10-KPeriod: FY2003

HORTON D R INC /DE/ Annual Report, Year Ended Sep 30, 2003

Filed December 12, 2003For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong performance for the fiscal year ended September 30, 2003, demonstrating significant growth across its homebuilding and financial services segments. The company's strategic geographic diversification, operating in 20 states and 47 markets, helped mitigate localized economic downturns and contributed to a substantial increase in revenues, reaching $8.73 billion, a 29.5% rise from the prior year. This growth was fueled by a robust housing demand and the integration of the Schuler Homes acquisition. DHI's financial services segment also saw considerable expansion, supporting the core homebuilding operations. The company maintained a strong balance sheet with increasing stockholders' equity and managed its debt effectively, indicating a healthy financial position. Investors can look to DHI's continued expansion into new markets and its focus on operational efficiency as key drivers for future performance. The company's operational strategy emphasizes geographic diversity, with expansion into new markets and a continued focus on internal growth following a series of acquisitions. DHI's decentralized operational model empowers local division presidents, fostering agility in responding to market conditions. Robust cost management strategies, both in overhead and construction, contribute to profitability. The company's land policies, including the extensive use of lot option contracts, effectively manage inventory risk. With a strong backlog and a clear strategic focus, D.R. Horton is well-positioned for continued success in the residential construction sector.

Key Highlights

  • 1D.R. Horton reported total revenues of $8.73 billion for the fiscal year ended September 30, 2003, a 29.5% increase from $6.74 billion in fiscal year 2002.
  • 2Homebuilding revenues accounted for approximately 98% of consolidated revenues, reaching $8.55 billion, up from $6.63 billion in the prior year.
  • 3The company closed 35,934 homes, an increase of 20.7% from the 29,761 homes closed in fiscal year 2002, with an average selling price of $231,900.
  • 4Income before income taxes increased significantly by 55.7% to $1.01 billion in fiscal year 2003 from $647.5 million in fiscal year 2002.
  • 5The financial services segment experienced strong growth, with revenues increasing by 54.9% to $176.0 million, driven by increased mortgage origination and title services.
  • 6D.R. Horton maintained a strong liquidity position with $582.9 million in cash and cash equivalents at the end of fiscal year 2003.
  • 7The company's strategic geographic diversification was evident, with operations spanning 20 states and 47 markets.

Frequently Asked Questions

D.R. Horton reported consolidated revenues of $8.73 billion for the fiscal year ended September 30, 2003, representing a significant increase of 29.5% from $6.74 billion in fiscal year 2002. This growth was primarily driven by the homebuilding segment, which accounted for the vast majority of revenues.

The acquisition of Schuler Homes, Inc. in February 2002 contributed significantly to D.R. Horton's financial performance in fiscal year 2003. The filing notes that approximately $498.8 million of the increase in homebuilding revenues was attributable to Schuler's operations prior to the anniversary date of the acquisition in fiscal 2003. The acquisition also contributed to the increase in average selling prices, as Schuler operated in higher-priced Western markets.

D.R. Horton employs a strategy to limit exposure to real estate inventory risks. A key component is the extensive use of lot option contracts, where approximately 51% of its total lot position was under option contracts at September 30, 2003. This approach allows the company to control significant lot positions with minimal capital investment, thereby reducing the risks associated with land ownership and development. Additionally, they generally commence construction only after receiving a down payment and mortgage approval, and they limit the number of speculative homes built in each subdivision.

D.R. Horton provides mortgage financing services through its wholly-owned subsidiary, CH Mortgage, which operates in numerous states. For the year ended September 30, 2003, these entities provided mortgage financing for approximately 73% of the homes closed that required mortgage financing. In markets where they don't offer direct financing, they collaborate with various mortgage lenders to facilitate the sales process and ensure timely closings for homebuyers.