Notes Payable

9 Months Ended

Jun. 30, 2011

Notes Payable [Abstract]

NOTES PAYABLE

NOTE F – NOTES PAYABLE

     The Company’s notes payable at their principal amounts, net of any unamortized discounts, consist of the following:

	June 30,		September 30,
	2011		2010
	(In millions)
Homebuilding:
Unsecured:
6% senior notes due 2011, net	$	—	$	70.1
7.875% senior notes due 2011, net		106.0		118.8
5.375% senior notes due 2012		—		146.6
6.875% senior notes due 2013		171.7		174.3
6.125% senior notes due 2014, net		145.2		146.0
2% convertible senior notes due 2014, net		411.3		391.9
5.625% senior notes due 2014, net		137.5		147.1
5.25% senior notes due 2015, net		189.1		199.7
5.625% senior notes due 2016, net		204.8		225.5
6.5% senior notes due 2016, net		392.7		430.1
Other secured		5.8		35.2
	$	1,764.1	$	2,085.3
Financial Services:
Mortgage repurchase facility, maturing 2012	$	116.3	$	86.5

   Homebuilding:

     In July 2010, the Board of Directors authorized the early repurchase of up to $500 million of the Company’s debt securities effective through July 31, 2011. At June 30, 2011, $241.7 million of the authorization was remaining. On August 1, 2011, the Board of Directors authorized the repurchase of up to $500 million of the Company’s debt securities effective through July 31, 2012.

     Following is a summary of the retirement activity related to the Company’s senior notes for the three and nine months ended June 30, 2011:

	Principal Amount
	Three Months		Nine Months
	Ended		Ended
	June 30, 2011		June 30, 2011
	(In millions)
Maturities:
6% senior notes, matured April 2011	$	70.1	$	70.1
Early Redemptions:
5.375% senior notes due 2012, redeemed April 2011		112.3		112.3
Repurchases:
7.875% senior notes due 2011		—		12.9
5.375% senior notes due 2012		—		34.3
6.875% senior notes due 2013		2.6		2.6
6.125% senior notes due 2014		—		1.0
5.625% senior notes due 2014		—		9.7
5.25% senior notes due 2015		—		10.8
5.625% senior notes due 2016		—		21.0
6.5% senior notes due 2016		—		37.5
Total repurchases		2.6		129.8
Total retirements	$	185.0	$	312.2

     These senior notes were redeemed or repurchased for an aggregate purchase price of $191.4 million and $322.4 million, respectively, plus accrued interest. The transactions resulted in a net loss on early retirement of debt of $6.5 million and $10.7 million for the three and nine months ended June 30, 2011, respectively, which included the write off of unamortized discounts and fees.

     During the quarter, the Company provided a deed in lieu of foreclosure on a parcel of undeveloped land, which secured a non-recourse note payable, in exchange for a return of the note payable. The Company’s basis in the inventory parcel and the balance of the note were both $17.5 million. There was no gain or loss on the transaction.

     The indentures governing the Company’s senior notes impose restrictions on the creation of secured debt and liens. At June 30, 2011, the Company was in compliance with all of the limitations and restrictions that form a part of the public debt obligations.

  Financial Services:

     The Company’s mortgage subsidiary, DHI Mortgage, has a mortgage repurchase facility that is accounted for as a secured financing. The mortgage repurchase facility provides financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to the counterparties against the transfer of funds by the counterparties, thereby becoming purchased loans. 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 120 days in accordance with the terms of the mortgage repurchase facility. The total capacity of the facility is $100 million; however, through a recent amendment to the repurchase agreement, the capacity was increased to $150 million for the period from June 29, 2011 through October 20, 2011, after which time it will return to $100 million. The maturity date of the facility is March 4, 2012.

     As of June 30, 2011, $258.1 million of mortgage loans held for sale were pledged under the mortgage repurchase facility. These mortgage loans had a collateral value of $242.1 million. DHI Mortgage has the option to fund a portion of its repurchase obligations in advance. As a result of advance paydowns totaling $125.8 million, DHI Mortgage had an obligation of $116.3 million outstanding under the mortgage repurchase facility at June 30, 2011 at a 3.8% annual interest rate.

     The mortgage repurchase facility is not guaranteed by either 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. At June 30, 2011, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facility.