-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RWJ6Em9uYTDglFiBgjM8o+0hU9j+/rk1Uqh8B4TTPStBrveSkajwk+HE+pTFJqMR qqrcoiR7I67hO1P9/1wumQ== 0000882184-96-000006.txt : 19960820 0000882184-96-000006.hdr.sgml : 19960820 ACCESSION NUMBER: 0000882184-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960724 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORTON D R INC /DE/ CENTRAL INDEX KEY: 0000882184 STANDARD INDUSTRIAL CLASSIFICATION: 1531 IRS NUMBER: 752386963 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14122 FILM NUMBER: 96598223 BUSINESS ADDRESS: STREET 1: 1901 ASCENSION BLVD STREET 2: STE 100 CITY: ARLINGTON STATE: TX ZIP: 76006 BUSINESS PHONE: 8178568200 10-Q 1 FORM 10-Q QUARTERLY REPORT FOR D.R. HORTON, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission File number 1-14112 D.R. HORTON, INC. ----------------- (Exact name of registrant as specified in its charter) Delaware 75-2386963 ------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1901 Ascension Blvd., Suite 100 Arlington, Texas 76006 ------------------------------- ---------- (Address of principal executive offices) (Zip Code) (817) 856-8200 -------------- (Registrant's telephone number, including area code) 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 X No APPLICABLE ONLY TO CORPORATE ISSUERS: 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 --32,359,836 shares as of July 24, 1996 PART I. FINANCIAL INFORMATION - - ------------------------------ ITEM 1. FINANCIAL STATEMENTS Incorporated herein is the following unaudited financial information: Consolidated Balance Sheets -- June 30, 1996, and September 30, 1995. Consolidated Statements of Income -- Three Months Ended June 30, 1996 and 1995; and Nine Months Ended June 30, 1996 and 1995. Consolidated Statements of Stockholders' Equity -- Nine Months Ended June 30, 1996. Consolidated Statements of Cash Flows -- Nine Months Ended ended June 30, 1996 and 1995. Notes to Consolidated Financial Statements ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. PART II. OTHER INFORMATION. - - ---------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. SIGNATURES. - - ---------- D.R. HORTON, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30 September 30, 1996 1995 ---- ---- (In thousands) (Unaudited) ASSETS Cash $29,607 $16,737 Inventories: Finished homes and construction in progress 223,654 182,772 Residential lots-developed and under development 114,445 98,824 Land held for development 1,312 1,312 ----- ----- 339,411 282,908 Property and equipment (net) 5,714 5,359 Earnest money deposits and other assets 12,412 10,680 Excess of cost over net assets acquired (net) 3,534 3,103 ----- ----- $390,678 $318,787 ======== ======== LIABILITIES Accounts payable $34,561 $29,312 Accrued expenses and customer deposits 16,829 13,523 Notes payable 171,014 169,879 ------- ------- 222,404 212,714 STOCKHOLDERS' EQUITY Preferred stock, $.10 par value, 30,000,000 shares authorized, no shares issued. - - Common stock, $.01 par value, 100,000,000 shares authorized, 32,359,750 at June 30, 1996 and 25,437,067 at September 30, 1995, issued and outstanding. 324 254 Additional capital 159,758 91,635 Retained earnings 8,192 14,184 ----- ------ 168,274 106,073 ------- ------- $390,678 $318,787 ======== ======== See accompanying notes to consolidated financial statements. D.R. HORTON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Nine Months Ended June 30, Ended June 30, ------------- -------------- 1996 1995 1996 1995 ---- ---- ---- ---- (In thousands, except net income per share) (Unaudited) Revenues $143,283 $120,529 $378,393 $304,561 Cost of sales 117,386 98,882 310,788 250,907 ------- ------ ------- ------- 25,897 21,647 67,605 53,654 Selling, general and administrative expense 14,101 11,953 38,674 31,926 ------ ------ ------ ------ Operating income 11,796 9,694 28,931 21,728 Other: Interest expense (216) (560) (1,157) (560) Other income 449 209 1,046 265 --- --- ----- --- 233 (351) (111) (295) --- ---- ---- ---- INCOME BEFORE INCOME TAXES 12,029 9,343 28,820 21,433 Provision for income taxes 4,595 3,253 10,849 7,575 ----- ----- ------ ----- NET INCOME $7,434 $6,090 $17,971 $13,858 ====== ====== ======= ======= Net income per share $0.23 $0.22 $0.58 $0.50 ===== ===== ===== ===== Weighted average number of shares of common stock and common stock equivalents outstanding 32,972 27,841 30,903 27,738 ====== ====== ====== ====== See accompanying notes to consolidated financial statements. D.R. HORTON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Total Common Additional Retained Stockholders' Stock Capital Earnings Equity ----- ------- ------- ------ (In thousands) (Unaudited) Balances at October 1, 1995 $254 $91,635 $14,184 $106,073 Eight percent stock dividend 24 23,938 (23,963) (1) Net income - - 17,971 17,971 Issuance of 4,375,000 shares of common stock 44 43,215 - 43,259 Issuance under employee benefit plans - 275 - 275 Exercise of stock options 2 695 697 --------------------------------- Balances at June 30, 1996 $324 $159,758 $8,192 $168,274 ================================= See accompanying notes to consolidated financial statements. D.R. HORTON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended June 30, -------------- 1996 1995 ---- ---- (In thousands) (Unaudited) OPERATING ACTIVITIES Net income $17,971 $13,858 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,156 1,414 Expense associated with issuance of stock under employee benefit plans 159 174 Changes in operating assets and liabilities: Increase in inventories (56,503) (36,241) Increase in earnest money deposits and other assets (1,807) (237) Decrease in accounts payable, accrued expenses and customer deposits 8,444 2,744 ----- ----- NET CASH USED IN OPERATING ACTIVITIES (29,580) (18,288) ------- ------- INVESTING ACTIVITIES Purchase of property and equipment (2,382) (1,842) Additional costs over net assets of acquisitions (560) - ---- ----- NET CASH USED IN INVESTING ACTIVITIES (2,942) (1,842) ------ ------ FINANCING ACTIVITIES Proceeds from notes payable 225,093 192,836 Repayment of notes payable (223,703) (151,683) Issuance of common stock 43,259 - Issuance of common stock associated with Employee Stock Purchase Plan 46 - Proceeds from exercise of stock options 697 368 --- --- NET CASH PROVIDED BY FINANCING ACTIVITIES 45,392 41,521 ------ ------ INCREASE IN CASH 12,870 21,391 Cash at beginning of period 16,737 11,190 ------ ------ Cash at end of period $29,607 $32,581 ======= ======= Supplemental cash flow information: Interest paid $10,553 $7,863 ======= ====== Income taxes paid $11,218 $6,493 ======= ====== See accompanying notes to consolidated financial statements. D.R. HORTON, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) June 30, 1996 NOTE A - BASIS OF PRESENTATION The accompanying unaudited, consolidated financial statements include the accounts of D.R. Horton, Inc. (the "Company") and its subsidiaries, all of which are majority owned. Intercompany accounts and transactions have been eliminated in consolidation. The statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended June 30, 1996, are not necessarily indicative of the results that may be expected for the year ending September 30, 1996. NOTE B - NET INCOME PER SHARE Net income per share for the three and nine month periods ended June 30, 1996 and 1995, is based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. On August 15, 1995, the Board of Directors declared a seven-for-five stock split effected in the form of a 40% stock dividend on the Company's common stock. The seven-for-five stock split was paid on September 16, 1995, to stockholders of record on August 31, 1995. On April 23, 1996, the Board of Directors declared an eight percent common stock dividend, which was paid on May 24, 1996, to stockholders of record on May 8, 1996. Earnings per share and weighted average shares outstanding for the three and nine month periods ended June 30, 1995, have been restated to reflect the seven-for-five stock split and the eight percent stock dividend. NOTE C - PROVISIONS FOR INCOME TAXES Deferred tax liabilities and assets, arising from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, consist primarily of differences in depreciation, warranty costs and inventory cost capitalization methods and were, as of June 30, 1996, not significant. The provisions for income tax expense for the three and nine month periods ended June 30, 1996 and 1995, are based on the effective tax rates estimated to be in effect for the respective years. The deferred income tax provisions were not significant in either period. The difference between income tax expense and tax computed by applying the statutory Federal income tax rate to income before income taxes is due primarily to the effect of applicable state income taxes. NOTE D - INTEREST Three months ended Nine months ended June 30, June 30, -------- -------- 1996 1995 1996 1995 ---- ---- ---- ---- (In thousands) Capitalized interest, beginning of period $9,855 $6,912 $7,118 $4,325 Interest incurred 3,343 2,753 10,897 8,458 Interest expensed: Directly (216) (560) (1,157) (560) Amortized to cost of sales (2,153) (2,091) (6,029) (5,209) ------ ------ ------ ------ Capitalized interest, end of period $10,829 $7,014 $10,829 $7,014 ======= ====== ======= ====== Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS The following tables set forth certain operating and financial data for the Company:
Percentages of Revenue ------------------------------------ Three Nine Months Ended Months Ended June 30, June 30, --------------- -------------- 1996 1995 1996 1995 ---- ---- ---- ---- Costs and expenses: Cost of sales 81.9 % 82.0 % 82.1 % 82.4 % Selling, general and administra- tive expense 9.8 9.9 10.2 10.5 Interest expense 0.2 0.5 0.3 0.2 --- --- --- --- Total costs and expenses 91.9 92.4 92.6 93.1 Other (income) (0.3) (0.2) (0.2) (0.1) ---- ---- ---- ---- Income before income taxes 8.4 7.8 7.6 7.0 Income taxes 3.2 2.7 2.9 2.5 --- --- --- --- Net income 5.2 % 5.1 % 4.7 % 4.5 % === === === ===
New sales contracts, net Homes in of cancellations Home closings sales backlog ----------------------------- -------------------------- -------------- Three Nine Three Nine Months Ended Months Ended Months Ended Months Ended As of June 30, June 30, June 30, June 30, June 30, -------- -------- -------- -------- -------- 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Mid-Atlantic (North and South Carolina, Washington, D.C.) 127 92 405 260 136 94 407 267 196 224 Midwest (Illinois, Kansas, Minnesota, Missouri, Ohio) 157 95 430 244 131 86 266 232 278 135 Southeast (Alabama, Florida, Georgia) 129 104 385 286 136 108 382 210 193 144 Southwest (Arizona, New Mexico, Texas) 389 348 1,019 891 300 316 901 816 535 475 West(California, Colorado, Nevada, Utah) 194 63 484 191 157 75 333 177 232 59 --- -- ----- ----- --- -- ----- ----- ----- ----- Totals 996 702 2,723 1,872 860 679 2,289 1,702 1,434 1,037 === === ===== ===== === === ===== ===== ===== =====
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995 Revenues for the three months ended June 30, 1996, increased by 18.9%, to $143.3 million, from $120.5 million in the comparable period of 1995. The number of homes closed by the Company increased by 26.7%, to 860 homes in the three months ended June 30, 1996, from 679 in the same period of 1995. Large percentage increases in the number of homes closed were achieved in each of the Company's market regions except for the Southwest region, which declined 5.1%. The average selling price of homes closed declined 5.9%, to $166,200 in the three months ended June 30, 1996, from $176,600 in the same period of 1995. The decrease in average sales price was attributable to differences in the geographic mix of markets in which homes were closed, to the introduction of new product lines with lower average selling prices, and to closings from the Greensboro and Birmingham markets, acquired in the last quarter of fiscal 1995, where homes are generally priced lower than the Company's overall average selling prices. New net sales contracts increased 41.9%, to 996 homes for the three months ended June 30, 1996, from 702 homes for the three months ended June 30, 1995. The 1996 quarterly average sales price approximated $167,600, compared to $175,300 for the same period of the prior year. The Company was operating in 180 subdivisions at June 30, 1996, compared to 146 subdivisions at June 30, 1995. At June 30, 1996, the Company's backlog of sales contracts was 1,434 homes, a 38.3% increase over comparable figures at June 30, 1995. Because large, more expensive homes require longer construction periods, the average sales value of homes in backlog increased to $174,000 at June 30, 1996, from $170,600 at June 30, 1995, after consideration for the sales backlog included in the 1995 Greensboro acquisition. Cost of sales increased by 18.7%, to $117.4 million in the three months ended June 30, 1996, from $98.9 million in the comparable period of 1995. The increase was attributable to the increase in revenues. As a percentage of revenues, cost of sales for the quarter decreased to 81.9% in 1996 from 82.0% in 1995. Selling, general and administrative (SG&A) expense increased by 18.0%, to $14.1 million in the three months ended June 30, 1996, from $12.0 million in the comparable period of 1995. As a percentage of revenues, SG&A expense for the quarter decreased 0.1%, to 9.8% in 1996 from 9.9% in 1995. Interest expense totalled $0.2 million in the three months ended June 30, 1996, compared to $0.6 million in the comparable period of 1995. The Company's stock offering in January 1996, allowed the Company to invest an incremental $43 million of equity in inventory without increasing debt, thereby limiting incurred interest. The Company follows a policy of capitalizing interest only on inventory under construction or development. Capitalized interest and other financing costs are included in cost of sales at the time of home closings. Other income, which consists mainly of interest income and the pre-tax earnings of DRH Title Company of Texas, Ltd. and DRH Mortgage Company, Ltd., increased to $449,000 in the three months ended June 30, 1996, from $209,000 in the same period of 1995. The provision for income taxes increased by 41.3%, to $4.6 million in the three months ended June 30, 1996, from $3.3 million in the comparable period of 1995, due primarily to an increase in the overall estimated income tax rate anticipated for fiscal 1996. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine Months Ended June 30, 1996 Compared to Nine Months Ended June 30, 1995 Revenues for the nine months ended June 30, 1996, increased by 24.2%, to $378.4 million, from $304.6 million in the comparable period of 1995. The number of homes closed by the Company increased by 34.5%, to 2,289 in the nine months ended June 30, 1996, from 1,702 in the same period of 1995. Percentage increases in the number of homes closed were achieved in each of the Company's market regions. There was a 6.5% decrease in the average selling price of homes closed, to $165,000 in the nine months ended June 30, 1996, from $176,400 in the same period of 1995. The decrease in average sales price was attributable to differences in the geographic mix of markets in which homes were closed, new product lines closed at lower average selling prices, and to closings from the Greensboro and Birmingham markets, acquired in the last quarter of fiscal 1995, where homes are generally priced lower than the Company's average selling prices in other markets. New net sales contracts increased 45.5%, to 2,723 homes for the nine months ended June 30, 1996, from 1,872 homes for the nine months ended June 30, 1995. Large percentage increases in new net sales contracts were achieved in each of the Company's market regions. The nine-month average sales price for 1996 approximated $167,900, compared to $176,600 for the same period of the prior year. Cost of sales increased by 23.9%, to $310.8 million in the nine months ended June 30, 1996, from $250.9 million in the comparable period of 1995. The increase was attributable to the increase in revenues, as the cost of sales as a percentage of revenues decreased to 82.1% in the nine months ended June 30, 1996, from 82.4% in the same period of 1995. Selling, general and administrative (SG&A) expense increased by 21.1%, to $38.7 million in the nine months ended June 30, 1996, from $31.9 million in the comparable period of 1995. As a percentage of revenues, SG&A expense decreased to 10.2% for the nine months ended June 30, 1996, from 10.5% for the same period of 1995. The decrease in SG&A expense as a percentage of revenues is due primarily to increased revenue growth during the 1996 period. Interest expense during the nine months ended June 30, 1996 amounted to $1.2 million, compared to $0.6 million in the comparable period of 1995. The Company follows a policy of capitalizing interest only on inventory under construction or development. Capitalized interest and other financing costs are included in cost of sales at the time of home closings. Other income, which consists mainly of interest income and pre-tax earnings of DRH Title Company of Texas, Ltd. and DRH Mortgage Company, Ltd., increased to $1,046,000 in the nine months ended June 30, 1996, from $265,000 in the same period of 1995. The increase is due primarily to the fact that the 1995 period includes only three months of DRH Title Company's results of operations, from its April 1995 formation through June 30, 1995. The provision for income taxes increased by 43.2%, to $10.8 million in the nine months ended June 30, 1996, from $7.6 million in the comparable period of 1995, due primarily to an increase in the overall estimated income tax rate anticipated for fiscal 1996. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES At June 30, 1996, the Company had available cash and cash equivalents of $29.6 million. Inventories (including finished homes, construction in progress, and developed residential lots and other land) at June 30, 1996, had increased by $56.5 million (20.0%) since September 30, 1995, to $339.4 million. The increase was due primarily to the fact that the Company was operating in more markets and subdivisions. The Company financed the inventory increase by borrowing, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS retaining earnings and the $43.3 million net proceeds of a public stock offering in January 1996. As a result, the Company's ratio of notes payable to total capital at June 30, 1996, was 50.4%, compared to the September 30, 1995 ratio of 61.6%. The Company's equity to total assets ratio was 43.1% at June 30, 1996, compared to the September 30, 1995 ratio of 33.3%. The Company's financing needs depend upon the results of its operations, sales volume, inventory levels, and inventory turnover. Historically, the Company has financed its operations through borrowings from financial institutions, through retaining earnings, and from the sale of common stock. At June 30, 1996, the Company had outstanding debt of $171.0 million. Substantially all of that amount represents borrowings under the terms of the Company's new $260 million unsecured bank credit facility, which was consummated in April 1996. The new facility consists of a $100 million five-year term loan, a $150 million three-year revolving loan and a $10 million three-year letter of credit facility. The Company also has $10 million in additional borrowing capacity under a separate unsecured bank revolving credit facility. The completion of the January public sale of common stock and the new credit facilities provide the Company with a strong financial position, with resources adequate to fund near-term growth objectives. Except for ordinary expenditures for the construction of homes, the acquisition of land and lots for development and sale of homes, at June 30, 1996, the Company had no material commitments for capital expenditures. PART II. OTHER INFORMATION ITEM 1-5. Inapplicable ITEM 6 Exhibits and Reports on Form 8-K. (a) Exhibits. None. (b) Reports on Form 8-K. None. SIGNATURES 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. - - ----------------- (Registrant) Date: July 24, 1996 By: David J. Keller ------------- --------------- (Signature) David J. Keller, on behalf of D.R. Horton,Inc. and as Executive Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) EX-27 2 FDS FOR 3RD QTR 10-Q
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets and Consolidated Statements of Income found on pages 3 and 4 of the Company's Form 10-Q for the year-to-date, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS SEP-30-1995 Oct-01-1995 JUN-30-1996 29,607 0 0 0 339,411 369,018 5,714 0 390,678 51,390 171,014 0 0 324 167,950 390,678 378,393 378,393 310,788 310,788 0 0 1,157 28,820 10,849 17,971 0 0 0 17,971 .58 0
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