9, 1997 and (ii) any other issue of debt securities of the Borrower or any Subsidiary (other than Forestar Group Inc. and its Subsidiaries) originally issued in a public offering registered with the SEC or in an offering pursuant to Rule 144A under the Securities Act and of which issue at least $50 million aggregate principal amount is outstanding.

Section 2.Representations and Warranties. The Borrower represents and warrants as of the date hereof and the Amendment Effective Date (before and after giving effect to this Agreement) that:

(a)the representations and warranties contained in Article VI of the Credit Agreement are true and correct in all material respects on the date hereof and the Amendment Effective Date (except (i) to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct in all material respects on and as of such earlier date and (ii) to the extent already qualified by materiality, in which case said representations and warranties are true and correct in all respects); and

(b)no Default or Unmatured Default (i) has occurred and is continuing on the date hereof or the Amendment Effective Date or (ii) exists or would exist after giving effect to this Agreement.

Section 3.Conditions to Effectiveness. This Agreement shall become effective on the date (such date, the “Amendment Effective Date”) on which each of the following conditions is satisfied or waived:

(a)The Administrative Agent shall have received on or prior to the Amendment Effective Date, this Agreement executed by the Required Lenders, the Borrower and the Administrative Agent.

(b)There shall have been paid to the Administrative Agent all expenses (including reasonable fees and expenses of one counsel to the Administrative Agent) due and payable on or before the Amendment Effective Date and invoiced at least two Business Days prior to the Amendment Effective Date.

Section 4.Expenses; Indemnification. The Borrower confirms that Section 10.6 of the Credit Agreement applies to this Agreement and the transactions contemplated hereby for the benefit of the Administrative Agent.

Section 5.Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or by email in Adobe “.pdf” format shall be effective as delivery of a manually executed counterpart hereof.

Section 6.Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 7.Headings. The headings of this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

Section 8.Effect of Agreement. Except as expressly set forth herein, this Agreement shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. As of the Amendment Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means of words like “thereunder,” “thereof” and words of like import), shall mean and be a reference to the Credit Agreement as amended hereby, and this Agreement and the Credit Agreement shall be read together and construed as a single instrument; provided, however, that nothing herein shall be interpreted to change the date of the Credit Agreement. This Agreement shall constitute a Loan Document.

Section 9.Acknowledgement and Affirmation. The Borrower hereby (i) expressly acknowledges the terms of the Credit Agreement as amended hereby, (ii) ratifies and affirms after giving effect to this Agreement its obligations under the Loan Documents (including Guaranty Agreements (as defined in the Credit Agreement)) executed by the Borrower and (iii) after giving effect to this Agreement acknowledges renews and extends its continued liability under all such Loan Documents and agrees such Loan Documents remain in full force and effect.

[signature pages follow]

-2-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

D.R. HORTON, INC.

By: /s/ Bill W. Wheat    

Name: Bill W. Wheat

Title: Executive Vice President and Chief Financial Officer

[D.R. Horton - Amendment No. 8]

MIZUHO BANK, LTD.
as Lender

By: /s/ Raymond Ventura

Name: Raymond Ventura

Title: Managing Director

[D.R. Horton - Amendment No. 8]

BANK OF AMERICA, N.A.,

as Lender

By: /s/ Michael J. Kauffman     

Name: Michael J. Kauffman

Title: Vice President

[D.R. Horton - Amendment No. 8]

BANK OF THE WEST,

as Lender

By: /s/ Clifford L. Rooke     

Name: Clifford L. Rooke

Title: Managing Director, Real Estate

[D.R. Horton - Amendment No. 8]

BRANCH BANKING AND TRUST COMPANY,

as Lender

By: /s/ Sarah Salmon     

Name: Sarah Salmon

Title: Senior Vice President

[D.R. Horton - Amendment No. 8]

CITIBANK, N.A.,

as Lender

By: /s/ Michael Vondriska     

Name: Michael Vondriska

Title: Vice President

[D.R. Horton - Amendment No. 8]

COMERICA BANK,

as Lender

By: /s/ Casey L. Stevenson     

Name: Casey L. Stevenson

Title: Vice President

[D.R. Horton - Amendment No. 8]

FIRST HAWAIIAN BANK,

as Lender

By: /s/ Todd T. Nitta     

Name: Todd T. Nitta

Title: Senior Vice President

[D.R. Horton - Amendment No. 8]

JPMORGAN CHASE BANK, N.A.,
as Lender

By: /s/ Chiara Carter     

Name: Chiara Carter

Title: Executive Director

[D.R. Horton - Amendment No. 8]

PNC BANK, NATIONAL ASSOCIATION,

as Lender

By: /s/ J. Richard Litton     

Name: J. Richard Litton

Title: Senior Vice President

[D.R. Horton - Amendment No. 8]

REGIONS BANK,

as Lender

By: /s/ Randall S. Reid     

Name: Randall S. Reid

Title: Senior Vice President

[D.R. Horton - Amendment No. 8]

SUNTRUST BANK,

as Lender

By: /s/ Nick Preston     

Name: Nick Preston

Title: Director

[D.R. Horton - Amendment No. 8]

THE TORONTO-DOMINION BANK, NEW YORK BRANCH, as Lender

By: /s/ Michael Borowiecki     

Name: Michael Borowiecki

Title: Authorized Signatory

[D.R. Horton - Amendment No. 8]

U.S. BANK NATIONAL ASSOCIATION,

as Lender

By: /s/ Gregory N. Kaye     

Name: Gregory N. Kaye

Title: Senior Vice President

[D.R. Horton - Amendment No. 8]

WELLS FARGO BANK, N.A.,
as Lender

By: /s/ Elena Bennett     

Name: Elena Bennett

Title: Senior Vice President

[D.R. Horton - Amendment No. 8]

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302(a)

OF THE SARBANES-OXLEY ACT OF 2002

I, David V. Auld, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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.

Date: April 30, 2019

	/s/ DAVID V. AULD
By:	David V. Auld President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302(a)

OF THE SARBANES-OXLEY ACT OF 2002

I, Bill W. Wheat, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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.

Date: April 30, 2019

	/s/ BILL W. WHEAT
By:	Bill W. Wheat Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of D.R. Horton, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David V. Auld, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(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:	April 30, 2019		/s/ DAVID V. AULD
		By:	David V. Auld President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of D.R. Horton, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bill W. Wheat, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(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:	April 30, 2019		/s/ BILL W. WHEAT
		By:	Bill W. Wheat Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2019	Apr. 24, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	HORTON D R INC /DE/
Entity Central Index Key	0000882184
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		373,176,964

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Mar. 31, 2019	Sep. 30, 2018
ASSETS
Cash and cash equivalents	$ 698.8	$ 1,473.1
Restricted cash	32.4	32.9
Total cash, cash equivalents and restricted cash	731.2	1,506.0
Inventories:
Construction in progress and finished homes	6,087.6	5,086.3
Residential land and lots — developed and under development	5,672.9	5,172.4
Land held for development	110.8	96.1
Land held for sale	49.0	40.2
Total inventories	11,920.3	10,395.0
Mortgage loans held for sale	796.5	796.4
Deferred income taxes, net of valuation allowance of $17.0 million and $17.7 million at March 31, 2019 and September 30, 2018, respectively	171.9	194.0
Property and equipment, net	437.9	401.1
Other assets	785.7	712.9
Goodwill	163.5	109.2
Total assets	15,007.0	14,114.6
LIABILITIES
Accounts payable	658.5	624.7
Accrued expenses and other liabilities	1,192.1	1,127.5
Notes payable	3,622.4	3,203.5
Total liabilities	5,473.0	4,955.7
Commitments and contingencies (Note K)
EQUITY
Preferred stock, $.10 par value, 30,000,000 shares authorized, no shares issued	0.0	0.0
Common stock, $.01 par value, 1,000,000,000 shares authorized, 391,091,572 shares issued and 373,132,964 shares outstanding at March 31, 2019 and 388,120,243 shares issued and 376,261,635 shares outstanding at September 30, 2018	3.9	3.9
Additional paid-in capital	3,123.4	3,085.0
Retained earnings	6,771.6	6,217.9
Treasury stock, 17,958,608 shares and 11,858,608 shares at March 31, 2019 and September 30, 2018, respectively, at cost	(538.6)	(322.4)
Stockholders’ equity	9,360.3	8,984.4
Noncontrolling interests	173.7	174.5
Total equity	9,534.0	9,158.9
Total liabilities and equity	$ 15,007.0	$ 14,114.6

XML

Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Millions	Mar. 31, 2019	Sep. 30, 2018
ASSETS
Valuation allowance for deferred income taxes	$ 17.0	$ 17.7
Preferred Stock, Par or Stated Value Per Share	$ 0.1	$ 0.1
Preferred Stock, Shares Authorized	30,000,000	30,000,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	1,000,000,000	1,000,000,000
Common Stock, Shares, Issued	391,091,572	388,120,243
Common Stock, Shares, Outstanding	373,132,964	376,261,635
EQUITY
Treasury Stock, Shares	17,958,608	11,858,608

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Revenues	$ 4,128.7	$ 3,794.7	$ 7,647.7	$ 7,127.6
Cost of sales	3,256.7	2,961.6	6,007.8	5,541.8
Selling, general and administrative expense	444.2	400.9	847.0	785.1
Gain on sale of assets	(29.3)	(1.1)	(31.3)	(14.5)
Other (income) expense	(5.7)	(11.5)	(14.3)	(20.9)
Income before income taxes	462.8	444.8	838.5	836.1
Income tax expense	108.4	94.0	197.4	296.4
Net income	354.4	350.8	641.1	539.7
Net income (loss) attributable to noncontrolling interests	3.1	(0.2)	2.7	(0.6)
Net income attributable to D.R. Horton, Inc.	$ 351.3	$ 351.0	$ 638.4	$ 540.3
Basic net income per common share attributable to D.R. Horton, Inc. (in dollars per share)	$ 0.94	$ 0.93	$ 1.71	$ 1.44
Weighted average number of common shares	373.3	376.8	374.2	376.3
Diluted net income per common share attributable to D.R. Horton, Inc. (in dollars per share)	$ 0.93	$ 0.91	$ 1.68	$ 1.41
Adjusted weighted average number of common shares	377.7	383.9	378.9	383.8

XML

Consolidated Statements of Total Equity Consolidated Statements of Total Equity - USD ($) $ in Millions	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Noncontrolling Interest [Member]
Beginning Balances at Sep. 30, 2017	$ 7,747.6	$ 3.8	$ 2,992.2	$ 4,946.0	$ (194.9)	$ 0.5
Noncontrolling interests acquired	175.2					175.2
Net income	188.8	0.0	0.0	189.3	0.0	(0.5)
Exercise of stock options	14.8	0.1	14.7
Stock issued under employee incentive plans			0.0
Cash paid for shares withheld for taxes	(10.3)	0.0	10.3	0.0	0.0	0.0
Stock-based compensation expense	13.6		13.6
Cash dividends declared	(47.1)			(47.1)
Repurchases of common stock	(25.4)				(25.4)
Distributions to noncontrolling interests	(1.8)					(1.8)
Ending Balances at Dec. 31, 2017	8,055.4	3.9	3,010.2	5,088.2	(220.3)	173.4
Beginning Balances at Sep. 30, 2017	7,747.6	3.8	2,992.2	4,946.0	(194.9)	0.5
Net income	539.7
Cash paid for shares withheld for taxes	(10.3)
Ending Balances at Mar. 31, 2018	8,371.9	3.9	3,045.7	5,392.1	(242.8)	173.0
Beginning Balances at Dec. 31, 2017	8,055.4	3.9	3,010.2	5,088.2	(220.3)	173.4
Net income	350.8	0.0	0.0	351.0	0.0	(0.2)
Exercise of stock options	16.3	0.0	16.3
Stock issued under employee incentive plans	1.8		1.8
Stock-based compensation expense	17.4		17.4
Cash dividends declared	(47.1)			(47.1)
Repurchases of common stock	(22.5)				(22.5)
Distributions to noncontrolling interests	(0.2)					(0.2)
Ending Balances at Mar. 31, 2018	8,371.9	3.9	3,045.7	5,392.1	(242.8)	173.0
Beginning Balances at Sep. 30, 2018	9,158.9	3.9	3,085.0	6,217.9	(322.4)	174.5
Cumulative effect of adoption of ASC 606	27.1			27.1		0.0
Net income	286.7	0.0	0.0	287.2	0.0	(0.5)
Exercise of stock options	8.6	0.0	8.6
Stock issued under employee incentive plans			0.0
Cash paid for shares withheld for taxes	(4.1)	0.0	4.1	0.0	0.0	0.0
Stock-based compensation expense	18.1		18.1
Cash dividends declared	(56.0)			(56.0)
Repurchases of common stock	(140.6)				(140.6)
Distributions to noncontrolling interests	(0.5)					0.5
Ending Balances at Dec. 31, 2018	9,298.2	3.9	3,107.6	6,476.2	(463.0)	173.5
Beginning Balances at Sep. 30, 2018	9,158.9	3.9	3,085.0	6,217.9	(322.4)	174.5
Net income	641.1
Cash paid for shares withheld for taxes	(19.5)
Ending Balances at Mar. 31, 2019	9,534.0	3.9	3,123.4	6,771.6	(538.6)	173.7
Beginning Balances at Dec. 31, 2018	9,298.2	3.9	3,107.6	6,476.2	(463.0)	173.5
Net income	354.4	0.0	0.0	351.3	0.0	3.1
Exercise of stock options	11.4	0.0	11.4
Stock issued under employee incentive plans	2.3		2.0			0.3
Cash paid for shares withheld for taxes	(15.4)	0.0	15.4	0.0	0.0	0.0
Stock-based compensation expense	17.8		17.8
Cash dividends declared	(55.9)			(55.9)
Repurchases of common stock	(75.6)				(75.6)
Distributions to noncontrolling interests	(3.2)					3.2
Ending Balances at Mar. 31, 2019	$ 9,534.0	$ 3.9	$ 3,123.4	$ 6,771.6	$ (538.6)	$ 173.7

XML

Consolidated Statements of Total Equity Consolidated Statements of Total Equity (Parenthetical) - shares	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Beginning Balances, shares		376,261,635
Ending Balances, shares	373,132,964
Common Stock [Member]
Beginning Balances, shares	373,242,060	376,261,635	375,693,966	374,986,079
Exercise of stock options	831,489	806,817	1,046,210	916,913
Stock issued under employee benefit plans	1,059,415	273,608	1,169,341	290,974
Repurchases of common stock	(2,000,000)	(4,100,000)	(500,000)	(500,000)
Ending Balances, shares	373,132,964	373,242,060	377,409,517	375,693,966

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
OPERATING ACTIVITIES
Net income	$ 641.1	$ 539.7
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	34.1	33.1
Amortization of discounts and fees	5.1	2.4
Stock-based compensation expense	35.9	31.0
Equity in earnings of unconsolidated entities	(0.5)	(2.7)
Distributions of earnings of unconsolidated entities	0.5	0.2
Deferred income taxes	12.6	145.0
Inventory and land option charges	21.8	33.8
Gain on sale of assets	(31.3)	(14.5)
Changes in operating assets and liabilities:
Increase in construction in progress and finished homes	(755.2)	(514.5)
Increase in residential land and lots – developed, under development, held for development and held for sale	(445.6)	(271.5)
(Increase) decrease in other assets	(39.9)	4.4
Increase in mortgage loans held for sale	0.0	(70.7)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	59.7	(14.5)
Net cash (used in) provided by operating activities	(461.7)	(98.8)
INVESTING ACTIVITIES
Expenditures for property and equipment	(69.8)	(39.5)
Proceeds from sale of assets	83.8	253.4
Expenditures related to multi-family rental properties	(28.3)	(39.5)
Return of investment in unconsolidated entities	4.4	15.1
Net principal increase of other mortgage loans and real estate owned	(1.6)	0.0
Payments related to business acquisitions	(309.6)	(158.1)
Net cash (used in) provided by investing activities	(321.1)	31.4
FINANCING ACTIVITIES
Proceeds from notes payable	1,815.0	1,913.6
Repayment of notes payable	(1,531.0)	(1,752.5)
Advances on mortgage repurchase facility, net	53.0	69.8
Proceeds from stock associated with certain employee benefit plans	22.3	32.7
Cash paid for shares withheld for taxes	(19.5)	(10.3)
Cash dividends paid	(111.9)	(94.1)
Repurchases of common stock	(216.2)	(47.9)
Distributions to noncontrolling interests, net	(3.7)	(2.0)
Net cash (used in) provided by financing activities	8.0	109.3
Net (decrease) increase in cash, cash equivalents and restricted cash	(774.8)	41.9
Cash, cash equivalents and restricted cash at beginning of period	1,506.0	1,024.3
Cash, cash equivalents and restricted cash at end of period	731.2	1,066.2
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:
Notes Issued	80.8	0.0
Stock issued under employee incentive plans	49.0	63.4
Accrual for holdback payment related to acquisition	$ 16.3	$ 0.0

XML

Basis of Presentation

6 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited, consolidated financial statements 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. All intercompany accounts, transactions and balances have been eliminated in consolidation.

The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments considered necessary to fairly state the results for the interim periods shown, including normal recurring accruals and other items. These financial statements, including the consolidated balance sheet as of September 30, 2018, which was derived from audited financial statements, do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2018.

Changes in Presentation and Reclassifications

In connection with the adoption of Accounting Standards Update (ASU) 2016-18 in fiscal 2019, restricted cash is now included with cash and cash equivalents when reconciling beginning and ending amounts in the consolidated statements of cash flows. Prior period amounts have been reclassified to conform to the current year presentation, resulting in a decrease in cash used in investing activities of $38.9 million for the six months ended March 31, 2018.

In August 2018, the Securities and Exchange Commission (SEC) issued Final Rule Release No. 33-10532, “Disclosure Update and Simplification,” which makes a number of changes meant to simplify interim disclosures. In complying with the relevant aspects of the rule within the current year quarterly reports, the Company has removed the presentation of cash dividends declared per common share from the statements of operations and has added the consolidated statements of total equity.

Certain other prior period amounts have been reclassified to conform to the current year presentation.

Adoption of New Accounting Standard

On October 1, 2018, the Company adopted Accounting Standards Codification 606, "Revenue from Contracts with Customers" (ASC 606), which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services and satisfaction of performance obligations to a customer in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company applied the modified retrospective method to contracts that were not completed as of October 1, 2018. Results for the reporting period beginning after October 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and will continue to be reported under the previous accounting standards. The Company recorded an increase to retained earnings of $27.1 million, net of tax, as of October 1, 2018, due to the cumulative effect of adopting ASC 606, which was primarily related to the recognition of contract assets totaling $32.4 million for insurance brokerage commission renewals. Under ASC 606, the Company recognizes revenue and a contract asset for estimated future renewals of these policies upon issuance of the initial policy, the date at which the performance obligation is satisfied. There was not a material impact to revenues as a result of applying ASC 606 for the three and six months ended March 31, 2019, and there have not been significant changes to the Company’s business processes, systems, or internal controls as a result of implementing the standard.

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.

Seasonality

Historically, the homebuilding industry has experienced seasonal fluctuations; therefore, the operating results for the three and six months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019 or subsequent periods.

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. The Company’s performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. 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.

The Company rarely purchases land for resale, but periodically may elect to sell parcels of land that no longer fit into its strategic operating plans. Cash consideration from land sales is typically due on the closing date, which is generally when performance obligations are satisfied.

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.

The Company collects insurance commissions on homeowner policies placed with third party carriers through its wholly owned insurance agency. The Company recognizes revenue and a contract asset for estimated future renewals of these policies upon issuance of the initial policy, the date at which the performance obligation is satisfied.

Business Acquisitions

During the first quarter of fiscal 2019, the Company acquired the homebuilding operations of Westport Homes, Classic Builders and Terramor Homes for $325.9 million. The assets acquired included approximately 700 homes in inventory, 4,500 lots and control of approximately 4,300 additional lots through land purchase contracts. The Company also acquired a sales order backlog of approximately 700 homes. Westport Homes operates in Indianapolis and Fort Wayne, Indiana, and Columbus, Ohio; Classic Builders operates in Des Moines, Iowa; and Terramor Homes operates in Raleigh, North Carolina.

The Company’s allocation of the aggregate purchase price to the assets and liabilities acquired through these transactions is not finalized and is subject to revision as additional information becomes available and more detailed analyses are completed. The preliminary allocation of the purchase price to the assets and liabilities acquired is as follows (in millions):

Inventories	$	265.5
Other assets	23.3
Goodwill	54.3
Intangible assets	8.6
Other liabilities	(25.8		)
Net assets acquired	$	325.9

As a result of these transactions, the Company’s preliminary estimate of goodwill is $54.3 million, of which $49.7 million was allocated to the Midwest region and $4.6 million was allocated to the East region. The goodwill is tax deductible and relates to expected synergies from expanding the Company’s market presence in its Midwest and East regions, the experienced and knowledgeable workforce of these entities and their capital efficient operating processes. The intangible assets will be amortized on a straight-line basis to selling, general and administrative (SG&A) expense over their expected lives, which range from one to three years.

Pending Accounting Standards

In February 2016, the Financial Accounting Standards Board (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 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.

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Segment Information

6 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company is a national homebuilder that is primarily engaged in the acquisition and development of land and the construction and sale of residential homes, with operations in 84 markets in 29 states across the United States. The Company’s operating segments are its 51 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:

East:	Delaware, Georgia (Savannah only), Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina and Virginia
Midwest:	Colorado, Illinois, Indiana, Iowa, Minnesota and Ohio
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

The Company’s homebuilding divisions design, build and sell single-family detached homes on lots they develop and on fully developed lots purchased ready for home construction. To a lesser extent, the homebuilding divisions also build and sell attached homes, such as townhomes, duplexes and triplexes. Most of the revenue generated by the Company’s homebuilding operations is 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 41 markets and 17 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, constructs multi-family rental properties and has four projects under active construction and two projects that are substantially complete at March 31, 2019. In January 2019, DHI Communities sold its first multi-family rental property for $73.4 million and recorded a gain on the sale of $29.3 million, which is included in the consolidated statements of operations for the three and six months ended March 31, 2019. At March 31, 2019 and September 30, 2018, the consolidated balance sheets included $170.2 million and $173.2 million, respectively, of assets related to 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 included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2018. Financial information relating to the Company’s reporting segments is as follows:

	March 31, 2019
	Homebuilding		Forestar (1)		Financial Services		Other (2)		Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Assets
Cash and cash equivalents	$	557.3	$	66.4	$	61.1	$	14.0	$	—		$	—		$	698.8
Restricted cash	9.4		15.7		7.3		—		—			—			32.4
Inventories:
Construction in progress and finished homes	6,086.1		—		—		—		1.5			—			6,087.6
Residential land and lots — developed and under development	4,879.4		803.0		—		—		(22.1		)	12.6			5,672.9
Land held for development	62.3		48.5		—		—		—			—			110.8
Land held for sale	49.0		—		—		—		—			—			49.0
	11,076.8		851.5		—		—		(20.6		)	12.6			11,920.3
Mortgage loans held for sale	—		—		796.5		—		—			—			796.5
Deferred income taxes, net	155.0		22.9		—		—		1.5			(7.5		)	171.9
Property and equipment, net	220.2		2.4		3.4		211.9		—			—			437.9
Other assets	732.8		26.0		52.1		37.4		(75.2		)	12.6			785.7
Goodwill	134.3		—		—		—		—			29.2			163.5
	$	12,885.8	$	984.9	$	920.4	$	263.3	$	(94.3	)	$	46.9		$	15,007.0
Liabilities
Accounts payable	$	631.7	$	16.1	$	9.4	$	3.0	$	(1.7	)	$	—		$	658.5
Accrued expenses and other liabilities	1,102.2		131.9		43.8		10.9		(83.3		)	(13.4		)	1,192.1
Notes payable	2,777.2		149.2		690.7		—		—			5.3			3,622.4
	$	4,511.1	$	297.2	$	743.9	$	13.9	$	(85.0	)	$	(8.1	)	$	5,473.0

______________

(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.

(4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.

	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
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		31.4		43.6		0.9		(48.6		)	11.9			712.9
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 Forestar interest expense to inventory.

(4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.

	Three Months Ended March 31, 2019
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	3,980.5		$	—		$	—		$	—		$	—		$	—		$	3,980.5
Land/lot sales and other	14.9			65.4			—			6.0			(39.7		)	—			46.6
Financial services	—			—			101.6			—			—			—			101.6
	3,995.4			65.4			101.6			6.0			(39.7		)	—			4,128.7
Cost of sales:
Home sales (5)	3,214.2			—			—			—			(0.7		)	—			3,213.5
Land/lot sales and other	9.3			43.7			—			—			(31.8		)	8.2			29.4
Inventory and land option charges	13.8			—			—			—			—			—			13.8
	3,237.3			43.7			—			—			(32.5		)	8.2			3,256.7
Selling, general and administrative expense	359.3			6.2			71.3			7.3			—			0.1			444.2
Gain on sale of assets	—			—			—			(29.3		)	—			—			(29.3		)
Other (income) expense	(1.6		)	(0.9		)	(3.7		)	0.5			—			—			(5.7		)
Income before income taxes	$	400.4		$	16.4		$	34.0		$	27.5		$	(7.2	)	$	(8.3	)	$	462.8

______________

(1) Results 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 results of certain subsidiaries that are immaterial for separate reporting.

(3) Amounts represent the elimination of intercompany transactions.

(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 recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.

	Six Months Ended March 31, 2019
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	7,391.2		$	—		$	—		$	—		$	—		$	—		$	7,391.2
Land/lot sales and other	21.7			103.8			—			12.8			(68.7		)	—			69.6
Financial services	—			—			186.9			—			—			—			186.9
	7,412.9			103.8			186.9			12.8			(68.7		)	—			7,647.7
Cost of sales:
Home sales (5)	5,943.4			—			—			—			(1.7		)	—			5,941.7
Land/lot sales and other	14.5			74.3			—			—			(56.3		)	11.8			44.3
Inventory and land option charges	21.8			—			—			—			—			—			21.8
	5,979.7			74.3			—			—			(58.0		)	11.8			6,007.8
Selling, general and administrative expense	683.9			11.9			137.0			13.9			—			0.3			847.0
Gain on sale of assets	(2.0		)	(0.9		)	—			(29.3		)	—			0.9			(31.3		)
Other (income) expense	(3.5		)	(2.8		)	(7.7		)	(0.3		)	—			—			(14.3		)
Income before income taxes	$	754.8		$	21.3		$	57.6		$	28.5		$	(10.7	)	$	(13.0	)	$	838.5
Summary Cash Flow Information:
Depreciation and amortization	$	30.1		$	0.1		$	0.7		$	2.9		$	—		$	0.3		$	34.1
Cash (used in) provided by operating activities	$	(215.9	)	$	(283.4	)	$	48.8		$	(4.1	)	$	(2.7	)	$	(4.4	)	$	(461.7	)

______________

(1) Results 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 results of certain subsidiaries that are immaterial for separate reporting.

(3) Amounts represent the elimination of intercompany transactions.

(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 recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.

	Three Months Ended March 31, 2018
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	3,672.1		$	—		$	—		$	—		$	—		$	—		$	3,672.1
Land/lot sales and other	13.6			22.6			—			—			(8.5		)	—			27.7
Financial services	—			—			94.9			—			—			—			94.9
	3,685.7			22.6			94.9			—			(8.5		)	—			3,794.7
Cost of sales:
Home sales	2,907.5			—			—			—			—			—			2,907.5
Land/lot sales and other	12.0			16.2			—			—			(6.7		)	2.5			24.0
Inventory and land option charges	30.1			—			—			—			—			—			30.1
	2,949.6			16.2			—			—			(6.7		)	2.5			2,961.6
Selling, general and administrative expense	322.7			5.6			66.7			5.8			—			0.1			400.9
Gain on sale of assets	—			(2.7		)	—			—			—			1.6			(1.1		)
Interest expense	—			2.1			—			—			(2.1		)	—			—
Other (income) expense	(2.6		)	(3.2		)	(3.2		)	(3.6		)	—			1.1			(11.5		)
Income (loss) before income taxes	$	416.0		$	4.6		$	31.4		$	(2.2	)	$	0.3		$	(5.3	)	$	444.8

______________

(1) Results 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 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.

	Six Months Ended March 31, 2018
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	6,856.6		$	—		$	—		$	—		$	—		$	—		$	6,856.6
Land/lot sales and other	50.0			53.5			—			—			(8.5		)	—			95.0
Financial services	—			—			176.0			—			—			—			176.0
	6,906.6			53.5			176.0			—			(8.5		)	—			7,127.6
Cost of sales:
Home sales	5,429.0			—			—			—			—			—			5,429.0
Land/lot sales and other	43.3			35.5			—			—			(6.7		)	6.9			79.0
Inventory and land option charges	33.8			—			—			—			—			—			33.8
	5,506.1			35.5			—			—			(6.7		)	6.9			5,541.8
Selling, general and administrative expense	627.5			19.1			128.4			9.8			—			0.3			785.1
Gain on sale of assets	(13.4		)	(2.7		)	—			—			—			1.6			(14.5		)
Interest expense	—			4.2			—			—			(4.2		)	—			—
Other (income) expense	(3.4		)	(11.3		)	(6.1		)	(6.5		)	—			6.4			(20.9		)
Income (loss) before income taxes	$	789.8		$	8.7		$	53.7		$	(3.3	)	$	2.4		$	(15.2	)	$	836.1
Summary Cash Flow Information:
Depreciation and amortization	$	26.3		$	2.5		$	0.7		$	3.3		$	—		$	0.3		$	33.1
Cash provided by (used in) operating activities	$	90.7		$	(150.2	)	$	(30.7	)	$	(0.5	)	$	—		$	(8.1	)	$	(98.8	)

______________

(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.

Homebuilding Inventories by Reporting Segment (1)	March 31, 2019		September 30, 2018
	(In millions)
East	$	1,354.4	$	1,192.0
Midwest	817.7		583.1
Southeast	2,852.1		2,668.7
South Central	2,720.6		2,439.4
Southwest	628.1		499.7
West	2,466.9		2,268.5
Corporate and unallocated (2)	237.0		223.7
	$	11,076.8	$	9,875.1

_________________

(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	Three Months Ended   March 31,				Six Months Ended   March 31,
	2019		2018		2019		2018
	(In millions)
Revenues
East	$	518.2	$	435.8	$	965.7	$	828.9
Midwest	248.1		203.6		497.2		365.0
Southeast	1,205.3		1,042.0		2,219.2		2,030.6
South Central	990.2		919.0		1,862.7		1,727.8
Southwest	173.2		172.1		316.9		328.5
West	860.4		913.2		1,551.2		1,625.8
	$	3,995.4	$	3,685.7	$	7,412.9	$	6,906.6
Inventory and Land Option Charges
East	$	0.3	$	0.7	$	1.7	$	0.6
Midwest	0.2		0.2		0.5		0.4
Southeast	2.2		25.1		3.5		26.2
South Central	1.4		0.6		1.9		1.9
Southwest	0.1		—		0.2		0.8
West	9.6		3.5		14.0		3.9
	$	13.8	$	30.1	$	21.8	$	33.8
Income before Income Taxes (1)
East	$	45.9	$	46.7	$	83.9	$	91.7
Midwest	9.5		18.7		20.2		32.0
Southeast	131.0		96.3		243.2		218.8
South Central	119.3		120.5		225.3		222.0
Southwest	18.6		22.0		36.3		36.7
West	76.1		111.8		145.9		188.6
	$	400.4	$	416.0	$	754.8	$	789.8

_________________

(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.

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Inventory

6 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

INVENTORY

INVENTORIES

At March 31, 2019, 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. The Company performed detailed impairment evaluations of communities and land inventories with a combined carrying value of $95.5 million and recorded impairment charges of $7.7 million during the three months ended March 31, 2019 to reduce the carrying value of impaired communities to fair value. During the six months ended March 31, 2019, impairment charges totaled $11.9 million. There were $3.0 million and $4.4 million of impairment charges recorded in the three and six months ended March 31, 2018, respectively. Inventory impairments and the land option charges discussed below are included in cost of sales in the consolidated statements of operations.

During the three and six months ended March 31, 2019, the Company wrote off $6.1 million and $9.9 million, respectively, of earnest money deposits and pre-acquisition costs related to land purchase contracts that the Company has terminated or expects to terminate. Earnest money and pre-acquisition cost write-offs for the three and six months ended March 31, 2018 were $2.6 million and $4.9 million, respectively. Inventory and land option charges for the three and six months ended March 31, 2018 also included a charge of $24.5 million related to the settlement of an outstanding dispute associated with a land transaction.

In February 2018, the Forestar land development segment 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 three and six months ended March 31, 2018.

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Notes Payable

6 Months Ended

Mar. 31, 2019

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:

	March 31, 2019		September 30, 2018
	(In millions)
Homebuilding:
Unsecured:
Revolving credit facility, maturing 2023	$	750.0	$	—
3.75% senior notes due 2019	—		499.6
4.0% senior notes due 2020	499.2		498.8
2.55% senior notes due 2020	398.4		397.9
4.375% senior notes due 2022	348.6		348.4
4.75% senior notes due 2023	298.8		298.7
5.75% senior notes due 2023	398.2		398.0
Other secured notes	84.0		4.5
	2,777.2		2,445.9
Forestar:
Unsecured:
Revolving credit facility, maturing 2021	35.0		—
3.75% convertible senior notes due 2020	119.5		119.9
	154.5		119.9
Financial Services:
Mortgage repurchase facility, maturing 2020	690.7		637.7
	$	3,622.4	$	3,203.5

Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $6.8 million and $8.5 million at March 31, 2019 and September 30, 2018, 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 $5.3 million and $8.2 million at March 31, 2019 and September 30, 2018, respectively.

Homebuilding:

The Company has a $1.325 billion senior unsecured homebuilding revolving credit facility with 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. The maturity date of the facility is September 25, 2023. Borrowings and repayments under the facility were $1.8 billion and $1.0 billion, respectively, during the six months ended March 31, 2019. At March 31, 2019, there were $750 million of borrowings outstanding at a 3.7% annual interest rate and $128.0 million of letters of credit issued under the revolving credit facility.

The Company’s 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 March 31, 2019, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and public debt obligations.

D.R. Horton has an automatically effective universal shelf registration statement filed with the SEC in August 2018, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.

On March 1, 2019, the Company repaid $500 million principal amount of its 3.75% senior notes at maturity.

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 March 31, 2019.

Forestar:

Forestar has 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 March 31, 2019, there were $35 million of borrowings outstanding at a 4.8% annual interest rate and $3.8 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 March 31, 2019, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

Forestar also has a secured letter of credit agreement that requires it to deposit cash as collateral with the issuing bank. At March 31, 2019, letters of credit outstanding under the letter of credit facility totaled $15.0 million, secured by $15.7 million in cash, which is included in restricted cash in the consolidated balance sheet.

In April 2019, Forestar issued $350 million principal amount of 8.0% senior notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The notes are due April 15, 2024, with interest payable semi-annually, and represent unsecured obligations of Forestar. The annual effective interest rate of these notes after giving effect to the amortization of financing costs is 8.5%. These notes may be redeemed prior to maturity, subject to certain limitations and premiums defined in the indenture agreement.

Forestar’s revolving credit facility, its senior notes 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 provides financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to the counterparties upon receipt of funds from the counterparties. 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. In February 2019, the mortgage repurchase facility was amended to extend its maturity date to February 21, 2020. 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 of the facility can also be increased to $1.0 billion subject to the availability of additional commitments. Additional commitments were obtained to increase the capacity of the facility to $800 million for approximately 30 days at the March 2019 quarter end.

As of March 31, 2019, $784.5 million of mortgage loans held for sale with a collateral value of $759.4 million were pledged under the mortgage repurchase facility. DHI Mortgage had an obligation of $690.7 million outstanding under the mortgage repurchase facility at March 31, 2019 at a 4.2% 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 March 31, 2019, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facility.

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Capitalized Interest

6 Months Ended

Mar. 31, 2019

Interest Costs Incurred [Abstract]

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 the first six months of fiscal 2019 and fiscal 2018, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and six months ended March 31, 2019 and 2018:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2019			2018			2019			2018
	(In millions)
Capitalized interest, beginning of period	$	168.8		$	170.3		$	162.7		$	167.9
Interest incurred (1)	35.0			31.8			66.7			62.8
Interest charged to cost of sales	(29.9		)	(32.0		)	(55.5		)	(60.6		)
Capitalized interest, end of period	$	173.9		$	170.1		$	173.9		$	170.1

_______________

(1) Interest incurred included interest on the Company's mortgage repurchase facility of $3.0 million and $6.3 million in the three and six months ended March 31, 2019, respectively, and $2.4 million and $4.5 million in the same periods of fiscal 2018. Also included in the amounts is interest incurred by Forestar of $1.5 million and $2.8 million in the three and six months ended March 31, 2019, respectively, and $1.3 million and $1.4 million in the same periods of fiscal 2018.

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Mortgage Loans

6 Months Ended

Mar. 31, 2019

Mortgage Loans on Real Estate [Abstract]

MORTGAGE LOANS

MORTGAGE LOANS

Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property. At March 31, 2019, mortgage loans held for sale had an aggregate carrying value of $796.5 million and an aggregate outstanding principal balance of $768.7 million. 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. During the six months ended March 31, 2019 and 2018, mortgage loans originated totaled $3.6 billion and $3.4 billion, respectively, and mortgage loans sold totaled $3.6 billion and $3.3 billion, respectively. The Company had gains on sales of loans and servicing rights of $73.1 million and $132.9 million during the three and six months ended March 31, 2019, respectively, compared to $68.8 million and $125.7 million in the prior year periods. Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations. Approximately 93% of the mortgage loans sold by DHI Mortgage during the six months ended March 31, 2019 were sold to four major financial entities, the largest of which purchased 32% of the total loans sold.

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Income Taxes

6 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company’s income tax expense for the three and six months ended March 31, 2019 was $108.4 million and $197.4 million, respectively, compared to $94.0 million and $296.4 million in the prior year periods. The effective tax rate was 23.4% and 23.5% for the three and six months ended March 31, 2019, respectively, compared to 21.1% and 35.5% in the prior year periods. The higher effective tax rate for the six months ended March 31, 2018 was primarily due to the remeasurement of the Company’s deferred tax assets and liabilities as a result of the Tax Cuts and Jobs Act (Tax Act), which was enacted into law on December 22, 2017. The effective tax rates for all periods include an expense for state income taxes, reduced by tax benefits related to stock-based compensation.

The Tax Act reduced the federal corporate tax rate from 35% to 21% for all corporations effective January 1, 2018. For fiscal year companies, the change in law required 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. For the fiscal year ending September 30, 2019 and thereafter, the applicable statutory federal tax rate is 21%. The Tax Act also repealed the domestic production activities deduction effective for the Company for fiscal 2019.

The Company’s deferred tax assets, net of deferred tax liabilities, were $188.9 million at March 31, 2019 compared to $211.7 million at September 30, 2018. The Company has a valuation allowance related to state deferred tax assets for net operating loss (NOL) carryforwards of $17.0 million at March 31, 2019 and $17.7 million at September 30, 2018. 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.

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.

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Earnings Per Share

6 Months Ended

Mar. 31, 2019

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.

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2019		2018		2019		2018
	(In millions)
Numerator:
Net income attributable to D.R. Horton, Inc.	$	351.3	$	351.0	$	638.4	$	540.3
Denominator:
Denominator for basic earnings per share — weighted average common shares	373.3		376.8		374.2		376.3
Effect of dilutive securities:
Employee stock awards	4.4		7.1		4.7		7.5
Denominator for diluted earnings per share — adjusted weighted average common shares	377.7		383.9		378.9		383.8
Basic net income per common share attributable to D.R. Horton, Inc.	$	0.94	$	0.93	$	1.71	$	1.44
Diluted net income per common share attributable to D.R. Horton, Inc.	$	0.93	$	0.91	$	1.68	$	1.41

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Stockholders' Equity

6 Months Ended

Mar. 31, 2019

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

D.R. Horton 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. Forestar also has an effective shelf registration statement filed with the SEC in September 2018, registering $500 million of equity securities.

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. During the six months ended March 31, 2019, the Company repurchased 6.1 million shares of its common stock for $216.2 million. The Company’s remaining authorization at March 31, 2019 was $159.3 million.

During the three months ended March 31, 2019, the Board of Directors approved a quarterly cash dividend of $0.15 per common share, which was paid on February 25, 2019 to stockholders of record on February 11, 2019. In April 2019, the Board of Directors approved a quarterly cash dividend of $0.15 per common share, payable on May 28, 2019 to stockholders of record on May 13, 2019. Cash dividends of $0.125 per common share were approved and paid in each quarter of fiscal 2018.

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Employee Benefit Plans

6 Months Ended

Mar. 31, 2019

Compensation Related Costs [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Restricted Stock Units (RSUs)

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). Performance-based and time-based RSU equity awards represent the contingent right to receive one share of the Company’s common stock per RSU if the vesting conditions and/or performance criteria are satisfied. The RSUs have no dividend or voting rights until vested.

In November 2018, a total of 360,000 performance-based RSU equity awards were granted to the Company’s Chairman and executive officers. These awards vest at the end of a three-year performance period ending September 30, 2021. 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 10% to 200% of the number of units granted. The performance criteria are total shareholder return; return on investment; selling, general and administrative expense containment; and gross profit. The grant date fair value of these equity awards was $37.75 per unit. Compensation expense related to these grants was $1.4 million and $3.1 million in the three and six months ended March 31, 2019, respectively, based on the Company’s performance against its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

During the six months ended March 31, 2019, a total of 1.8 million time-based RSUs were granted to approximately 900 recipients, including the Company’s executive officers, other key employees and non-management directors. The weighted average grant date fair value of these equity awards was $33.75 per unit, and they vest annually in equal installments over periods of three to five years. Compensation expense related to these grants was $3.0 million and $7.4 million in the three and six months ended March 31, 2019, respectively, of which $3.5 million in the six month period related to expense recognized for employees that were retirement eligible on the date of grant.

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Commitments and Contingencies

6 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Warranty Claims

The Company 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. 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.

Changes in the Company’s warranty liability during the three and six months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2019			2018			2019			2018
	(In millions)
Warranty liability, beginning of period	$	205.6		$	149.4		$	202.0		$	143.7
Warranties issued	21.0			19.3			38.9			35.8
Changes in liability for pre-existing warranties	6.0			13.7			11.5			20.5
Settlements made	(18.7		)	(19.8		)	(38.5		)	(37.4		)
Warranty liability, end of period	$	213.9		$	162.6		$	213.9		$	162.6

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 $419.1 million and $408.1 million at March 31, 2019 and September 30, 2018, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets. Approximately 99% of these reserves related to construction defect matters at both March 31, 2019 and September 30, 2018. Expenses related to the Company’s legal contingencies were $14.6 million and $39.0 million in the six months ended March 31, 2019 and 2018, respectively.

The Company’s reserves for legal claims increased from $408.1 million at September 30, 2018 to $419.1 million at March 31, 2019. Changes in the Company’s legal claims reserves during the six months ended March 31, 2019 and 2018 were as follows:

	Six Months Ended   March 31,
	2019			2018
	(In millions)
Reserves for legal claims, beginning of period	$	408.1		$	420.6
Increase in reserves	23.3			41.4
Payments	(12.3		)	(18.4		)
Reserves for legal claims, end of period	$	419.1		$	443.6

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 $56.9 million, $54.6 million and $69.0 million at March 31, 2019, September 30, 2018 and March 31, 2018, 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 Purchase Contracts

The Company enters into land and lot 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 purchase contracts, the deposits are not refundable in the event the Company elects to terminate the contract. Land and lot purchase contract deposits are included in other assets in the consolidated balance sheets.

At March 31, 2019, the Company’s homebuilding segment had total deposits of $461.0 million, consisting of cash deposits of $457.9 million and promissory notes and letters of credit of $3.1 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $7.4 billion. The majority of land and lots under contract are currently expected to be purchased within three years. Of these amounts, $76.5 million of the deposits related to contracts with Forestar to purchase land and lots with a remaining purchase price of $895.8 million. A limited number of the homebuilding land and lot purchase contracts at March 31, 2019, representing $96.8 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations. Of the $96.8 million remaining purchase price subject to specific performance provisions, $50.9 million related to contracts between the homebuilding segment and Forestar.

During the three and six months ended March 31, 2019, Forestar reimbursed the Company’s homebuilding segment $4.7 million and $16.8 million, respectively, for previously paid earnest money and $0.7 million and $3.7 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar. During the three and six months ended March 31, 2018, Forestar reimbursed the Company’s homebuilding segment $11.8 million and $14.0 million, respectively, for previously paid earnest money and $5.9 million and $8.2 million, respectively, for pre-acquisition and other due diligence costs.

Other Commitments

At March 31, 2019, the Company had outstanding surety bonds of $1.6 billion and letters of credit of $148.3 million to secure performance under various contracts. Of the total letters of credit, $128.0 million were issued under the homebuilding revolving credit facility and $3.8 million were issued under Forestar’s revolving credit facility. The remaining $16.5 million of letters of credit were issued under secured letter of credit agreements, of which $1.5 million related to homebuilding operations and $15.0 million related to Forestar. These agreements require the deposit of cash as collateral with the issuing banks, which is included in restricted cash in the consolidated balance sheets.

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Other Assets, Accrued Expenses and Other Liabilities

6 Months Ended

Mar. 31, 2019

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 March 31, 2019 and September 30, 2018 were as follows:

	March 31, 2019		September 30, 2018
	(In millions)
Earnest money and refundable deposits	$	477.0	$	445.2
Insurance receivables	56.9		54.6
Other receivables	79.4		81.7
Prepaid assets	30.9		36.9
Rental properties	33.9		39.2
Contract assets - insurance agency commissions	34.4		—
Other	73.2		55.3
	$	785.7	$	712.9

The Company’s accrued expenses and other liabilities at March 31, 2019 and September 30, 2018 were as follows:

	March 31, 2019		September 30, 2018
	(In millions)
Reserves for legal claims	$	419.1	$	408.1
Employee compensation and related liabilities	244.5		252.5
Warranty liability	213.9		202.0
Accrued interest	12.9		14.8
Federal and state income tax liabilities	83.8		35.2
Inventory related accruals	42.6		45.5
Customer deposits	62.5		58.1
Accrued property taxes	20.5		38.0
Other	92.3		73.3
	$	1,192.1	$	1,127.5

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Fair Value Measurements

6 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2019 and September 30, 2018. Changes in the fair value of the Level 3 assets during the six months ended March 31, 2019 and 2018 were not material.

		Fair Value at March 31, 2019
	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	—		784.4			8.4		792.8
Derivatives not designated as hedging instruments (b):
Interest rate lock commitments	Other assets	—		19.8			—		19.8
Forward sales of mortgage-backed securities	Other liabilities	—		(8.0		)	—		(8.0		)
Best-efforts and mandatory commitments	Other liabilities	—		(0.8		)	—		(0.8		)

		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 mortgage-backed securities	Other assets	—		3.3		—		3.3
Best-efforts and mandatory commitments	Other assets	—		0.2		—		0.2

___________________

(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 March 31, 2019 and September 30, 2018 include $8.4 million and $7.8 million, respectively, of loans for which the Company elected the fair value option upon origination and did not sell into the secondary market. 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.

The following table summarizes the Company’s assets measured at fair value on a nonrecurring basis at March 31, 2019 and September 30, 2018:

		Fair Value at    March 31, 2019				Fair Value at    September 30, 2018
	Balance Sheet Location	Level 2		Level 3		Level 2		Level 3
		(In millions)
Inventory held and used (a) (b)	Inventories	$	—	$	20.8	$	—	$	4.4
Inventory available for sale (a) (c)	Inventories	—		—		—		1.4
Mortgage loans held for sale (a) (d)	Mortgage loans held for sale	—		0.8		—		2.9
Other mortgage loans (a) (e)	Other assets	—		1.8		—		1.0

___________________

(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 16% 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 value of other mortgage loans was determined based on the value of the underlying collateral.

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 March 31, 2019 and September 30, 2018:

	Carrying Value		Fair Value at March 31, 2019
			Level 1		Level 2		Level 3		Total
	(In millions)
Cash and cash equivalents (a)	$	698.8	$	698.8	$	—	$	—	$	698.8
Restricted cash (a)	32.4		32.4		—		—		32.4
Notes payable (b) (c)	3,622.4		—		2,124.2		1,559.7		3,683.9

	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

___________________

(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.

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Related Party Transactions (Notes)

6 Months Ended

Mar. 31, 2019

Related Party Transaction [Line Items]

Related Party Transactions Disclosure [Text Block]

RELATED PARTY TRANSACTIONS

In March 2019, the Company assigned its rights under a land purchase contract to R&R Riverview LLC (R&R), an entity owned by Ryan Horton and Reagan Horton, the adult sons of Donald Horton, the Company’s Chairman. In March 2019, R&R exercised its rights under the purchase contract and purchased 119 acres of undeveloped land in Arizona for $77.5 million. In connection with the transaction, Donald Horton loaned R&R $77.5 million at a 2.55% annual interest rate and obtained a security interest in the land. Concurrent with the contract assignment to R&R, the Company entered into a land purchase contract with R&R to purchase the 119 acres for R&R’s cost plus an annualized return of 16%. Based on the terms of the contract, the Company will purchase the land in two phases. The first purchase is expected in October 2019. The Company has determined R&R is a variable interest entity, the Company has the power to control the activities that most significantly impact the entity’s economic performance, and the Company is the primary beneficiary. Accordingly, the Company consolidated the variable interest entity in its consolidated financial statements by increasing inventory and notes payable at March 31, 2019 by $77.5 million.

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Supplemental Guarantor Information

6 Months Ended

Mar. 31, 2019

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) its ceasing to guarantee any of the Company’s publicly traded debt securities and ceasing to guarantee any of the Company’s obligations under the homebuilding revolving credit facility.

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Balance Sheet

March 31, 2019

	D.R. Horton, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
	(In millions)
ASSETS
Cash and cash equivalents	$	405.4	$	104.3	$	189.1	$	—		$	698.8
Restricted cash	7.6		1.8		23.0		—			32.4
Investment in subsidiaries	6,739.8		—		—		(6,739.8		)	—
Inventories	4,458.3		6,527.4		955.2		(20.6		)	11,920.3
Mortgage loans held for sale	—		—		796.5		—			796.5
Deferred income taxes, net	52.1		92.3		24.6		2.9			171.9
Property and equipment, net	112.2		76.8		253.3		(4.4		)	437.9
Other assets	328.7		402.5		129.6		(75.1		)	785.7
Goodwill	—		134.3		29.2		—			163.5
Intercompany receivables	596.9		—		—		(596.9		)	—
Total Assets	$	12,701.0	$	7,339.4	$	2,400.5	$	(7,433.9	)	$	15,007.0
LIABILITIES & EQUITY
Accounts payable and other liabilities	$	625.2	$	1,034.1	$	272.1	$	(80.8	)	$	1,850.6
Intercompany payables	—		298.9		298.0		(596.9		)	—
Notes payable	2,697.8		1.9		922.7		—			3,622.4
Total Liabilities	3,323.0		1,334.9		1,492.8		(677.7		)	5,473.0
Stockholders’ equity	9,378.0		6,004.5		735.7		(6,757.9		)	9,360.3
Noncontrolling interests	—		—		172.0		1.7			173.7
Total Equity	9,378.0		6,004.5		907.7		(6,756.2		)	9,534.0
Total Liabilities & Equity	$	12,701.0	$	7,339.4	$	2,400.5	$	(7,433.9	)	$	15,007.0

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Balance Sheet

September 30, 2018

	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
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		90.2		(45.2		)	712.9
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

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Three Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	1,575.2		$	2,419.7		$	173.5		$	(39.7	)	$	4,128.7
Cost of sales	1,249.8			1,989.5			52.4			(35.0		)	3,256.7
Selling, general and administrative expense	193.3			164.9			86.0			—			444.2
Gain on sale of assets	—			—			(26.8		)	(2.5		)	(29.3		)
Other (income) expense	(1.1		)	(0.4		)	(4.2		)	—			(5.7		)
Income before income taxes	133.2			265.7			66.1			(2.2		)	462.8
Income tax expense	31.4			62.3			15.2			(0.5		)	108.4
Equity in net income of subsidiaries, net of tax	253.5			—			—			(253.5		)	—
Net income	355.3			203.4			50.9			(255.2		)	354.4
Net income attributable to noncontrolling interests	—			—			0.6			2.5			3.1
Net income attributable to D.R. Horton, Inc.	$	355.3		$	203.4		$	50.3		$	(257.7	)	$	351.3

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Six Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	2,910.9		$	4,501.4		$	304.1		$	(68.7	)	$	7,647.7
Cost of sales	2,307.0			3,670.9			90.4			(60.5		)	6,007.8
Selling, general and administrative expense	351.2			330.8			165.0			—			847.0
Gain on sale of assets	(2.0		)	—			(26.8		)	(2.5		)	(31.3		)
Other (income) expense	(2.0		)	(0.8		)	(11.5		)	—			(14.3		)
Income before income taxes	256.7			500.5			87.0			(5.7		)	838.5
Income tax expense	60.6			118.1			20.0			(1.3		)	197.4
Equity in net income of subsidiaries, net of tax	449.4			—			—			(449.4		)	—
Net income	645.5			382.4			67.0			(453.8		)	641.1
Net income attributable to noncontrolling interests	—			—			—			2.7			2.7
Net income attributable to D.R. Horton, Inc.	$	645.5		$	382.4		$	67.0		$	(456.5	)	$	638.4

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Three Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	1,288.0		$	2,402.7		$	117.5		$	(13.5	)	$	3,794.7
Cost of sales	1,026.2			1,926.9			19.4			(10.9		)	2,961.6
Selling, general and administrative expense	156.9			164.8			79.2			—			400.9
Gain on sale of assets	—			—			(1.1		)	—			(1.1		)
Other (income) expense	(1.7		)	(0.7		)	(9.1		)	—			(11.5		)
Income before income taxes	106.6			311.7			29.1			(2.6		)	444.8
Income tax expense	20.7			67.4			5.9			—			94.0
Equity in net income of subsidiaries, net of tax	267.5			—			—			(267.5		)	—
Net income	353.4			244.3			23.2			(270.1		)	350.8
Net loss attributable to noncontrolling interests	—			—			(0.2		)	—			(0.2		)
Net income attributable to D.R. Horton, Inc.	$	353.4		$	244.3		$	23.4		$	(270.1	)	$	351.0

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Six Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	2,451.9		$	4,455.1		$	234.1		$	(13.5	)	$	7,127.6
Cost of sales	1,941.6			3,567.0			44.1			(10.9		)	5,541.8
Selling, general and administrative expense	309.1			316.4			159.6			—			785.1
Gain on sale of assets	—			—			(14.5		)	—			(14.5		)
Other (income) expense	(2.1		)	(0.7		)	(18.1		)	—			(20.9		)
Income before income taxes	203.3			572.4			63.0			(2.6		)	836.1
Income tax expense	71.8			205.3			19.3			—			296.4
Equity in net income of subsidiaries, net of tax	410.8			—			—			(410.8		)	—
Net income	$	542.3		$	367.1		$	43.7		$	(413.4	)	$	539.7
Net loss attributable to noncontrolling interests	—			—			(0.6		)	—			(0.6		)
Net income attributable to D.R. Horton, Inc.	$	542.3		$	367.1		$	44.3		$	(413.4	)	$	540.3

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Cash Flows

Six Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
OPERATING ACTIVITIES
Net cash used in operating activities	$	(76.5	)	$	(61.5	)	$	(245.0	)	$	(78.7	)	$	(461.7	)
INVESTING ACTIVITIES
Expenditures for property and equipment	(16.7		)	(16.9		)	(36.2		)	—			(69.8		)
Proceeds from sale of assets	10.4			—			73.4			—			83.8
Expenditures related to multi-family rental properties	—			—			(28.3		)	—			(28.3		)
Return of investment in unconsolidated entities	—			—			4.4			—			4.4
Net principal increase of other mortgage loans and real estate owned	—			—			(1.6		)	—			(1.6		)
Intercompany advances	(42.4		)	—			—			42.4			—
Payments related to business acquisitions	(301.3		)	—			(8.3		)	—			(309.6		)
Net cash (used in) provided by investing activities	(350.0		)	(16.9		)	3.4			42.4			(321.1		)
FINANCING ACTIVITIES
Proceeds from notes payable	1,775.0			—			40.0			—			1,815.0
Repayment of notes payable	(1,524.9		)	(1.1		)	(5.0		)	—			(1,531.0		)
Advances on mortgage repurchase facility, net	—			—			53.0			—			53.0
Intercompany advances	—			24.9			17.5			(42.4		)	—
Proceeds from stock associated with certain employee benefit plans	22.3			—			—			—			22.3
Cash paid for shares withheld for taxes	(19.5		)	—			—			—			(19.5		)
Cash dividends paid	(111.9		)	—			(78.7		)	78.7			(111.9		)
Repurchases of common stock	(216.2		)	—			—			—			(216.2		)
Distributions to noncontrolling interests, net	—			—			(3.7		)	—			(3.7		)
Net cash (used in) provided by financing activities	(75.2		)	23.8			23.1			36.3			8.0
Decrease in cash, cash equivalents and restricted cash	(501.7		)	(54.6		)	(218.5		)	—			(774.8		)
Cash, cash equivalents and restricted cash at beginning of period	914.7			160.7			430.6			—			1,506.0
Cash, cash equivalents and restricted cash at end of period	$	413.0		$	106.1		$	212.1		$	—		$	731.2

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Cash Flows

Six Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(147.3	)	$	269.9		$	(184.4	)	$	(37.0	)	$	(98.8	)
INVESTING ACTIVITIES
Expenditures for property and equipment	(21.4		)	(15.0		)	(3.1		)	—			(39.5		)
Proceeds from sale of assets	—			—			253.4			—			253.4
Expenditures related to multi-family rental properties	—			—			(44.5		)	5.0			(39.5		)
Return of investment in unconsolidated entities	—			—			15.1			—			15.1
Intercompany advances	266.3			—			—			(266.3		)	—
Payments related to business acquisitions, net of cash acquired	(560.0		)	—			401.9			—			(158.1		)
Net cash (used in) provided by investing activities	(315.1		)	(15.0		)	622.8			(261.3		)	31.4
FINANCING ACTIVITIES
Proceeds from notes payable	1,912.3			—			1.3			—			1,913.6
Repayment of notes payable	(1,740.2		)	(2.3		)	(10.0		)	—			(1,752.5		)
Advances on mortgage repurchase facility, net	—			—			69.8			—			69.8
Intercompany advances	—			(291.0		)	24.7			266.3			—
Proceeds from stock associated with certain employee benefit plans	32.7			—			—			—			32.7
Cash paid for shares withheld for taxes	(10.3		)	—			—			—			(10.3		)
Cash dividends paid	(94.1		)	—			(32.0		)	32.0			(94.1		)
Repurchases of common stock	(47.9		)	—			—			—			(47.9		)
Distributions to noncontrolling interests, net	—			—			(2.0		)	—			(2.0		)
Net cash provided by (used in) financing activities	52.5			(293.3		)	51.8			298.3			109.3
(Decrease) increase in cash, cash equivalents and restricted cash	(409.9		)	(38.4		)	490.2			—			41.9
Cash, cash equivalents and restricted cash at beginning of period	788.7			156.0			79.6			—			1,024.3
Cash, cash equivalents and restricted cash at end of period	$	378.8		$	117.6		$	569.8		$	—		$	1,066.2

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Basis of Presentation (Policies)

6 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The accompanying unaudited, consolidated financial statements 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. All intercompany accounts, transactions and balances have been eliminated in consolidation.

The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments considered necessary to fairly state the results for the interim periods shown, including normal recurring accruals and other items. These financial statements, including the consolidated balance sheet as of September 30, 2018, which was derived from audited financial statements, do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2018.

Reclassifications

Changes in Presentation and Reclassifications

In connection with the adoption of Accounting Standards Update (ASU) 2016-18 in fiscal 2019, restricted cash is now included with cash and cash equivalents when reconciling beginning and ending amounts in the consolidated statements of cash flows. Prior period amounts have been reclassified to conform to the current year presentation, resulting in a decrease in cash used in investing activities of $38.9 million for the six months ended March 31, 2018.

In August 2018, the Securities and Exchange Commission (SEC) issued Final Rule Release No. 33-10532, “Disclosure Update and Simplification,” which makes a number of changes meant to simplify interim disclosures. In complying with the relevant aspects of the rule within the current year quarterly reports, the Company has removed the presentation of cash dividends declared per common share from the statements of operations and has added the consolidated statements of total equity.

Certain other prior period amounts have been reclassified to conform to the current year presentation.

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Adoption of New Accounting Standard

On October 1, 2018, the Company adopted Accounting Standards Codification 606, "Revenue from Contracts with Customers" (ASC 606), which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services and satisfaction of performance obligations to a customer in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company applied the modified retrospective method to contracts that were not completed as of October 1, 2018. Results for the reporting period beginning after October 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and will continue to be reported under the previous accounting standards. The Company recorded an increase to retained earnings of $27.1 million, net of tax, as of October 1, 2018, due to the cumulative effect of adopting ASC 606, which was primarily related to the recognition of contract assets totaling $32.4 million for insurance brokerage commission renewals. Under ASC 606, the Company recognizes revenue and a contract asset for estimated future renewals of these policies upon issuance of the initial policy, the date at which the performance obligation is satisfied. There was not a material impact to revenues as a result of applying ASC 606 for the three and six months ended March 31, 2019, and there have not been significant changes to the Company’s business processes, systems, or internal controls as a result of implementing the standard.

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, Policy [Policy Text Block]

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. The Company’s performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. 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.

The Company rarely purchases land for resale, but periodically may elect to sell parcels of land that no longer fit into its strategic operating plans. Cash consideration from land sales is typically due on the closing date, which is generally when performance obligations are satisfied.

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.

The Company collects insurance commissions on homeowner policies placed with third party carriers through its wholly owned insurance agency. The Company recognizes revenue and a contract asset for estimated future renewals of these policies upon issuance of the initial policy, the date at which the performance obligation is satisfied.

Business Combinations Policy [Policy Text Block]

Business Acquisitions

During the first quarter of fiscal 2019, the Company acquired the homebuilding operations of Westport Homes, Classic Builders and Terramor Homes for $325.9 million. The assets acquired included approximately 700 homes in inventory, 4,500 lots and control of approximately 4,300 additional lots through land purchase contracts. The Company also acquired a sales order backlog of approximately 700 homes. Westport Homes operates in Indianapolis and Fort Wayne, Indiana, and Columbus, Ohio; Classic Builders operates in Des Moines, Iowa; and Terramor Homes operates in Raleigh, North Carolina.

The Company’s allocation of the aggregate purchase price to the assets and liabilities acquired through these transactions is not finalized and is subject to revision as additional information becomes available and more detailed analyses are completed. The preliminary allocation of the purchase price to the assets and liabilities acquired is as follows (in millions):

Inventories	$	265.5
Other assets	23.3
Goodwill	54.3
Intangible assets	8.6
Other liabilities	(25.8		)
Net assets acquired	$	325.9

As a result of these transactions, the Company’s preliminary estimate of goodwill is $54.3 million, of which $49.7 million was allocated to the Midwest region and $4.6 million was allocated to the East region. The goodwill is tax deductible and relates to expected synergies from expanding the Company’s market presence in its Midwest and East regions, the experienced and knowledgeable workforce of these entities and their capital efficient operating processes. The intangible assets will be amortized on a straight-line basis to selling, general and administrative (SG&A) expense over their expected lives, which range from one to three years.

Recent Accounting Pronouncements

Pending Accounting Standards

In February 2016, the Financial Accounting Standards Board (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 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.

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Basis of Presentation Basis of Presentation (Tables)

6 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The Company’s allocation of the aggregate purchase price to the assets and liabilities acquired through these transactions is not finalized and is subject to revision as additional information becomes available and more detailed analyses are completed. The preliminary allocation of the purchase price to the assets and liabilities acquired is as follows (in millions):

Inventories	$	265.5
Other assets	23.3
Goodwill	54.3
Intangible assets	8.6
Other liabilities	(25.8		)
Net assets acquired	$	325.9

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Segment Information (Tables)

6 Months Ended

Mar. 31, 2019

Segment Reporting Information [Line Items]

Schedule of segment reporting information, by segment

The accounting policies of the reporting segments are described throughout Note A included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2018. Financial information relating to the Company’s reporting segments is as follows:

	March 31, 2019
	Homebuilding		Forestar (1)		Financial Services		Other (2)		Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Assets
Cash and cash equivalents	$	557.3	$	66.4	$	61.1	$	14.0	$	—		$	—		$	698.8
Restricted cash	9.4		15.7		7.3		—		—			—			32.4
Inventories:
Construction in progress and finished homes	6,086.1		—		—		—		1.5			—			6,087.6
Residential land and lots — developed and under development	4,879.4		803.0		—		—		(22.1		)	12.6			5,672.9
Land held for development	62.3		48.5		—		—		—			—			110.8
Land held for sale	49.0		—		—		—		—			—			49.0
	11,076.8		851.5		—		—		(20.6		)	12.6			11,920.3
Mortgage loans held for sale	—		—		796.5		—		—			—			796.5
Deferred income taxes, net	155.0		22.9		—		—		1.5			(7.5		)	171.9
Property and equipment, net	220.2		2.4		3.4		211.9		—			—			437.9
Other assets	732.8		26.0		52.1		37.4		(75.2		)	12.6			785.7
Goodwill	134.3		—		—		—		—			29.2			163.5
	$	12,885.8	$	984.9	$	920.4	$	263.3	$	(94.3	)	$	46.9		$	15,007.0
Liabilities
Accounts payable	$	631.7	$	16.1	$	9.4	$	3.0	$	(1.7	)	$	—		$	658.5
Accrued expenses and other liabilities	1,102.2		131.9		43.8		10.9		(83.3		)	(13.4		)	1,192.1
Notes payable	2,777.2		149.2		690.7		—		—			5.3			3,622.4
	$	4,511.1	$	297.2	$	743.9	$	13.9	$	(85.0	)	$	(8.1	)	$	5,473.0

______________

(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.

(4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.

	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
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		31.4		43.6		0.9		(48.6		)	11.9			712.9
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 Forestar interest expense to inventory.

(4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.

	Three Months Ended March 31, 2019
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	3,980.5		$	—		$	—		$	—		$	—		$	—		$	3,980.5
Land/lot sales and other	14.9			65.4			—			6.0			(39.7		)	—			46.6
Financial services	—			—			101.6			—			—			—			101.6
	3,995.4			65.4			101.6			6.0			(39.7		)	—			4,128.7
Cost of sales:
Home sales (5)	3,214.2			—			—			—			(0.7		)	—			3,213.5
Land/lot sales and other	9.3			43.7			—			—			(31.8		)	8.2			29.4
Inventory and land option charges	13.8			—			—			—			—			—			13.8
	3,237.3			43.7			—			—			(32.5		)	8.2			3,256.7
Selling, general and administrative expense	359.3			6.2			71.3			7.3			—			0.1			444.2
Gain on sale of assets	—			—			—			(29.3		)	—			—			(29.3		)
Other (income) expense	(1.6		)	(0.9		)	(3.7		)	0.5			—			—			(5.7		)
Income before income taxes	$	400.4		$	16.4		$	34.0		$	27.5		$	(7.2	)	$	(8.3	)	$	462.8

______________

(1) Results 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 results of certain subsidiaries that are immaterial for separate reporting.

(3) Amounts represent the elimination of intercompany transactions.

(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 recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.

	Six Months Ended March 31, 2019
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	7,391.2		$	—		$	—		$	—		$	—		$	—		$	7,391.2
Land/lot sales and other	21.7			103.8			—			12.8			(68.7		)	—			69.6
Financial services	—			—			186.9			—			—			—			186.9
	7,412.9			103.8			186.9			12.8			(68.7		)	—			7,647.7
Cost of sales:
Home sales (5)	5,943.4			—			—			—			(1.7		)	—			5,941.7
Land/lot sales and other	14.5			74.3			—			—			(56.3		)	11.8			44.3
Inventory and land option charges	21.8			—			—			—			—			—			21.8
	5,979.7			74.3			—			—			(58.0		)	11.8			6,007.8
Selling, general and administrative expense	683.9			11.9			137.0			13.9			—			0.3			847.0
Gain on sale of assets	(2.0		)	(0.9		)	—			(29.3		)	—			0.9			(31.3		)
Other (income) expense	(3.5		)	(2.8		)	(7.7		)	(0.3		)	—			—			(14.3		)
Income before income taxes	$	754.8		$	21.3		$	57.6		$	28.5		$	(10.7	)	$	(13.0	)	$	838.5
Summary Cash Flow Information:
Depreciation and amortization	$	30.1		$	0.1		$	0.7		$	2.9		$	—		$	0.3		$	34.1
Cash (used in) provided by operating activities	$	(215.9	)	$	(283.4	)	$	48.8		$	(4.1	)	$	(2.7	)	$	(4.4	)	$	(461.7	)

______________

(1) Results 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 results of certain subsidiaries that are immaterial for separate reporting.

(3) Amounts represent the elimination of intercompany transactions.

(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 recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.

	Three Months Ended March 31, 2018
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	3,672.1		$	—		$	—		$	—		$	—		$	—		$	3,672.1
Land/lot sales and other	13.6			22.6			—			—			(8.5		)	—			27.7
Financial services	—			—			94.9			—			—			—			94.9
	3,685.7			22.6			94.9			—			(8.5		)	—			3,794.7
Cost of sales:
Home sales	2,907.5			—			—			—			—			—			2,907.5
Land/lot sales and other	12.0			16.2			—			—			(6.7		)	2.5			24.0
Inventory and land option charges	30.1			—			—			—			—			—			30.1
	2,949.6			16.2			—			—			(6.7		)	2.5			2,961.6
Selling, general and administrative expense	322.7			5.6			66.7			5.8			—			0.1			400.9
Gain on sale of assets	—			(2.7		)	—			—			—			1.6			(1.1		)
Interest expense	—			2.1			—			—			(2.1		)	—			—
Other (income) expense	(2.6		)	(3.2		)	(3.2		)	(3.6		)	—			1.1			(11.5		)
Income (loss) before income taxes	$	416.0		$	4.6		$	31.4		$	(2.2	)	$	0.3		$	(5.3	)	$	444.8

______________

(1) Results 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 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.

	Six Months Ended March 31, 2018
	Homebuilding			Forestar (1)			Financial Services			Other (2)			Eliminations (3)			Other Adjustments (4)			Consolidated
	(In millions)
Revenues:
Home sales	$	6,856.6		$	—		$	—		$	—		$	—		$	—		$	6,856.6
Land/lot sales and other	50.0			53.5			—			—			(8.5		)	—			95.0
Financial services	—			—			176.0			—			—			—			176.0
	6,906.6			53.5			176.0			—			(8.5		)	—			7,127.6
Cost of sales:
Home sales	5,429.0			—			—			—			—			—			5,429.0
Land/lot sales and other	43.3			35.5			—			—			(6.7		)	6.9			79.0
Inventory and land option charges	33.8			—			—			—			—			—			33.8
	5,506.1			35.5			—			—			(6.7		)	6.9			5,541.8
Selling, general and administrative expense	627.5			19.1			128.4			9.8			—			0.3			785.1
Gain on sale of assets	(13.4		)	(2.7		)	—			—			—			1.6			(14.5		)
Interest expense	—			4.2			—			—			(4.2		)	—			—
Other (income) expense	(3.4		)	(11.3		)	(6.1		)	(6.5		)	—			6.4			(20.9		)
Income (loss) before income taxes	$	789.8		$	8.7		$	53.7		$	(3.3	)	$	2.4		$	(15.2	)	$	836.1
Summary Cash Flow Information:
Depreciation and amortization	$	26.3		$	2.5		$	0.7		$	3.3		$	—		$	0.3		$	33.1
Cash provided by (used in) operating activities	$	90.7		$	(150.2	)	$	(30.7	)	$	(0.5	)	$	—		$	(8.1	)	$	(98.8	)

______________

(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.

Homebuilding Inventories by Reporting Segment (1)	March 31, 2019		September 30, 2018
	(In millions)
East	$	1,354.4	$	1,192.0
Midwest	817.7		583.1
Southeast	2,852.1		2,668.7
South Central	2,720.6		2,439.4
Southwest	628.1		499.7
West	2,466.9		2,268.5
Corporate and unallocated (2)	237.0		223.7
	$	11,076.8	$	9,875.1

_________________

(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	Three Months Ended   March 31,				Six Months Ended   March 31,
	2019		2018		2019		2018
	(In millions)
Revenues
East	$	518.2	$	435.8	$	965.7	$	828.9
Midwest	248.1		203.6		497.2		365.0
Southeast	1,205.3		1,042.0		2,219.2		2,030.6
South Central	990.2		919.0		1,862.7		1,727.8
Southwest	173.2		172.1		316.9		328.5
West	860.4		913.2		1,551.2		1,625.8
	$	3,995.4	$	3,685.7	$	7,412.9	$	6,906.6
Inventory and Land Option Charges
East	$	0.3	$	0.7	$	1.7	$	0.6
Midwest	0.2		0.2		0.5		0.4
Southeast	2.2		25.1		3.5		26.2
South Central	1.4		0.6		1.9		1.9
Southwest	0.1		—		0.2		0.8
West	9.6		3.5		14.0		3.9
	$	13.8	$	30.1	$	21.8	$	33.8
Income before Income Taxes (1)
East	$	45.9	$	46.7	$	83.9	$	91.7
Midwest	9.5		18.7		20.2		32.0
Southeast	131.0		96.3		243.2		218.8
South Central	119.3		120.5		225.3		222.0
Southwest	18.6		22.0		36.3		36.7
West	76.1		111.8		145.9		188.6
	$	400.4	$	416.0	$	754.8	$	789.8

_________________

(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.

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Notes Payable (Tables)

6 Months Ended

Mar. 31, 2019

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:

	March 31, 2019		September 30, 2018
	(In millions)
Homebuilding:
Unsecured:
Revolving credit facility, maturing 2023	$	750.0	$	—
3.75% senior notes due 2019	—		499.6
4.0% senior notes due 2020	499.2		498.8
2.55% senior notes due 2020	398.4		397.9
4.375% senior notes due 2022	348.6		348.4
4.75% senior notes due 2023	298.8		298.7
5.75% senior notes due 2023	398.2		398.0
Other secured notes	84.0		4.5
	2,777.2		2,445.9
Forestar:
Unsecured:
Revolving credit facility, maturing 2021	35.0		—
3.75% convertible senior notes due 2020	119.5		119.9
	154.5		119.9
Financial Services:
Mortgage repurchase facility, maturing 2020	690.7		637.7
	$	3,622.4	$	3,203.5

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Capitalized Interest (Tables)

6 Months Ended

Mar. 31, 2019

Interest Costs Incurred [Abstract]

Rollforward of capitalized interest

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and six months ended March 31, 2019 and 2018:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2019			2018			2019			2018
	(In millions)
Capitalized interest, beginning of period	$	168.8		$	170.3		$	162.7		$	167.9
Interest incurred (1)	35.0			31.8			66.7			62.8
Interest charged to cost of sales	(29.9		)	(32.0		)	(55.5		)	(60.6		)
Capitalized interest, end of period	$	173.9		$	170.1		$	173.9		$	170.1

_______________

(1) Interest incurred included interest on the Company's mortgage repurchase facility of $3.0 million and $6.3 million in the three and six months ended March 31, 2019, respectively, and $2.4 million and $4.5 million in the same periods of fiscal 2018. Also included in the amounts is interest incurred by Forestar of $1.5 million and $2.8 million in the three and six months ended March 31, 2019, respectively, and $1.3 million and $1.4 million in the same periods of fiscal 2018.

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Earnings Per Share (Tables)

6 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Numerator and denominator used to compute basic and diluted earnings per share

The following table sets forth the numerators and denominators used in the computation of basic and diluted earnings per share.

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2019		2018		2019		2018
	(In millions)
Numerator:
Net income attributable to D.R. Horton, Inc.	$	351.3	$	351.0	$	638.4	$	540.3
Denominator:
Denominator for basic earnings per share — weighted average common shares	373.3		376.8		374.2		376.3
Effect of dilutive securities:
Employee stock awards	4.4		7.1		4.7		7.5
Denominator for diluted earnings per share — adjusted weighted average common shares	377.7		383.9		378.9		383.8
Basic net income per common share attributable to D.R. Horton, Inc.	$	0.94	$	0.93	$	1.71	$	1.44
Diluted net income per common share attributable to D.R. Horton, Inc.	$	0.93	$	0.91	$	1.68	$	1.41

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Commitments and Contingencies (Tables)

6 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Changes in warranty liability

Changes in the Company’s warranty liability during the three and six months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2019			2018			2019			2018
	(In millions)
Warranty liability, beginning of period	$	205.6		$	149.4		$	202.0		$	143.7
Warranties issued	21.0			19.3			38.9			35.8
Changes in liability for pre-existing warranties	6.0			13.7			11.5			20.5
Settlements made	(18.7		)	(19.8		)	(38.5		)	(37.4		)
Warranty liability, end of period	$	213.9		$	162.6		$	213.9		$	162.6

Changes in legal claims reserves

Changes in the Company’s legal claims reserves during the six months ended March 31, 2019 and 2018 were as follows:

	Six Months Ended   March 31,
	2019			2018
	(In millions)
Reserves for legal claims, beginning of period	$	408.1		$	420.6
Increase in reserves	23.3			41.4
Payments	(12.3		)	(18.4		)
Reserves for legal claims, end of period	$	419.1		$	443.6

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Other Assets, Accrued Expenses and Other Liabilities (Tables)

6 Months Ended

Mar. 31, 2019

Other Assets and Accrued Expenses and Other Liabilities [Abstract]

Other assets

The Company’s other assets at March 31, 2019 and September 30, 2018 were as follows:

	March 31, 2019		September 30, 2018
	(In millions)
Earnest money and refundable deposits	$	477.0	$	445.2
Insurance receivables	56.9		54.6
Other receivables	79.4		81.7
Prepaid assets	30.9		36.9
Rental properties	33.9		39.2
Contract assets - insurance agency commissions	34.4		—
Other	73.2		55.3
	$	785.7	$	712.9

Accrued expenses and other liabilities

The Company’s accrued expenses and other liabilities at March 31, 2019 and September 30, 2018 were as follows:

	March 31, 2019		September 30, 2018
	(In millions)
Reserves for legal claims	$	419.1	$	408.1
Employee compensation and related liabilities	244.5		252.5
Warranty liability	213.9		202.0
Accrued interest	12.9		14.8
Federal and state income tax liabilities	83.8		35.2
Inventory related accruals	42.6		45.5
Customer deposits	62.5		58.1
Accrued property taxes	20.5		38.0
Other	92.3		73.3
	$	1,192.1	$	1,127.5

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Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2019

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 March 31, 2019 and September 30, 2018. Changes in the fair value of the Level 3 assets during the six months ended March 31, 2019 and 2018 were not material.

		Fair Value at March 31, 2019
	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	—		784.4			8.4		792.8
Derivatives not designated as hedging instruments (b):
Interest rate lock commitments	Other assets	—		19.8			—		19.8
Forward sales of mortgage-backed securities	Other liabilities	—		(8.0		)	—		(8.0		)
Best-efforts and mandatory commitments	Other liabilities	—		(0.8		)	—		(0.8		)

		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 mortgage-backed securities	Other assets	—		3.3		—		3.3
Best-efforts and mandatory commitments	Other assets	—		0.2		—		0.2

___________________

(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 March 31, 2019 and September 30, 2018 include $8.4 million and $7.8 million, respectively, of loans for which the Company elected the fair value option upon origination and did not sell into the secondary market. 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.

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 March 31, 2019 and September 30, 2018:

		Fair Value at    March 31, 2019				Fair Value at    September 30, 2018
	Balance Sheet Location	Level 2		Level 3		Level 2		Level 3
		(In millions)
Inventory held and used (a) (b)	Inventories	$	—	$	20.8	$	—	$	4.4
Inventory available for sale (a) (c)	Inventories	—		—		—		1.4
Mortgage loans held for sale (a) (d)	Mortgage loans held for sale	—		0.8		—		2.9
Other mortgage loans (a) (e)	Other assets	—		1.8		—		1.0

___________________

(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 16% 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 value of other mortgage loans was determined based on the value of the underlying collateral.

Carrying values and fair values of financial assets and liabilities not reflected at fair value

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 March 31, 2019 and September 30, 2018:

	Carrying Value		Fair Value at March 31, 2019
			Level 1		Level 2		Level 3		Total
	(In millions)
Cash and cash equivalents (a)	$	698.8	$	698.8	$	—	$	—	$	698.8
Restricted cash (a)	32.4		32.4		—		—		32.4
Notes payable (b) (c)	3,622.4		—		2,124.2		1,559.7		3,683.9

	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

___________________

(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.

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Supplemental Guarantor Information (Tables)

6 Months Ended

Mar. 31, 2019

Supplemental Guarantor Information [Abstract]

Condensed Financial Statements

Consolidating Balance Sheet

March 31, 2019

	D.R. Horton, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
	(In millions)
ASSETS
Cash and cash equivalents	$	405.4	$	104.3	$	189.1	$	—		$	698.8
Restricted cash	7.6		1.8		23.0		—			32.4
Investment in subsidiaries	6,739.8		—		—		(6,739.8		)	—
Inventories	4,458.3		6,527.4		955.2		(20.6		)	11,920.3
Mortgage loans held for sale	—		—		796.5		—			796.5
Deferred income taxes, net	52.1		92.3		24.6		2.9			171.9
Property and equipment, net	112.2		76.8		253.3		(4.4		)	437.9
Other assets	328.7		402.5		129.6		(75.1		)	785.7
Goodwill	—		134.3		29.2		—			163.5
Intercompany receivables	596.9		—		—		(596.9		)	—
Total Assets	$	12,701.0	$	7,339.4	$	2,400.5	$	(7,433.9	)	$	15,007.0
LIABILITIES & EQUITY
Accounts payable and other liabilities	$	625.2	$	1,034.1	$	272.1	$	(80.8	)	$	1,850.6
Intercompany payables	—		298.9		298.0		(596.9		)	—
Notes payable	2,697.8		1.9		922.7		—			3,622.4
Total Liabilities	3,323.0		1,334.9		1,492.8		(677.7		)	5,473.0
Stockholders’ equity	9,378.0		6,004.5		735.7		(6,757.9		)	9,360.3
Noncontrolling interests	—		—		172.0		1.7			173.7
Total Equity	9,378.0		6,004.5		907.7		(6,756.2		)	9,534.0
Total Liabilities & Equity	$	12,701.0	$	7,339.4	$	2,400.5	$	(7,433.9	)	$	15,007.0

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Balance Sheet

September 30, 2018

	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
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		90.2		(45.2		)	712.9
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

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Three Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	1,575.2		$	2,419.7		$	173.5		$	(39.7	)	$	4,128.7
Cost of sales	1,249.8			1,989.5			52.4			(35.0		)	3,256.7
Selling, general and administrative expense	193.3			164.9			86.0			—			444.2
Gain on sale of assets	—			—			(26.8		)	(2.5		)	(29.3		)
Other (income) expense	(1.1		)	(0.4		)	(4.2		)	—			(5.7		)
Income before income taxes	133.2			265.7			66.1			(2.2		)	462.8
Income tax expense	31.4			62.3			15.2			(0.5		)	108.4
Equity in net income of subsidiaries, net of tax	253.5			—			—			(253.5		)	—
Net income	355.3			203.4			50.9			(255.2		)	354.4
Net income attributable to noncontrolling interests	—			—			0.6			2.5			3.1
Net income attributable to D.R. Horton, Inc.	$	355.3		$	203.4		$	50.3		$	(257.7	)	$	351.3

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Six Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	2,910.9		$	4,501.4		$	304.1		$	(68.7	)	$	7,647.7
Cost of sales	2,307.0			3,670.9			90.4			(60.5		)	6,007.8
Selling, general and administrative expense	351.2			330.8			165.0			—			847.0
Gain on sale of assets	(2.0		)	—			(26.8		)	(2.5		)	(31.3		)
Other (income) expense	(2.0		)	(0.8		)	(11.5		)	—			(14.3		)
Income before income taxes	256.7			500.5			87.0			(5.7		)	838.5
Income tax expense	60.6			118.1			20.0			(1.3		)	197.4
Equity in net income of subsidiaries, net of tax	449.4			—			—			(449.4		)	—
Net income	645.5			382.4			67.0			(453.8		)	641.1
Net income attributable to noncontrolling interests	—			—			—			2.7			2.7
Net income attributable to D.R. Horton, Inc.	$	645.5		$	382.4		$	67.0		$	(456.5	)	$	638.4

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Three Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	1,288.0		$	2,402.7		$	117.5		$	(13.5	)	$	3,794.7
Cost of sales	1,026.2			1,926.9			19.4			(10.9		)	2,961.6
Selling, general and administrative expense	156.9			164.8			79.2			—			400.9
Gain on sale of assets	—			—			(1.1		)	—			(1.1		)
Other (income) expense	(1.7		)	(0.7		)	(9.1		)	—			(11.5		)
Income before income taxes	106.6			311.7			29.1			(2.6		)	444.8
Income tax expense	20.7			67.4			5.9			—			94.0
Equity in net income of subsidiaries, net of tax	267.5			—			—			(267.5		)	—
Net income	353.4			244.3			23.2			(270.1		)	350.8
Net loss attributable to noncontrolling interests	—			—			(0.2		)	—			(0.2		)
Net income attributable to D.R. Horton, Inc.	$	353.4		$	244.3		$	23.4		$	(270.1	)	$	351.0

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Operations

Six Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
Revenues	$	2,451.9		$	4,455.1		$	234.1		$	(13.5	)	$	7,127.6
Cost of sales	1,941.6			3,567.0			44.1			(10.9		)	5,541.8
Selling, general and administrative expense	309.1			316.4			159.6			—			785.1
Gain on sale of assets	—			—			(14.5		)	—			(14.5		)
Other (income) expense	(2.1		)	(0.7		)	(18.1		)	—			(20.9		)
Income before income taxes	203.3			572.4			63.0			(2.6		)	836.1
Income tax expense	71.8			205.3			19.3			—			296.4
Equity in net income of subsidiaries, net of tax	410.8			—			—			(410.8		)	—
Net income	$	542.3		$	367.1		$	43.7		$	(413.4	)	$	539.7
Net loss attributable to noncontrolling interests	—			—			(0.6		)	—			(0.6		)
Net income attributable to D.R. Horton, Inc.	$	542.3		$	367.1		$	44.3		$	(413.4	)	$	540.3

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Cash Flows

Six Months Ended March 31, 2019

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
OPERATING ACTIVITIES
Net cash used in operating activities	$	(76.5	)	$	(61.5	)	$	(245.0	)	$	(78.7	)	$	(461.7	)
INVESTING ACTIVITIES
Expenditures for property and equipment	(16.7		)	(16.9		)	(36.2		)	—			(69.8		)
Proceeds from sale of assets	10.4			—			73.4			—			83.8
Expenditures related to multi-family rental properties	—			—			(28.3		)	—			(28.3		)
Return of investment in unconsolidated entities	—			—			4.4			—			4.4
Net principal increase of other mortgage loans and real estate owned	—			—			(1.6		)	—			(1.6		)
Intercompany advances	(42.4		)	—			—			42.4			—
Payments related to business acquisitions	(301.3		)	—			(8.3		)	—			(309.6		)
Net cash (used in) provided by investing activities	(350.0		)	(16.9		)	3.4			42.4			(321.1		)
FINANCING ACTIVITIES
Proceeds from notes payable	1,775.0			—			40.0			—			1,815.0
Repayment of notes payable	(1,524.9		)	(1.1		)	(5.0		)	—			(1,531.0		)
Advances on mortgage repurchase facility, net	—			—			53.0			—			53.0
Intercompany advances	—			24.9			17.5			(42.4		)	—
Proceeds from stock associated with certain employee benefit plans	22.3			—			—			—			22.3
Cash paid for shares withheld for taxes	(19.5		)	—			—			—			(19.5		)
Cash dividends paid	(111.9		)	—			(78.7		)	78.7			(111.9		)
Repurchases of common stock	(216.2		)	—			—			—			(216.2		)
Distributions to noncontrolling interests, net	—			—			(3.7		)	—			(3.7		)
Net cash (used in) provided by financing activities	(75.2		)	23.8			23.1			36.3			8.0
Decrease in cash, cash equivalents and restricted cash	(501.7		)	(54.6		)	(218.5		)	—			(774.8		)
Cash, cash equivalents and restricted cash at beginning of period	914.7			160.7			430.6			—			1,506.0
Cash, cash equivalents and restricted cash at end of period	$	413.0		$	106.1		$	212.1		$	—		$	731.2

NOTE O – SUPPLEMENTAL GUARANTOR INFORMATION - (Continued)

Consolidating Statement of Cash Flows

Six Months Ended March 31, 2018

	D.R. Horton, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In millions)
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(147.3	)	$	269.9		$	(184.4	)	$	(37.0	)	$	(98.8	)
INVESTING ACTIVITIES
Expenditures for property and equipment	(21.4		)	(15.0		)	(3.1		)	—			(39.5		)
Proceeds from sale of assets	—			—			253.4			—			253.4
Expenditures related to multi-family rental properties	—			—			(44.5		)	5.0			(39.5		)
Return of investment in unconsolidated entities	—			—			15.1			—			15.1
Intercompany advances	266.3			—			—			(266.3		)	—
Payments related to business acquisitions, net of cash acquired	(560.0		)	—			401.9			—			(158.1		)
Net cash (used in) provided by investing activities	(315.1		)	(15.0		)	622.8			(261.3		)	31.4
FINANCING ACTIVITIES
Proceeds from notes payable	1,912.3			—			1.3			—			1,913.6
Repayment of notes payable	(1,740.2		)	(2.3		)	(10.0		)	—			(1,752.5		)
Advances on mortgage repurchase facility, net	—			—			69.8			—			69.8
Intercompany advances	—			(291.0		)	24.7			266.3			—
Proceeds from stock associated with certain employee benefit plans	32.7			—			—			—			32.7
Cash paid for shares withheld for taxes	(10.3		)	—			—			—			(10.3		)
Cash dividends paid	(94.1		)	—			(32.0		)	32.0			(94.1		)
Repurchases of common stock	(47.9		)	—			—			—			(47.9		)
Distributions to noncontrolling interests, net	—			—			(2.0		)	—			(2.0		)
Net cash provided by (used in) financing activities	52.5			(293.3		)	51.8			298.3			109.3
(Decrease) increase in cash, cash equivalents and restricted cash	(409.9		)	(38.4		)	490.2			—			41.9
Cash, cash equivalents and restricted cash at beginning of period	788.7			156.0			79.6			—			1,024.3
Cash, cash equivalents and restricted cash at end of period	$	378.8		$	117.6		$	569.8		$	—		$	1,066.2

XML

Basis of Presentation (Details) $ in Millions	3 Months Ended	6 Months Ended
	Dec. 31, 2018 USD ($) Lot Home	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Oct. 01, 2018 USD ($)	Sep. 30, 2018 USD ($)
Entity Information [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent		75.00%
Payments to Acquire Businesses		$ 309.6	$ 158.1
Cumulative Effect on Retained Earnings, Net of Tax	$ 27.1
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners		25.00%
Goodwill		$ 163.5			$ 109.2
Contract Asset Insurance Renewals		34.4			0.0
Accounting Standards Update 2016-18 [Member]
Entity Information [Line Items]
Increase (Decrease) in Restricted Cash			$ (38.9)
Accounting Standards Update 2014-09 [Member]
Entity Information [Line Items]
Contract Asset Insurance Renewals				$ 32.4
Series of Individually Immaterial Business Acquisitions [Member]
Entity Information [Line Items]
Payments to Acquire Businesses	325.9
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory	265.5
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets	23.3
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other	(25.8)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest	325.9
Goodwill	54.3
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill	$ 8.6
Business Acquisition, Number of Homes Acquired | Home	700
Business Acquisition, Number of Finished Lots Acquired | Lot	4,500
Business Acquisition, Number of Lots Under Option Contracts | Lot	4,300
Business Acquisition, Sales Order Backlog Acquired (Homes) | Home	700
Homebuilding [Member]
Entity Information [Line Items]
Goodwill		$ 134.3			$ 80.0
Homebuilding [Member] | Midwest [Member]
Entity Information [Line Items]
Goodwill	$ 49.7
Homebuilding [Member] | East [Member]
Entity Information [Line Items]
Goodwill	4.6
Minimum [Member] | Series of Individually Immaterial Business Acquisitions [Member]
Entity Information [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		1 year
Maximum [Member] | Series of Individually Immaterial Business Acquisitions [Member]
Entity Information [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		3 years
Retained Earnings [Member]
Entity Information [Line Items]
Cumulative Effect on Retained Earnings, Net of Tax	27.1
Retained Earnings [Member] | Accounting Standards Update 2014-09 [Member]
Entity Information [Line Items]
Cumulative Effect on Retained Earnings, Net of Tax	$ 27.1

XML

Segment Information - Narrative (Details) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019 USD ($) Projects Market State Segments OperatingDivisions	Mar. 31, 2018 USD ($)	Mar. 31, 2019 USD ($) Projects Market State	Mar. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)
Segment Reporting Information [Line Items]
Proceeds from Sale of Buildings			$ 83.8	$ 253.4
Gain (Loss) on Sale of Properties	$ 29.3	$ 1.1	31.3	14.5
Total assets	15,007.0		15,007.0		$ 14,114.6
Other Segments [Member]
Segment Reporting Information [Line Items]
Gain (Loss) on Sale of Properties	29.3	0.0	29.3	0.0
Total assets	$ 263.3		$ 263.3		198.9
Homebuilding [Member]
Segment Reporting Information [Line Items]
Number of housing construction markets | Market	84		84
Number of housing construction states | State	29		29
Number of home building operating divisions | OperatingDivisions	51
Number of homebuilding reporting segments | Segments	6
Gain (Loss) on Sale of Properties	$ 0.0	0.0	$ 2.0	13.4
Total assets	$ 12,885.8		$ 12,885.8		12,132.8
Forestar Group [Member]
Segment Reporting Information [Line Items]
Number of housing construction markets | Market	41		41
Number of housing construction states | State	17		17
Gain (Loss) on Sale of Properties	$ 0.0	$ 2.7	$ 0.9	$ 2.7
Total assets	984.9		984.9		893.1
Multifamily [Member] | Other Segments [Member]
Segment Reporting Information [Line Items]
Proceeds from Sale of Buildings	73.4		73.4
Gain (Loss) on Sale of Properties	29.3		29.3
Total assets	$ 170.2		$ 170.2		$ 173.2
Asset under Construction [Member] | Multifamily [Member] | Other Segments [Member]
Segment Reporting Information [Line Items]
Number of Projects | Projects	4		4
Assets Leased to Others [Member] | Multifamily [Member] | Other Segments [Member]
Segment Reporting Information [Line Items]
Number of Projects | Projects	2		2

XML

Segment Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Sep. 30, 2018
Assets [Abstract]
Cash and cash equivalents	$ 698.8		$ 698.8			$ 1,473.1
Restricted cash	32.4		32.4			32.9
Inventories:
Construction in progress and finished homes	6,087.6		6,087.6			5,086.3
Residential land and lots — developed and under development	5,672.9		5,672.9			5,172.4
Land held for development	110.8		110.8			96.1
Land held for sale	49.0		49.0			40.2
Total inventories	11,920.3		11,920.3			10,395.0
Mortgage loans held for sale	796.5		796.5			796.4
Deferred income taxes, net	171.9		171.9			194.0
Property and equipment, net	437.9		437.9			401.1
Other Assets	785.7		785.7			712.9
Goodwill	163.5		163.5			109.2
Total assets	15,007.0		15,007.0			14,114.6
Liabilities [Abstract]
Accounts payable	658.5		658.5			624.7
Accrued expenses and other liabilities	1,192.1		1,192.1			1,127.5
Notes payable	3,622.4		3,622.4			3,203.5
Total liabilities	5,473.0		5,473.0			4,955.7
Revenues
Home sales	3,980.5	$ 3,672.1	7,391.2	$ 6,856.6
Land/lot sales and other	46.6	27.7	69.6	95.0
Financial services	101.6	94.9	186.9	176.0
Total revenues	4,128.7	3,794.7	7,647.7	7,127.6
Cost of sales
Home sales	3,213.5	2,907.5	5,941.7	5,429.0
Land/lot sales and other	29.4	24.0	44.3	79.0
Inventory and land option charges	13.8	30.1	21.8	33.8
Cost of sales	3,256.7	2,961.6	6,007.8	5,541.8
Selling, General and Administrative Expense	444.2	400.9	847.0	785.1
Gain on sale of assets	(29.3)	(1.1)	(31.3)	(14.5)
Interest Expense		0.0		0.0
Other (income) expense	(5.7)	(11.5)	(14.3)	(20.9)
Income (loss) before income taxes	462.8	444.8	838.5	836.1
Depreciation and amortization			34.1	33.1
Net cash (used in) provided by operating activities			(461.7)	(98.8)
Segment Reconciling Items [Member]
Assets [Abstract]
Cash and cash equivalents	0.0		0.0			0.0
Restricted cash	0.0		0.0			0.0
Inventories:
Construction in progress and finished homes	0.0		0.0			0.0
Residential land and lots — developed and under development	12.6		12.6			27.2
Land held for development	0.0		0.0			0.0
Land held for sale	0.0		0.0			0.0
Total inventories	12.6		12.6			27.2
Mortgage loans held for sale	0.0		0.0			0.0
Deferred income taxes, net	(7.5)		(7.5)			(10.5)
Property and equipment, net	0.0		0.0			0.0
Other Assets	12.6		12.6			11.9
Goodwill	29.2		29.2			29.2
Total assets	46.9		46.9			57.8
Liabilities [Abstract]
Accounts payable	0.0		0.0			0.0
Accrued expenses and other liabilities	(13.4)		(13.4)			(15.2)
Notes payable	5.3		5.3			8.2
Total liabilities	(8.1)		(8.1)			(7.0)
Revenues
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	0.0	0.0	0.0	0.0
Financial services	0.0	0.0	0.0	0.0
Total revenues	0.0	0.0	0.0	0.0
Cost of sales
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	8.2	2.5	11.8	6.9
Inventory and land option charges	0.0	0.0	0.0	0.0
Cost of sales	8.2	2.5	11.8	6.9
Selling, General and Administrative Expense	0.1	0.1	0.3	0.3
Gain on sale of assets	0.0	1.6	0.9	1.6
Interest Expense		0.0		0.0
Other (income) expense	0.0	1.1	0.0	6.4
Income (loss) before income taxes	(8.3)	(5.3)	(13.0)	(15.2)
Depreciation and amortization			0.3	0.3
Net cash (used in) provided by operating activities			(4.4)	(8.1)
Intersegment Eliminations [Member]
Assets [Abstract]
Cash and cash equivalents	0.0		0.0			0.0
Restricted cash	0.0		0.0			0.0
Inventories:
Construction in progress and finished homes	1.5		1.5			1.9
Residential land and lots — developed and under development	(22.1)		(22.1)			(7.2)
Land held for development	0.0		0.0			0.0
Land held for sale	0.0		0.0			0.0
Total inventories	(20.6)		(20.6)			(5.3)
Mortgage loans held for sale	0.0		0.0			0.0
Deferred income taxes, net	1.5		1.5			1.1
Property and equipment, net	0.0		0.0			0.0
Other Assets	(75.2)		(75.2)			(48.6)
Goodwill	0.0		0.0			0.0
Total assets	(94.3)		(94.3)			(52.8)
Liabilities [Abstract]
Accounts payable	(1.7)		(1.7)			(3.3)
Accrued expenses and other liabilities	(83.3)		(83.3)			(46.1)
Notes payable	0.0		0.0			0.0
Total liabilities	(85.0)		(85.0)			(49.4)
Revenues
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	(39.7)	(8.5)	(68.7)	(8.5)
Financial services	0.0	0.0	0.0	0.0
Total revenues	(39.7)	(8.5)	(68.7)	(8.5)
Cost of sales
Home sales	(0.7)	0.0	(1.7)	0.0
Land/lot sales and other	(31.8)	(6.7)	(56.3)	(6.7)
Inventory and land option charges	0.0	0.0	0.0	0.0
Cost of sales	(32.5)	(6.7)	(58.0)	(6.7)
Selling, General and Administrative Expense	0.0	0.0	0.0	0.0
Gain on sale of assets	0.0	0.0	0.0	0.0
Interest Expense		(2.1)		(4.2)
Other (income) expense	0.0	0.0	0.0	0.0
Income (loss) before income taxes	(7.2)	0.3	(10.7)	2.4
Depreciation and amortization			0.0	0.0
Net cash (used in) provided by operating activities			(2.7)	0.0
Homebuilding [Member]
Assets [Abstract]
Cash and cash equivalents	557.3		557.3			1,111.8
Restricted cash	9.4		9.4			8.6
Inventories:
Construction in progress and finished homes	6,086.1		6,086.1			5,084.4
Residential land and lots — developed and under development	4,879.4		4,879.4			4,689.3
Land held for development	62.3		62.3			61.2
Land held for sale	49.0		49.0			40.2
Total inventories	11,076.8		11,076.8			9,875.1
Mortgage loans held for sale	0.0		0.0			0.0
Deferred income taxes, net	155.0		155.0			176.5
Property and equipment, net	220.2		220.2			207.1
Other Assets	732.8		732.8			673.7
Goodwill	134.3		134.3			80.0
Total assets	12,885.8		12,885.8			12,132.8
Liabilities [Abstract]
Accounts payable	631.7		631.7			612.4
Accrued expenses and other liabilities	1,102.2		1,102.2			1,041.3
Notes payable	2,777.2		2,777.2			2,445.9
Total liabilities	4,511.1		4,511.1			4,099.6
Revenues
Home sales	3,980.5	3,672.1	7,391.2	6,856.6
Land/lot sales and other	14.9	13.6	21.7	50.0
Financial services	0.0	0.0	0.0	0.0
Total revenues	3,995.4	3,685.7	7,412.9	6,906.6
Cost of sales
Home sales	3,214.2	2,907.5	5,943.4	5,429.0
Land/lot sales and other	9.3	12.0	14.5	43.3
Inventory and land option charges	13.8	30.1	21.8	33.8
Cost of sales	3,237.3	2,949.6	5,979.7	5,506.1
Selling, General and Administrative Expense	359.3	322.7	683.9	627.5
Gain on sale of assets	0.0	0.0	(2.0)	(13.4)
Interest Expense		0.0		0.0
Other (income) expense	(1.6)	(2.6)	(3.5)	(3.4)
Income (loss) before income taxes	400.4	416.0	754.8	789.8
Depreciation and amortization			30.1	26.3
Net cash (used in) provided by operating activities			(215.9)	90.7
Forestar Group [Member]
Assets [Abstract]
Cash and cash equivalents	66.4		66.4			318.8
Restricted cash	15.7		15.7			16.2
Inventories:
Construction in progress and finished homes	0.0		0.0			0.0
Residential land and lots — developed and under development	803.0		803.0			463.1
Land held for development	48.5		48.5			34.9
Land held for sale	0.0		0.0			0.0
Total inventories	851.5		851.5			498.0
Mortgage loans held for sale	0.0		0.0			0.0
Deferred income taxes, net	22.9		22.9			26.9
Property and equipment, net	2.4		2.4			1.8
Other Assets	26.0		26.0			31.4
Goodwill	0.0		0.0			0.0
Total assets	984.9		984.9			893.1
Liabilities [Abstract]
Accounts payable	16.1		16.1			11.2
Accrued expenses and other liabilities	131.9		131.9			95.7
Notes payable	149.2		149.2			111.7
Total liabilities	297.2		297.2			218.6
Revenues
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	65.4	22.6	103.8	53.5
Financial services	0.0	0.0	0.0	0.0
Total revenues	65.4	22.6	103.8	53.5
Cost of sales
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	43.7	16.2	74.3	35.5
Inventory and land option charges	0.0	0.0	0.0	0.0
Cost of sales	43.7	16.2	74.3	35.5
Selling, General and Administrative Expense	6.2	5.6	11.9	19.1
Gain on sale of assets	0.0	(2.7)	(0.9)	(2.7)
Interest Expense		2.1		4.2
Other (income) expense	(0.9)	(3.2)	(2.8)	(11.3)
Income (loss) before income taxes	16.4	4.6	21.3	8.7
Depreciation and amortization			0.1	2.5
Net cash (used in) provided by operating activities			(283.4)	(150.2)
Financial Services [Member]
Assets [Abstract]
Cash and cash equivalents	61.1		61.1			33.7
Restricted cash	7.3		7.3			8.1
Inventories:
Construction in progress and finished homes	0.0		0.0			0.0
Residential land and lots — developed and under development	0.0		0.0			0.0
Land held for development	0.0		0.0			0.0
Land held for sale	0.0		0.0			0.0
Total inventories	0.0		0.0			0.0
Mortgage loans held for sale	796.5		796.5			796.4
Deferred income taxes, net	0.0		0.0			0.0
Property and equipment, net	3.4		3.4			3.0
Other Assets	52.1		52.1			43.6
Goodwill	0.0		0.0			0.0
Total assets	920.4		920.4			884.8
Liabilities [Abstract]
Accounts payable	9.4		9.4			0.2
Accrued expenses and other liabilities	43.8		43.8			41.9
Notes payable	690.7		690.7			637.7
Total liabilities	743.9		743.9			679.8
Revenues
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	0.0	0.0	0.0	0.0
Financial services	101.6	94.9	186.9	176.0
Total revenues	101.6	94.9	186.9	176.0
Cost of sales
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	0.0	0.0	0.0	0.0
Inventory and land option charges	0.0	0.0	0.0	0.0
Cost of sales	0.0	0.0	0.0	0.0
Selling, General and Administrative Expense	71.3	66.7	137.0	128.4
Gain on sale of assets	0.0	0.0	0.0	0.0
Interest Expense		0.0		0.0
Other (income) expense	(3.7)	(3.2)	(7.7)	(6.1)
Income (loss) before income taxes	34.0	31.4	57.6	53.7
Depreciation and amortization			0.7	0.7
Net cash (used in) provided by operating activities			48.8	(30.7)
Other Segments [Member]
Assets [Abstract]
Cash and cash equivalents	14.0		14.0			8.8
Restricted cash	0.0		0.0			0.0
Inventories:
Construction in progress and finished homes	0.0		0.0			0.0
Residential land and lots — developed and under development	0.0		0.0			0.0
Land held for development	0.0		0.0			0.0
Land held for sale	0.0		0.0			0.0
Total inventories	0.0		0.0			0.0
Mortgage loans held for sale	0.0		0.0			0.0
Deferred income taxes, net	0.0		0.0			0.0
Property and equipment, net	211.9		211.9			189.2
Other Assets	37.4		37.4			0.9
Goodwill	0.0		0.0			0.0
Total assets	263.3		263.3			198.9
Liabilities [Abstract]
Accounts payable	3.0		3.0			4.2
Accrued expenses and other liabilities	10.9		10.9			9.9
Notes payable	0.0		0.0			0.0
Total liabilities	13.9		13.9			14.1
Revenues
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	6.0	0.0	12.8	0.0
Financial services	0.0	0.0	0.0	0.0
Total revenues	6.0	0.0	12.8	0.0
Cost of sales
Home sales	0.0	0.0	0.0	0.0
Land/lot sales and other	0.0	0.0	0.0	0.0
Inventory and land option charges	0.0	0.0	0.0	0.0
Cost of sales	0.0	0.0	0.0	0.0
Selling, General and Administrative Expense	7.3	5.8	13.9	9.8
Gain on sale of assets	(29.3)	0.0	(29.3)	0.0
Interest Expense		0.0		0.0
Other (income) expense	0.5	(3.6)	(0.3)	(6.5)
Income (loss) before income taxes	27.5	(2.2)	28.5	(3.3)
Depreciation and amortization			2.9	3.3
Net cash (used in) provided by operating activities			(4.1)	(0.5)
East [Member] | Homebuilding [Member]
Inventories:
Total inventories	1,354.4		1,354.4			1,192.0
Goodwill					$ 4.6
Revenues
Total revenues	518.2	435.8	965.7	828.9
Cost of sales
Inventory and land option charges	0.3	0.7	1.7	0.6
Income (loss) before income taxes	45.9	46.7	83.9	91.7
Midwest [Member] | Homebuilding [Member]
Inventories:
Total inventories	817.7		817.7			583.1
Goodwill					$ 49.7
Revenues
Total revenues	248.1	203.6	497.2	365.0
Cost of sales
Inventory and land option charges	0.2	0.2	0.5	0.4
Income (loss) before income taxes	9.5	18.7	20.2	32.0
Southeast [Member] | Homebuilding [Member]
Inventories:
Total inventories	2,852.1		2,852.1			2,668.7
Revenues
Total revenues	1,205.3	1,042.0	2,219.2	2,030.6
Cost of sales
Inventory and land option charges	2.2	25.1	3.5	26.2
Income (loss) before income taxes	131.0	96.3	243.2	218.8
South Central [Member] | Homebuilding [Member]
Inventories:
Total inventories	2,720.6		2,720.6			2,439.4
Revenues
Total revenues	990.2	919.0	1,862.7	1,727.8
Cost of sales
Inventory and land option charges	1.4	0.6	1.9	1.9
Income (loss) before income taxes	119.3	120.5	225.3	222.0
Southwest [Member] | Homebuilding [Member]
Inventories:
Total inventories	628.1		628.1			499.7
Revenues
Total revenues	173.2	172.1	316.9	328.5
Cost of sales
Inventory and land option charges	0.1	0.0	0.2	0.8
Income (loss) before income taxes	18.6	22.0	36.3	36.7
West [Member] | Homebuilding [Member]
Inventories:
Total inventories	2,466.9		2,466.9			2,268.5
Revenues
Total revenues	860.4	913.2	1,551.2	1,625.8
Cost of sales
Inventory and land option charges	9.6	3.5	14.0	3.9
Income (loss) before income taxes	76.1	$ 111.8	145.9	$ 188.6
Corporate, Non-Segment [Member] | Homebuilding [Member]
Inventories:
Total inventories	$ 237.0		$ 237.0			$ 223.7

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Inventory (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Inventory [Line Items]
Carrying value of communities with impairment indicators	$ 95.5		$ 95.5
Impairment charges	7.7	$ 3.0	11.9	$ 4.4
Write-offs (recoveries) of earnest money deposits and pre-acquisition costs	$ 6.1	2.6	$ 9.9	4.9
Payments for Legal Settlements		24.5		24.5
Forestar Group [Member]
Inventory [Line Items]
Proceeds from Sale of Productive Assets		232.0		232.0
Payments for (Proceeds from) Productive Assets		(217.5)		(217.5)
Gain (Loss) on Sale of Interest in Projects		$ 0.7		$ 0.7

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Notes Payable (Details) - USD ($) $ in Millions	Mar. 31, 2019	Sep. 30, 2018
Unsecured:
Notes payable	$ 3,622.4	$ 3,203.5
Homebuilding [Member]
Unsecured:
Notes payable	2,777.2	2,445.9
Revolving credit facility	750.0	0.0
Financial Services [Member]
Unsecured:
Notes payable	690.7	637.7
Forestar Group [Member]
Unsecured:
Notes payable	154.5	119.9
Revolving credit facility	$ 35.0	0.0
3.75% senior notes due 2019 [Member] | Homebuilding [Member]
Unsecured:
Stated interest rate	3.75%
Notes payable	$ 0.0	499.6
4.0% senior notes due 2020 [Member] | Homebuilding [Member]
Unsecured:
Stated interest rate	4.00%
Notes payable	$ 499.2	498.8
2.55% senior notes due 2020 [Member] | Homebuilding [Member]
Unsecured:
Stated interest rate	2.55%
Notes payable	$ 398.4	397.9
4.375% senior notes due 2022 [Member] | Homebuilding [Member]
Unsecured:
Stated interest rate	4.375%
Notes payable	$ 348.6	348.4
4.75% senior notes due 2023 [Member] | Homebuilding [Member]
Unsecured:
Stated interest rate	4.75%
Notes payable	$ 298.8	298.7
5.75% senior notes due 2023 [Member] | Homebuilding [Member]
Unsecured:
Stated interest rate	5.75%
Notes payable	$ 398.2	398.0
3.75% convertible senior notes due 2020 [Member] | Forestar Group [Member]
Unsecured:
Notes payable	119.5	119.9
Secured Debt [Member] | Homebuilding [Member]
Unsecured:
Notes payable	$ 84.0	$ 4.5

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Notes Payable - Narrative (Details) - USD ($)		3 Months Ended	6 Months Ended
	Aug. 01, 2018	Mar. 31, 2019	Mar. 31, 2019	Jun. 30, 2019	Sep. 30, 2018
Debt Instrument [Line Items]
Debt issuance costs		$ 6,800,000	$ 6,800,000		$ 8,500,000
Notes payable		3,622,400,000	3,622,400,000		3,203,500,000
Outstanding letters of credit		148,300,000	148,300,000
Restricted Cash and Cash Equivalents		32,400,000	32,400,000		32,900,000
Homebuilding [Member]
Debt Instrument [Line Items]
Notes payable		2,777,200,000	2,777,200,000		2,445,900,000
Borrowing capacity on revolving credit facility		1,325,000,000	1,325,000,000
Maximum borrowing capacity on revolving credit facility		$ 1,900,000,000	$ 1,900,000,000
Letters of credit, sublimit borrowing capacity, as a percentage		50.00%	50.00%
Proceeds from revolving credit facility			$ 1,800,000,000
Repayments of revolving credit facility			1,000,000,000
Borrowings outstanding on revolving credit facility		$ 750,000,000	$ 750,000,000		0
Line of Credit Facility, Interest Rate at Period End		3.70%	3.70%
Authorized repurchase of debt securities	$ 500,000,000
Debt repurchase program, remaining authorized repurchase amount		$ 500,000,000	$ 500,000,000
Restricted Cash and Cash Equivalents		9,400,000	9,400,000		8,600,000
Homebuilding [Member] | Senior Note Twenty Nine [Member]
Debt Instrument [Line Items]
Notes payable		0	$ 0		499,600,000
Maturities of Senior Debt		$ 500,000,000
Stated interest rate		3.75%	3.75%
Financial Services [Member]
Debt Instrument [Line Items]
Notes payable		$ 690,700,000	$ 690,700,000		637,700,000
Borrowing capacity on revolving credit facility		600,000,000	600,000,000
Maximum borrowing capacity on revolving credit facility		1,000,000,000	1,000,000,000
Restricted Cash and Cash Equivalents		7,300,000	7,300,000		8,100,000
Mortgage loans held for sale pledged under repurchase agreement		784,500,000	784,500,000
Mortgage loans held for sale pledged under repurchase agreement, collateral value		$ 759,400,000	$ 759,400,000
Interest rate on mortgage repurchase facility		4.20%	4.20%
Forestar Group [Member]
Debt Instrument [Line Items]
Notes payable		$ 149,200,000	$ 149,200,000		111,700,000
Borrowing capacity on revolving credit facility		380,000,000	380,000,000
Letter of Credit, Maximum Borrowing Capacity (in dollars)		100,000,000	100,000,000
Maximum borrowing capacity on revolving credit facility		$ 570,000,000	$ 570,000,000
Letters of credit, sublimit borrowing capacity, as a percentage		50.00%	50.00%
Line of Credit Facility, Interest Rate at Period End		4.80%	4.80%
Restricted Cash and Cash Equivalents		$ 15,700,000	$ 15,700,000		16,200,000
Forestar Group [Member] | 3.75% convertible senior notes due 2020 [Member]
Debt Instrument [Line Items]
Stated interest rate		3.75%	3.75%
Standby Letters of Credit [Member]
Debt Instrument [Line Items]
Outstanding letters of credit		$ 16,500,000	$ 16,500,000
Standby Letters of Credit [Member] | Homebuilding [Member]
Debt Instrument [Line Items]
Outstanding letters of credit		1,500,000	1,500,000
Standby Letters of Credit [Member] | Forestar Group [Member]
Debt Instrument [Line Items]
Outstanding letters of credit		15,000,000	15,000,000
Line of Credit [Member] | Homebuilding [Member]
Debt Instrument [Line Items]
Outstanding letters of credit		128,000,000	128,000,000
Line of Credit [Member] | Forestar Group [Member]
Debt Instrument [Line Items]
Outstanding letters of credit		3,800,000	3,800,000
Weighted Average [Member] | Financial Services [Member]
Debt Instrument [Line Items]
Borrowing capacity on revolving credit facility		725,000,000	725,000,000
Maximum [Member] | Financial Services [Member]
Debt Instrument [Line Items]
Borrowing capacity on revolving credit facility		800,000,000	800,000,000
Segment Reconciling Items [Member]
Debt Instrument [Line Items]
Notes payable		5,300,000	5,300,000		8,200,000
Restricted Cash and Cash Equivalents		$ 0	$ 0		$ 0
Subsequent Event [Member] | Forestar Group [Member] | Senior Note Member Forty One [Member]
Debt Instrument [Line Items]
Stated interest rate				8.00%
Debt Instrument, Interest Rate, Effective Percentage				8.50%
Debt Instrument, Face Amount				$ 350,000,000

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Capitalized Interest (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Rollforward of capitalized interest
Capitalized interest, beginning of period	$ 168.8	$ 170.3	$ 162.7	$ 167.9
Interest incurred	35.0	31.8	66.7	62.8
Interest charged to cost of sales	(29.9)	(32.0)	(55.5)	(60.6)
Capitalized interest, end of period	173.9	170.1	173.9	170.1
Financial Services [Member]
Rollforward of capitalized interest
Interest incurred	3.0	2.4	6.3	4.5
Forestar Group [Member]
Rollforward of capitalized interest
Interest incurred	$ 1.5	$ 1.3	$ 2.8	$ 1.4

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Mortgage Loans Mortgage Loans Held for Sale (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Sep. 30, 2018
Mortgage Loans on Real Estate [Abstract]
Mortgage loans held for sale	$ 796.5		$ 796.5		$ 796.4
Mortgage loans held for sale, outstanding principal amount	768.7		768.7		$ 776.1
Payments for Origination of Mortgage Loans Held-for-sale			3,600.0	$ 3,400.0
Proceeds from Sale of Mortgage Loans Held-for-sale			3,600.0	3,300.0
Gain (Loss) on Sales of Loans, Net	$ 73.1	$ 68.8	$ 132.9	$ 125.7
Concentration Risk, Percentage			93.00%
Percentage Of Mortgage Loans Sold To Major Purchaser			32.00%

XML

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2019	Mar. 31, 2018	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Income tax expense	$ 108.4	$ 94.0		$ 197.4	$ 296.4
Effective tax rate (percent)	23.40%	21.10%		23.50%	35.50%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			35.00%			24.50%
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent				21.00%
Deferred tax assets net of DTL	$ 188.9			$ 188.9		$ 211.7
Valuation allowance for deferred income taxes	$ 17.0			$ 17.0		$ 17.7

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Numerator:
Net Income (Loss) Attributable to Parent	$ 351.3	$ 351.0	$ 638.4	$ 540.3
Denominator:
Denominator for basic earnings per share — weighted average common shares	373.3	376.8	374.2	376.3
Effect of dilutive securities:
Employee stock awards (shares)	4.4	7.1	4.7	7.5
Denominator for diluted earnings per share — adjusted weighted average common shares	377.7	383.9	378.9	383.8
Basic net income per common share attributable to Parent (in dollars per share)	$ 0.94	$ 0.93	$ 1.71	$ 1.44
Diluted net income per common share attributable to Parent (in dollars per share)	$ 0.93	$ 0.91	$ 1.68	$ 1.41

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Stockholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions	3 Months Ended						6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2019	Mar. 31, 2018	Aug. 01, 2018
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Amount of stock repurchase authorization									$ 400,000,000
Treasury Stock, Shares, Acquired							6.1
Payments for Repurchase of Common Stock							$ 216,200,000	$ 47,900,000
Amount remaining under stock repurchase authorization		$ 159,300,000					$ 159,300,000
Dividends, Common Stock [Abstract]
Cash dividends declared per common share (in dollars per share)		$ 0.15	$ 0.125	$ 0.125	$ 0.125	$ 0.125
Cash dividends paid per common share (in dollars per share)		$ 0.15	$ 0.125	$ 0.125	$ 0.125	$ 0.125
Subsequent Event [Member]
Dividends, Common Stock [Abstract]
Cash dividends declared per common share (in dollars per share)	$ 0.15
Forestar Group [Member]
Class of Stock [Line Items]
Equity Securities Registered, Value			$ 500,000,000

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Employee Benefit Plans (Details) - November Two Thousand Eighteen Grant [Member] $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	Nov. 30, 2018 $ / shares shares	Mar. 31, 2019 USD ($)	Mar. 31, 2019 USD ($) grant_recipient $ / shares shares
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted in the period | shares	360,000
Award vesting period	3 years
Fair value of equity awards on the date of grant (in US$ per unit) | $ / shares	$ 37.75
Compensation expense		$ 1.4	$ 3.1
Performance Shares [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of total units granted that vest in the period	10.00%
Performance Shares [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of total units granted that vest in the period	200.00%
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted in the period | shares			1,800,000
Fair value of equity awards on the date of grant (in US$ per unit) | $ / shares			$ 33.75
Compensation expense		$ 3.0	$ 7.4
RSU Grant Recipients | grant_recipient			900
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			3 years
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			5 years
Retirement Eligible [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense			$ 3.5

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Commitments and Contingencies - Warranty Claims (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Changes in warranty liability
Warranty liability, beginning of period	$ 205.6	$ 149.4	$ 202.0	$ 143.7
Warranties issued	21.0	19.3	38.9	35.8
Changes in liability for pre-existing warranties	6.0	13.7	11.5	20.5
Settlements made	(18.7)	(19.8)	(38.5)	(37.4)
Warranty liability, end of period	$ 213.9	$ 162.6	$ 213.9	$ 162.6

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Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Sep. 30, 2018	Sep. 30, 2017
Commitments and Contingencies [Abstract]
Liabilities for various claims, complaints and other legal actions	$ 419.1	$ 443.6	$ 419.1	$ 443.6	$ 408.1	$ 420.6
Construction defect portion of loss contingency accrual, percentage	99.00%		99.00%		99.00%
Expenses related to legal claims			$ 14.6	39.0
Estimated insurance recoveries related to legal claims	$ 56.9	69.0	56.9	69.0	$ 54.6
Surety bonds	1,600.0		1,600.0
Outstanding letters of credit	148.3		148.3
Standby Letters of Credit [Member]
Commitments and Contingencies [Abstract]
Outstanding letters of credit	16.5		16.5
Forestar Consolidated [Member]
Commitments and Contingencies [Abstract]
Earnest money deposits	76.5		76.5
Remaining purchase price of land under option contracts	895.8		895.8
Forestar Consolidated [Member] | Option Contracts Subject to Specific Performance Clauses [Member]
Commitments and Contingencies [Abstract]
Remaining purchase price of land under option contracts	50.9		50.9
Homebuilding [Member]
Commitments and Contingencies [Abstract]
Earnest money deposits	461.0		461.0
Remaining purchase price of land under option contracts	7,400.0		7,400.0
Homebuilding [Member] | Line of Credit [Member]
Commitments and Contingencies [Abstract]
Outstanding letters of credit	128.0		128.0
Homebuilding [Member] | Standby Letters of Credit [Member]
Commitments and Contingencies [Abstract]
Outstanding letters of credit	1.5		1.5
Homebuilding [Member] | Option Contracts Subject to Specific Performance Clauses [Member]
Commitments and Contingencies [Abstract]
Remaining purchase price of land under option contracts	96.8		96.8
Homebuilding [Member] | Cash [Member]
Commitments and Contingencies [Abstract]
Earnest money deposits	457.9		457.9
Homebuilding [Member] | Notes Payable, Other Payables [Member]
Commitments and Contingencies [Abstract]
Earnest money deposits	3.1		3.1
Forestar Group [Member]
Commitments and Contingencies [Abstract]
Increase (Decrease) in Earnest Money Deposits Outstanding	4.7	11.8	16.8	14.0
Increase (Decrease) in Prepaid Expenses, Other	0.7	$ 5.9	3.7	$ 8.2
Forestar Group [Member] | Line of Credit [Member]
Commitments and Contingencies [Abstract]
Outstanding letters of credit	3.8		3.8
Forestar Group [Member] | Standby Letters of Credit [Member]
Commitments and Contingencies [Abstract]
Outstanding letters of credit	$ 15.0		$ 15.0

XML

Commitments and Contingencies - Legal Claims and Insurance (Details) - USD ($) $ in Millions	6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Rollforward of reserves for legal claims
Reserves for legal claims, beginning of period	$ 408.1	$ 420.6
Increase in reserves	23.3	41.4
Payments	(12.3)	(18.4)
Reserves for legal claims, end of period	$ 419.1	$ 443.6

XML

Other Assets, Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017
Other assets
Earnest money and refundable deposits	$ 477.0		$ 445.2
Insurance receivables	56.9		54.6	$ 69.0
Other receivables	79.4		81.7
Prepaid assets	30.9		36.9
Rental properties	33.9		39.2
Contract Asset Insurance Renewals	34.4		0.0
Other	73.2		55.3
Other assets	785.7		712.9
Accrued expenses and other liabilities
Reserves for legal claims	419.1		408.1	443.6		$ 420.6
Employee compensation and related liabilities	244.5		252.5
Warranty liability	213.9	$ 205.6	202.0	$ 162.6	$ 149.4	$ 143.7
Accrued interest	12.9		14.8
Federal and state income tax liabilities	83.8		35.2
Inventory related accruals	42.6		45.5
Customer deposits	62.5		58.1
Accrued property taxes	20.5		38.0
Other	92.3		73.3
Accrued expenses and other liabilities	1,192.1		1,127.5
Other Segments [Member]
Other assets
Other assets	37.4		0.9
Accrued expenses and other liabilities
Accrued expenses and other liabilities	$ 10.9		$ 9.9

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Fair Value Measurements - Recurring (Details) - USD ($) $ in Millions	Mar. 31, 2019	Sep. 30, 2018
Fair value balance sheet items measured on a recurring basis
Mortgage loans held for sale	$ 796.5	$ 796.4
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities collateralized by residential real estate	3.9	3.9
Fair value balance sheet items measured on a recurring basis
Mortgage loans held for sale	792.8	792.4
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Interest rate lock commitments [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	19.8	10.5
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Forward sales of MBS [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	(8.0)	3.3
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Best-efforts and mandatory commitments [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	(0.8)	0.2
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities collateralized by residential real estate	0.0	0.0
Fair value balance sheet items measured on a recurring basis
Mortgage loans held for sale	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Interest rate lock commitments [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Forward sales of MBS [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Best-efforts and mandatory commitments [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities collateralized by residential real estate	0.0	0.0
Fair value balance sheet items measured on a recurring basis
Mortgage loans held for sale	784.4	784.6
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest rate lock commitments [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	19.8	10.5
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Forward sales of MBS [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	(8.0)	3.3
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Best-efforts and mandatory commitments [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	(0.8)	0.2
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities collateralized by residential real estate	3.9	3.9
Fair value balance sheet items measured on a recurring basis
Mortgage loans held for sale	8.4	7.8
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Interest rate lock commitments [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Forward sales of MBS [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Best-efforts and mandatory commitments [Member]
Fair value balance sheet items measured on a recurring basis
Fair value of interest rate derivatives	$ 0.0	$ 0.0

XML

Fair Value Measurements - Nonrecurring (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Sep. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	$ 796.5	$ 796.4
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0.0	0.0
Other mortgage loans	0.0	0.0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Inventories [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Inventories	0.0	0.0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Assets Held-for-sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Inventories	0.0	0.0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0.8	2.9
Other mortgage loans	1.8	1.0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Inventories [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Inventories	20.8	4.4
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Assets Held-for-sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Inventories	0.0	1.4
Homebuilding [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	$ 0.0	$ 0.0
Homebuilding [Member] | Inventories [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Discount Rate	12.00%
Homebuilding [Member] | Inventories [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Discount Rate	16.00%

XML

Fair Value Measurements - Assets and Liabilities Not Reflected at Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2019	Sep. 30, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Carrying value	$ 698.8	$ 1,473.1
Restricted Cash and Cash Equivalents	32.4	32.9
Notes payable	3,622.4	3,203.5
Estimate of Fair Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Fair value	698.8	1,473.1
Restricted cash, Fair value	32.4	32.9
Notes payable, Fair value	3,683.9	3,244.8
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Fair value	698.8	1,473.1
Restricted cash, Fair value	32.4	32.9
Notes payable, Fair value	0.0	0.0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Fair value	0.0	0.0
Restricted cash, Fair value	0.0	0.0
Notes payable, Fair value	2,124.2	2,602.6
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Fair value	0.0	0.0
Restricted cash, Fair value	0.0	0.0
Notes payable, Fair value	$ 1,559.7	$ 642.2

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Related Party Transactions (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) a	Jun. 30, 2019	Sep. 30, 2018 USD ($)
Related Party Transaction [Line Items]
Inventory, Real Estate, Land and Land Development Costs	$ 5,672,900,000		$ 5,172,400,000
Immediate Family Member of Management or Principal Owner [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Due from (to) Related Party	$ 77,500,000
Area of Land | a	119
Mortgage Loans on Real Estate, Interest Rate	2.55%
Inventory, Real Estate, Land and Land Development Costs	$ 77,500,000
Land under Purchase Options, Recorded	$ 77,500,000
Related Party Transaction, Rate	16.00%
Forestar Group [Member]
Related Party Transaction [Line Items]
Inventory, Real Estate, Land and Land Development Costs	$ 803,000,000		$ 463,100,000
Forestar Group [Member] | Senior Note Member Forty One [Member] | Subsequent Event [Member]
Related Party Transaction [Line Items]
Debt Instrument, Interest Rate, Effective Percentage		8.50%

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Supplemental Guarantor Information - Balance Sheet (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017
ASSETS
Cash and cash equivalents	$ 698.8		$ 1,473.1
Restricted cash	32.4		32.9
Investment in subsidiaries	0.0		0.0
Inventories	11,920.3		10,395.0
Mortgage loans held for sale	796.5		796.4
Deferred income taxes, net	171.9		194.0
Property and equipment, net	437.9		401.1
Other assets	785.7		712.9
Goodwill	163.5		109.2
Intercompany receivables	0.0		0.0
Total assets	15,007.0		14,114.6
LIABILITIES & EQUITY
Accounts payable and other liabilities	1,850.6		1,752.2
Intercompany payables	0.0		0.0
Notes payable	3,622.4		3,203.5
Total liabilities	5,473.0		4,955.7
Stockholders’ equity	9,360.3		8,984.4
Noncontrolling interests	173.7		174.5
Total equity	9,534.0	$ 9,298.2	9,158.9	$ 8,371.9	$ 8,055.4	$ 7,747.6
Total liabilities and equity	15,007.0		14,114.6
Eliminations [Member]
ASSETS
Cash and cash equivalents	0.0		0.0
Restricted cash	0.0		0.0
Investment in subsidiaries	(6,739.8)		(6,344.9)
Inventories	(20.6)		(11.2)
Mortgage loans held for sale	0.0		0.0
Deferred income taxes, net	2.9		2.5
Property and equipment, net	(4.4)		(6.9)
Other assets	(75.1)		(45.2)
Goodwill	0.0		0.0
Intercompany receivables	(596.9)		(273.5)
Total assets	(7,433.9)		(6,679.2)
LIABILITIES & EQUITY
Accounts payable and other liabilities	(80.8)		(49.1)
Intercompany payables	(596.9)		(273.5)
Notes payable	0.0		0.0
Total liabilities	(677.7)		(322.6)
Stockholders’ equity	(6,757.9)		(6,355.6)
Noncontrolling interests	1.7		(1.0)
Total equity	(6,756.2)		(6,356.6)
Total liabilities and equity	(7,433.9)		(6,679.2)
D.R. Horton, Inc. [Member]
ASSETS
Cash and cash equivalents	405.4		908.1
Restricted cash	7.6		6.6
Investment in subsidiaries	6,739.8		6,344.9
Inventories	4,458.3		4,037.1
Mortgage loans held for sale	0.0		0.0
Deferred income taxes, net	52.1		69.2
Property and equipment, net	112.2		111.2
Other assets	328.7		306.6
Goodwill	0.0		0.0
Intercompany receivables	596.9		246.2
Total assets	12,701.0		12,029.9
LIABILITIES & EQUITY
Accounts payable and other liabilities	625.2		590.8
Intercompany payables	0.0		0.0
Notes payable	2,697.8		2,443.9
Total liabilities	3,323.0		3,034.7
Stockholders’ equity	9,378.0		8,995.2
Noncontrolling interests	0.0		0.0
Total equity	9,378.0		8,995.2
Total liabilities and equity	12,701.0		12,029.9
Guarantor Subsidiaries [Member]
ASSETS
Cash and cash equivalents	104.3		158.7
Restricted cash	1.8		2.0
Investment in subsidiaries	0.0		0.0
Inventories	6,527.4		5,824.1
Mortgage loans held for sale	0.0		0.0
Deferred income taxes, net	92.3		105.0
Property and equipment, net	76.8		66.1
Other assets	402.5		361.3
Goodwill	134.3		80.0
Intercompany receivables	0.0		27.3
Total assets	7,339.4		6,624.5
LIABILITIES & EQUITY
Accounts payable and other liabilities	1,034.1		1,000.4
Intercompany payables	298.9		0.0
Notes payable	1.9		2.1
Total liabilities	1,334.9		1,002.5
Stockholders’ equity	6,004.5		5,622.0
Noncontrolling interests	0.0		0.0
Total equity	6,004.5		5,622.0
Total liabilities and equity	7,339.4		6,624.5
Non-Guarantor Subsidiaries [Member]
ASSETS
Cash and cash equivalents	189.1		406.3
Restricted cash	23.0		24.3
Investment in subsidiaries	0.0		0.0
Inventories	955.2		545.0
Mortgage loans held for sale	796.5		796.4
Deferred income taxes, net	24.6		17.3
Property and equipment, net	253.3		230.7
Other assets	129.6		90.2
Goodwill	29.2		29.2
Intercompany receivables	0.0		0.0
Total assets	2,400.5		2,139.4
LIABILITIES & EQUITY
Accounts payable and other liabilities	272.1		210.1
Intercompany payables	298.0		273.5
Notes payable	922.7		757.5
Total liabilities	1,492.8		1,241.1
Stockholders’ equity	735.7		722.8
Noncontrolling interests	172.0		175.5
Total equity	907.7		898.3
Total liabilities and equity	$ 2,400.5		$ 2,139.4

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Supplemental Guarantor Information - Statement of Operations (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2019	Mar. 31, 2018
Consolidating Statement of Operations
Revenues	$ 4,128.7		$ 3,794.7		$ 7,647.7	$ 7,127.6
Cost of sales	3,256.7		2,961.6		6,007.8	5,541.8
Selling, general and administrative expense	444.2		400.9		847.0	785.1
Gain on sale of assets	(29.3)		(1.1)		(31.3)	(14.5)
Other (income) expense	(5.7)		(11.5)		(14.3)	(20.9)
Income before income taxes	462.8		444.8		838.5	836.1
Income tax expense	108.4		94.0		197.4	296.4
Equity in net income of subsidiaries, net of tax	0.0		0.0		0.0	0.0
Net income	354.4	$ 286.7	350.8	$ 188.8	641.1	539.7
Net income (loss) attributable to noncontrolling interests	3.1		(0.2)		2.7	(0.6)
Net Income (Loss) Attributable to Parent	351.3		351.0		638.4	540.3
Eliminations [Member]
Consolidating Statement of Operations
Revenues	(39.7)		(13.5)		(68.7)	(13.5)
Cost of sales	(35.0)		(10.9)		(60.5)	(10.9)
Selling, general and administrative expense	0.0		0.0		0.0	0.0
Gain on sale of assets	(2.5)		0.0		(2.5)	0.0
Other (income) expense	0.0		0.0		0.0	0.0
Income before income taxes	(2.2)		(2.6)		(5.7)	(2.6)
Income tax expense	(0.5)		0.0		(1.3)	0.0
Equity in net income of subsidiaries, net of tax	(253.5)		(267.5)		(449.4)	(410.8)
Net income	(255.2)		(270.1)		(453.8)	(413.4)
Net income (loss) attributable to noncontrolling interests	2.5		0.0		2.7	0.0
Net Income (Loss) Attributable to Parent	(257.7)		(270.1)		(456.5)	(413.4)
D.R. Horton, Inc. [Member]
Consolidating Statement of Operations
Revenues	1,575.2		1,288.0		2,910.9	2,451.9
Cost of sales	1,249.8		1,026.2		2,307.0	1,941.6
Selling, general and administrative expense	193.3		156.9		351.2	309.1
Gain on sale of assets	0.0		0.0		(2.0)	0.0
Other (income) expense	(1.1)		(1.7)		(2.0)	(2.1)
Income before income taxes	133.2		106.6		256.7	203.3
Income tax expense	31.4		20.7		60.6	71.8
Equity in net income of subsidiaries, net of tax	253.5		267.5		449.4	410.8
Net income	355.3		353.4		645.5	542.3
Net income (loss) attributable to noncontrolling interests	0.0		0.0		0.0	0.0
Net Income (Loss) Attributable to Parent	355.3		353.4		645.5	542.3
Guarantor Subsidiaries [Member]
Consolidating Statement of Operations
Revenues	2,419.7		2,402.7		4,501.4	4,455.1
Cost of sales	1,989.5		1,926.9		3,670.9	3,567.0
Selling, general and administrative expense	164.9		164.8		330.8	316.4
Gain on sale of assets	0.0		0.0		0.0	0.0
Other (income) expense	(0.4)		(0.7)		(0.8)	(0.7)
Income before income taxes	265.7		311.7		500.5	572.4
Income tax expense	62.3		67.4		118.1	205.3
Equity in net income of subsidiaries, net of tax	0.0		0.0		0.0	0.0
Net income	203.4		244.3		382.4	367.1
Net income (loss) attributable to noncontrolling interests	0.0		0.0		0.0	0.0
Net Income (Loss) Attributable to Parent	203.4		244.3		382.4	367.1
Non-Guarantor Subsidiaries [Member]
Consolidating Statement of Operations
Revenues	173.5		117.5		304.1	234.1
Cost of sales	52.4		19.4		90.4	44.1
Selling, general and administrative expense	86.0		79.2		165.0	159.6
Gain on sale of assets	(26.8)		(1.1)		(26.8)	(14.5)
Other (income) expense	(4.2)		(9.1)		(11.5)	(18.1)
Income before income taxes	66.1		29.1		87.0	63.0
Income tax expense	15.2		5.9		20.0	19.3
Equity in net income of subsidiaries, net of tax	0.0		0.0		0.0	0.0
Net income	50.9		23.2		67.0	43.7
Net income (loss) attributable to noncontrolling interests	0.6		(0.2)		0.0	(0.6)
Net Income (Loss) Attributable to Parent	$ 50.3		$ 23.4		$ 67.0	$ 44.3

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Supplemental Guarantor Information - Statement of Cash Flows (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Mar. 31, 2019	Mar. 31, 2018
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities				$ (461.7)	$ (98.8)
INVESTING ACTIVITIES
Expenditures for property and equipment				(69.8)	(39.5)
Proceeds from sale of assets				83.8	253.4
Expenditures related to multi-family rental properties				(28.3)	(39.5)
Return of investment in unconsolidated entities				4.4	15.1
Net principal increase of other mortgage loans and real estate owned				(1.6)	0.0
Intercompany advances				0.0	0.0
Payments related to business acquisitions				309.6	158.1
Net cash (used in) provided by investing activities				(321.1)	31.4
FINANCING ACTIVITIES
Proceeds from notes payable				1,815.0	1,913.6
Repayment of notes payable				(1,531.0)	(1,752.5)
Advances (payments) on mortgage repurchase facility, net				53.0	69.8
Intercompany advances				0.0	0.0
Proceeds from stock associated with certain employee benefit plans				22.3	32.7
Cash paid for shares withheld for taxes	$ (15.4)	$ (4.1)	$ (10.3)	(19.5)	(10.3)
Cash dividends paid				(111.9)	(94.1)
Repurchases of common stock				(216.2)	(47.9)
Distributions to noncontrolling interests, net				(3.7)	(2.0)
Net cash (used in) provided by financing activities				8.0	109.3
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect				(774.8)	41.9
Cash, cash equivalents and restricted cash at beginning of period		1,506.0	1,024.3	1,506.0	1,024.3
Cash, cash equivalents and restricted cash at end of period	731.2			731.2	1,066.2
Eliminations [Member]
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities				(78.7)	(37.0)
INVESTING ACTIVITIES
Expenditures for property and equipment				0.0	0.0
Proceeds from sale of assets				0.0	0.0
Expenditures related to multi-family rental properties				0.0	5.0
Return of investment in unconsolidated entities				0.0	0.0
Net principal increase of other mortgage loans and real estate owned				0.0
Intercompany advances				42.4	(266.3)
Payments related to business acquisitions				0.0	0.0
Net cash (used in) provided by investing activities				42.4	(261.3)
FINANCING ACTIVITIES
Proceeds from notes payable				0.0	0.0
Repayment of notes payable				0.0	0.0
Advances (payments) on mortgage repurchase facility, net				0.0	0.0
Intercompany advances				(42.4)	266.3
Proceeds from stock associated with certain employee benefit plans				0.0	0.0
Cash paid for shares withheld for taxes				0.0	0.0
Cash dividends paid				78.7	32.0
Repurchases of common stock				0.0	0.0
Distributions to noncontrolling interests, net				0.0	0.0
Net cash (used in) provided by financing activities				36.3	298.3
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect				0.0	0.0
Cash, cash equivalents and restricted cash at beginning of period		0.0	0.0	0.0	0.0
Cash, cash equivalents and restricted cash at end of period	0.0			0.0	0.0
D.R. Horton, Inc. [Member]
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities				(76.5)	(147.3)
INVESTING ACTIVITIES
Expenditures for property and equipment				(16.7)	(21.4)
Proceeds from sale of assets				10.4	0.0
Expenditures related to multi-family rental properties				0.0	0.0
Return of investment in unconsolidated entities				0.0	0.0
Net principal increase of other mortgage loans and real estate owned				0.0
Intercompany advances				(42.4)	266.3
Payments related to business acquisitions				301.3	560.0
Net cash (used in) provided by investing activities				(350.0)	(315.1)
FINANCING ACTIVITIES
Proceeds from notes payable				1,775.0	1,912.3
Repayment of notes payable				(1,524.9)	(1,740.2)
Advances (payments) on mortgage repurchase facility, net				0.0	0.0
Intercompany advances				0.0	0.0
Proceeds from stock associated with certain employee benefit plans				22.3	32.7
Cash paid for shares withheld for taxes				(19.5)	(10.3)
Cash dividends paid				(111.9)	(94.1)
Repurchases of common stock				(216.2)	(47.9)
Distributions to noncontrolling interests, net				0.0	0.0
Net cash (used in) provided by financing activities				(75.2)	52.5
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect				(501.7)	(409.9)
Cash, cash equivalents and restricted cash at beginning of period		914.7	788.7	914.7	788.7
Cash, cash equivalents and restricted cash at end of period	413.0			413.0	378.8
Guarantor Subsidiaries [Member]
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities				(61.5)	269.9
INVESTING ACTIVITIES
Expenditures for property and equipment				(16.9)	(15.0)
Proceeds from sale of assets				0.0	0.0
Expenditures related to multi-family rental properties				0.0	0.0
Return of investment in unconsolidated entities				0.0	0.0
Net principal increase of other mortgage loans and real estate owned				0.0
Intercompany advances				0.0	0.0
Payments related to business acquisitions				0.0	0.0
Net cash (used in) provided by investing activities				(16.9)	(15.0)
FINANCING ACTIVITIES
Proceeds from notes payable				0.0	0.0
Repayment of notes payable				(1.1)	(2.3)
Advances (payments) on mortgage repurchase facility, net				0.0	0.0
Intercompany advances				24.9	(291.0)
Proceeds from stock associated with certain employee benefit plans				0.0	0.0
Cash paid for shares withheld for taxes				0.0	0.0
Cash dividends paid				0.0	0.0
Repurchases of common stock				0.0	0.0
Distributions to noncontrolling interests, net				0.0	0.0
Net cash (used in) provided by financing activities				23.8	(293.3)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect				(54.6)	(38.4)
Cash, cash equivalents and restricted cash at beginning of period		160.7	156.0	160.7	156.0
Cash, cash equivalents and restricted cash at end of period	106.1			106.1	117.6
Non-Guarantor Subsidiaries [Member]
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities				(245.0)	(184.4)
INVESTING ACTIVITIES
Expenditures for property and equipment				(36.2)	(3.1)
Proceeds from sale of assets				73.4	253.4
Expenditures related to multi-family rental properties				(28.3)	(44.5)
Return of investment in unconsolidated entities				4.4	15.1
Net principal increase of other mortgage loans and real estate owned				(1.6)
Intercompany advances				0.0	0.0
Payments related to business acquisitions				8.3	401.9
Net cash (used in) provided by investing activities				3.4	622.8
FINANCING ACTIVITIES
Proceeds from notes payable				40.0	1.3
Repayment of notes payable				(5.0)	(10.0)
Advances (payments) on mortgage repurchase facility, net				53.0	69.8
Intercompany advances				17.5	24.7
Proceeds from stock associated with certain employee benefit plans				0.0	0.0
Cash paid for shares withheld for taxes				0.0	0.0
Cash dividends paid				(78.7)	(32.0)
Repurchases of common stock				0.0	0.0
Distributions to noncontrolling interests, net				(3.7)	(2.0)
Net cash (used in) provided by financing activities				23.1	51.8
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect				(218.5)	490.2
Cash, cash equivalents and restricted cash at beginning of period		$ 430.6	$ 79.6	430.6	79.6
Cash, cash equivalents and restricted cash at end of period	$ 212.1			$ 212.1	$ 569.8