8-KMaterial AgreementsFinancial EventsExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Material Agreement (Jun 30, 2008)

Filed June 30, 2008For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) filed an 8-K on June 30, 2008, to report on the Fifth Amendment to its unsecured Revolving Credit Agreement, effective June 26, 2008. This amendment significantly alters the terms of its credit facility, reflecting current market conditions and the company's financial position. Key changes include a reduction in the required tangible net worth, modifications to how net funded notes payable and land/lot valuations are calculated, and a decrease in the overall facility size. While the facility size has been reduced from $2.25 billion to $1.65 billion (with an accordion option to $2.05 billion), it's notable that D.R. Horton had no cash borrowings outstanding under this facility as of June 30, 2008. The amendment also adjusts interest rate spreads and fees. These changes are crucial for investors to understand as they impact the company's financial flexibility and debt management strategies during a challenging economic period.

Key Highlights

  • 1D.R. Horton entered into a Fifth Amendment to its Revolving Credit Agreement on June 26, 2008.
  • 2The required tangible net worth minimum was decreased to $2.0 billion, plus a percentage of future net profits and equity increases.
  • 3The calculation for Net Funded Notes Payable now allows cash exceeding $50 million to reduce Indebtedness for Leverage Ratio calculation.
  • 4The covenant limiting the Net Book Value of Land and Lots was modified from 150% to 200% of Adjusted Tangible Net Worth under certain conditions.
  • 5The overall credit facility size was reduced from $2.25 billion to $1.65 billion, with an uncommitted accordion option to increase it to $2.05 billion.
  • 6As of June 30, 2008, D.R. Horton had no cash borrowings outstanding under the amended credit facility.
  • 7The amendment includes adjustments to the Applicable Margin for interest rates and fees, influenced by financial ratios and debt ratings.

Frequently Asked Questions

This 8-K filing announces the Fifth Amendment to D.R. Horton's Revolving Credit Agreement, which modifies the terms and conditions of its credit facility. This is a material event for investors as it impacts the company's borrowing capacity and financial covenants.

The facility size has been reduced from $2.25 billion to $1.65 billion. However, there is an uncommitted accordion feature that allows the company to increase the facility size up to $2.05 billion under certain conditions.

As of June 30, 2008, D.R. Horton had no cash borrowings outstanding under the Amended Credit Facility. This indicates the company was not actively drawing on its credit line at that specific point in time.

The amendments to the tangible net worth, net funded notes payable, and land/lot valuation covenants provide D.R. Horton with greater flexibility in managing its balance sheet and complying with its debt obligations. The reduction in the tangible net worth requirement and the adjustment to land/lot valuation limits are particularly relevant given the challenging housing market environment at the time.