10-KPeriod: FY2002

HORTON D R INC /DE/ Annual Report, Year Ended Sep 30, 2002

Filed December 13, 2002For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a remarkable fiscal year 2002, achieving its 25th consecutive year of growth in revenues and profitability. The company significantly expanded its operations through strategic acquisitions, most notably the integration of Schuler Homes, Inc., which bolstered its market presence in key Western regions. This aggressive growth strategy, combined with strong internal sales performance, resulted in record revenues of $6.7 billion and net income of $404.7 million, translating to a diluted EPS of $2.87. Investors can take comfort in DHI's robust financial health, demonstrated by a substantial increase in stockholders' equity to $2.3 billion and a declining debt-to-capital ratio. The company's financial services division also performed exceptionally well, more than doubling its pre-tax income. DHI's decentralized operational structure, empowering local division presidents with entrepreneurial autonomy and aligning management interests with shareholders, is highlighted as a key driver of its consistent outperformance in a cyclical industry.

Key Highlights

  • 1Achieved 25th consecutive year of revenue and profitability growth.
  • 2Record revenues of $6.7 billion, a 51% increase over fiscal 2001.
  • 3Record net income of $404.7 million, a 57% increase over fiscal 2001.
  • 4Record diluted earnings per share (EPS) of $2.87, a 29% increase.
  • 5Completed largest acquisition to date: Schuler Homes, Inc., enhancing Western market presence.
  • 6Record year-end sales backlog of $2.8 billion, up 46%.
  • 7Record stockholders' equity of $2.3 billion, up 82%.

Frequently Asked Questions

The primary drivers were a combination of robust internal sales growth, which saw new sales contracts increase by 53% to $6.9 billion, and strategic acquisitions. The most significant of these was the acquisition of Schuler Homes, Inc., which substantially expanded the company's footprint and market share, particularly in Western U.S. markets.

The acquisition of Schuler Homes was a key factor in D.R. Horton's impressive revenue and profit growth, contributing $1.24 billion in revenues during the reporting period. It also significantly increased the company's assets and liabilities, and added to its goodwill balance. Financially, it helped solidify dominant market positions in several key Western markets, aligning with the company's strategy of geographic diversification and expansion.

D.R. Horton actively manages its debt through a combination of issuing new debt, refinancing existing facilities, and retaining earnings to strengthen its balance sheet. The company highlighted a reduction in its homebuilding debt-to-total capital ratio to 51.3% by the end of fiscal 2002 and projected further reduction. They also have substantial credit facilities in place, including a $805 million revolving credit facility, providing ample resources for growth.

The company emphasizes a decentralized structure where division presidents are empowered as entrepreneurs to react to local market changes, adjust land positions, product offerings, and pricing. This autonomy, coupled with performance-based bonuses and direct stock ownership, aligns management and stockholder interests, giving DHI a competitive advantage and enabling it to navigate various economic cycles effectively.