FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the Quarterly Period Ended December 31, 1997
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the Transition Period From To
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Commission file number 1-14122
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D.R. HORTON, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-2386963
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 Ascension Blvd., Suite 100, Arlington, Texas 76006
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(Address of principal executive offices) (Zip Code)
(817) 856-8200
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
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 -- 37,352,713 shares as of January 26, 1998
This Report contains 14 pages.
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<PAGE>
INDEX
D.R. HORTON, INC.
PART I. FINANCIAL INFORMATION. Page
ITEM 1. Financial Statements.
Consolidated Balance Sheets--December 31, 1997
and September 30, 1997. 3
Consolidated Statements of Income--Three Months Ended
December 31, 1997 and 1996. 4
Consolidated Statement of Stockholders' Equity--Three
Months Ended December 31, 1997. 5
Consolidated Statements of Cash Flows--Three Months
Ended December 31, 1997 and 1996. 6
Notes to Consolidated Financial Statements. 7-8
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition. 9-12
PART II. OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K. 13
SIGNATURES. 14
<PAGE>
<TABLE>
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, September 30,
1997 1997
------------ -------------
(In thousands)
(Unaudited)
ASSETS
<S> <C> <C>
Cash $ 40,362 $ 43,984
Inventories:
Finished homes and construction in progress 379,779 342,911
Residential lots - developed and under development 271,896 260,198
Land held for development 1,482 1,482
------- --------
653,157 604,591
Property and equipment (net) 12,892 13,124
Earnest money deposits and other assets 28,617 29,502
Excess of cost over net assets acquired (net) 30,049 28,593
------- -------
$765,077 $719,794
======= =======
<CAPTION>
LIABILITIES
<S> <C> <C>
Accounts payable $ 53,640 $ 55,499
Accrued expenses and customer deposits 46,137 46,200
Notes payable 392,078 355,315
------- -------
491,855 457,014
<CAPTION>
STOCKHOLDERS' EQUITY
<S> <C> <C>
Preferred stock, $.10 par value, 30,000,000 shares
authorized, no shares issued - -
Common stock, $.01 par value, 100,000,000 shares
authorized, 37,352,663 at December 31, 1997,
and 37,319,184 at September 30, 1997, issued
and outstanding. 374 373
Additional capital 211,096 210,742
Retained earnings 61,752 51,665
------- -------
273,222 262,780
------- -------
$765,077 $719,794
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
<TABLE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months
Ended December 31,
-----------------------
1997 1996
-------- --------
(In thousands, except
net income per share)
(Unaudited)
<S> <C> <C>
Revenues $231,152 $144,381
Cost of sales 187,212 118,036
------- -------
43,940 26,345
Selling, general and administrative expense 25,703 15,117
------- -------
Operating income 18,237 11,228
Other:
Interest expense (1,169) (784)
Other income 726 715
------- -------
(443) (69)
------- -------
INCOME BEFORE INCOME TAXES 17,794 11,159
Provision for income taxes 6,960 4,352
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NET INCOME $ 10,834 $ 6,807
======= =======
Net income per share
Basic $ 0.29 $ 0.21
======= =======
Diluted $ 0.28 $ 0.21
======= =======
Weighted average number of shares of common stock
and common stock equivalents outstanding
Basic 37,337 32,375
======= =======
Diluted 38,789 33,003
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
<TABLE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Total
Common Additional Retained Stockholders'
Stock Capital Earnings Equity
------------------------------------------
(In thousands)
(Unaudited)
<S> <C> <C> <C> <C>
Balances at October 1, 1997 $373 $210,742 $51,665 $262,780
Net income - - 10,834 10,834
Issuance under D.R. Horton, Inc.
employee benefit plans - 2 - 2
Exercise of stock options 1 352 - 353
Cash dividends - - (747) (747)
------------------------------------------
Balances at December 31, 1997 $374 $211,096 $61,752 $273,222
==========================================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
<TABLE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months
Ended December 31,
-----------------------
1997 1996
-------- --------
(In thousands)
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 10,834 $ 6,807
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,559 739
Expense associated with issuance of stock
under employee benefit plans 115 133
Changes in operating assets and liabilities:
Increase in inventories (49,143) (30,262)
Decrease (increase) in earnest money deposits
and other assets 772 (1,750)
Decrease in accounts payable, accrued expenses
and customer deposits (2,037) (4,167)
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NET CASH USED IN OPERATING ACTIVITIES (37,900) (28,500)
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INVESTING ACTIVITIES
Net purchase of property and equipment (830) (501)
Net cash paid for acquisitions (1,851) (17,737)
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NET CASH USED IN INVESTING ACTIVITIES (2,681) (18,238)
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FINANCING ACTIVITIES
Proceeds from notes payable 54,009 46,372
Repayment of notes payable (16,658) (17,178)
Proceeds from exercise of stock options 355 202
Payment of cash dividends (747) -
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NET CASH PROVIDED BY FINANCING ACTIVITIES 36,959 29,396
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INCREASE (DECREASE) IN CASH (3,622) (17,342)
Cash at beginning of period 43,984 32,467
------- -------
Cash at end of period $ 40,362 $ 15,125
======= =======
Supplemental cash flow information:
Interest paid $ 10,791 $ 3,578
======= =======
Income taxes paid $ 6,273 $ 4,505
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
December 31, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements include the
accounts of D.R. Horton, Inc. (the "Company") and its subsidiaries. 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 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 period ended December
31, 1997, are not necessarily indicative of the results that may be expected for
the year ending September 30, 1998.
NOTE B - NET INCOME PER SHARE
Basic net income per share for the three month periods ended December 31, 1997
and 1996, is based on the weighted average number of shares of common stock
outstanding. Diluted net income per share is based on the weighted average
number of shares of common stock and dilutive common stock equivalents
outstanding.
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 December 31, 1997, not significant.
The provisions for income tax expense for the three month periods ended December
31, 1997 and 1996, 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
<TABLE>
<CAPTION>
Three months ended
December 31,
------------------
1997 1996
-------- -------
Interest costs are (in thousands):
<S> <C> <C>
Capitalized interest, beginning of period $17,995 $11,042
Interest incurred 8,292 3,872
Interest expensed:
Directly (1,169) (784)
Amortized to cost of sales (3,851) (2,057)
------ ------
Capitalized interest, end of period $21,267 $12,073
======= =======
</TABLE>
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<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 1997
NOTE E - PENDING ACQUISITIONS
On December 18, 1997, D.R. Horton, Inc. and Continental Homes Holding Corp.
announced that they had entered into a definitive agreement and plan of merger
pursuant to which Continental would be merged into Horton. The ratio of Horton
shares to be exchanged for Continental shares will be determined based on the
average of Horton's closing stock prices for fifteen randomly selected trading
days within the thirty consecutive trading days ending five days prior to the
closing date. The merger with Continental will be treated as a pooling of
interests for accounting purposes.
On January 14, 1998, D.R. Horton, Inc. announced an agreement in principle to
acquire the outstanding stock of C. Richard Dobson Builders, Inc. (Dobson), and
certain of its affiliated companies, for the lesser of $22.9 million or 1.5
times Dobson's book value at the time of the acquisition. In addition, D.R.
Horton will repay Dobson's net debt, which approximated $45.0 million at August
31, 1997. This transaction will be treated as a purchase for accounting
purposes.
Both these transactions are expected to close during the Company's second fiscal
quarter.
NOTE F - SUMMARIZED FINANCIAL INFORMATION
The 8 3/8% senior notes payable, due June, 2004, in the aggregate principal
amount of $150,000,000, are fully and unconditionally guaranteed, on a joint and
several basis, by all the Company's direct and indirect subsidiaries other than
certain inconsequential subsidiaries. Each of the guarantors is a wholly-owned
subsidiary of the Company. Summarized financial information of the Company and
its subsidiaries is presented below. Separate financial statements and other
disclosures concerning the guarantor subsidiaries are not presented because
management has determined that they are not material to investors.
As of and for the period ended: (In thousands)
<TABLE>
<CAPTION>
December 31, 1997 (Unaudited)
D.R. Horton, Guarantor Nonguarantor Intercompany
Inc. Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total assets............ $663,954 $470,890 $ 1,375 ($371,142) $765,077
Total liabilities....... 435,648 426,180 334 (370,307) 491,855
Revenues................ 68,336 162,816 418 (418) 231,152
Gross profit............ 10,490 33,450 342 (342) 43,940
Net income.............. 9,564 20,005 265 (19,000) 10,834
<CAPTION>
December 31, 1996 (Unaudited)
D.R. Horton, Guarantor Nonguarantor Intercompany
Inc. Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total assets............ $383,090 $233,960 $ 1,648 ($172,844) $445,854
Total liabilities....... 226,083 206,361 599 (171,969) 261,074
Revenues................ 54,509 89,872 366 (366) 144,381
Gross profit............ 9,887 16,458 312 (312) 26,345
Net income.............. 3,614 11,307 230 (8,344) 6,807
<CAPTION>
September 30, 1997
D.R. Horton, Guarantor Nonguarantor Intercompany
Inc. Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total assets............ $619,586 $456,323 $ 2,065 ($358,180) $719,794
Total liabilities....... 395,803 417,284 1,272 (357,345) 457,014
Revenues................ 286,568 550,712 1,513 (1,513) 837,280
Gross profit............ 51,485 100,454 1,226 (1,226) 151,939
Net income.............. 34,521 70,942 909 (70,168) 36,204
</TABLE>
-8-
<PAGE>
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:
<TABLE>
<CAPTION>
Percentages of
Revenue
---------------
Three
Months Ended
December 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Costs and expenses:
Cost of sales 81.0% 81.8%
Selling, general and administrative expense 11.1 10.5
Interest expense 0.5 0.5
---- ----
Total costs and expenses 92.6 92.8
Other (income) (0.3) (0.5)
---- ----
Income before income taxes 7.7 7.7
Income taxes 3.0 3.0
---- ----
Net income 4.7% 4.7%
==== ====
</TABLE>
<TABLE>
<CAPTION>
New sales
contracts, net Homes in
of cancellations Home closings sales backlog
---------------- ------------- -------------
Three Three
Months Ended Months Ended As of
December 31, December 31, December 31,
---------------- ------------- -------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Mid-Atlantic (Maryland,
New Jersey, North and
South Carolina, Virginia) 296 108 250 116 380 214
Midwest (Illinois, Kansas,
Minnesota, Missouri, Ohio) 131 89 106 105 205 168
Southeast (Alabama, Florida,
Georgia, Tennessee) 425 100 436 130 403 134
Southwest (Arizona, New Mexico,
Texas) 334 265 353 333 426 421
West (California, Colorado,
Nevada, Utah) 354 189 285 171 489 271
----- ----- ----- ----- ----- -----
Totals 1,540 751 1,430 855 1,903 1,208
===== ===== ===== ===== ===== =====
</TABLE>
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Three Months Ended December 31, 1997 Compared to Three Months Ended December 31,
1996
Revenues for the three months ended December 31, 1997, increased by 60.1%, to
$231.2 million, from $144.4 million for the comparable period of 1996. The
number of homes closed by the Company increased by 67.3% to 1,430 homes in the
three months ended December 31, 1997, from 855 homes in the same period of 1996.
Percentage increases in home closings ranging from 1.0% to 260.8% were achieved
in the Company's market regions. The increases in both revenues and homes closed
were due in part to the Torrey Group (Torrey), which was acquired in February,
1997. In the three months ended December 31, 1997, Torrey closed 441 homes, with
revenues totalling $64.2 million. Torrey comprised 30.8% of the homes closed in
the period, and 27.8% of the revenues generated. Excluding Torrey, revenues
increased by 15.6%, to $167.0 million in the three months ended December 31,
1997.
The average selling price of homes closed in the three months ended December 31,
1997, was $161,400, a decrease of 4.3% from the $168,700 selling price in the
comparable period of 1996. The decrease in the average home selling price was
due primarily to Torrey, whose home closings were at lower price points.
New net sales contracts increased 105.1%, to 1,540 homes for the three months
ended December 31, 1997, from 751 homes for the three months ended December 31,
1996. The dollar amount of new net sales contracts increased 98.8%, to $258.0
million. Percentage increases in new net sales contracts ranging from 26.0% to
325.0% were achieved in the Company's market regions. Torrey had 461 home sales
contracts during the current period. Excluding Torrey, sales contracts were
1,079 homes in the current three-month period, a 43.7% increase over 1996.
The Company was operating in 373 subdivisions at December 31, 1997, compared to
225 subdivisions at December 31, 1996. At December 31, 1997, the Company's
backlog of sales contracts was 1,903 homes, a 57.5% increase over comparable
figures at December 31, 1996. At December 31, 1997, Torrey had 433 homes in
sales backlog. Excluding Torrey, the sales backlog at December 31, 1997, was
1,470 homes, a 21.7% increase over 1996.
Cost of sales increased by 58.6%, to $187.2 million in the three months ended
December 31, 1997, from $118.0 million in the comparable period of 1996. The
increase was attributable to the increase in revenues. As a percentage of
revenues, cost of sales for the quarter decreased to 81.0% in 1997 from 81.8% in
1996. The decrease in cost of sales as a percentage of revenues is due to an
overall improved sales environment and the effect of purchase accounting
adjustments requiring the Company to increase its basis in the inventories
acquired with the Trimark Communities, L.L.C. (Trimark) and SGS Communities,
Inc. (SGS) acquisitions in the 1996 period.
Selling, general and administrative (SG&A) expense increased by 70.0%, to $25.7
million in the three months ended December 31, 1997, from $15.1 million in the
comparable period of 1996. As a percentage of revenues, SG&A expense increased
to 11.1% in 1997, from 10.5% in 1996. This increase was caused by the rapid
growth of the Company and by continued absorption of overhead associated with
Torrey.
Interest expense amounted to $1.2 million in the three months ended December 31,
1997, compared to $0.8 million in the comparable period of 1996. The Company
follows a policy of capitalizing interest only on inventory under construction
or development. During the three months ended December 31, 1997 and 1996, the
Company expensed a portion of incurred interest and other financing costs due to
increased levels of developed lots and finished homes. 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 the DRH Title Companies and DRH Mortgage Company, Ltd., increased to $726,000
in the three months ended December 31, 1997, from $715,000 for the comparable
period of 1996.
The provision for income taxes was $7.0 million in the three months ended
December 31, 1997, up $2.6 million from the $4.4 million for the comparable
quarter of 1996. The increase in income taxes was attributable to the increase
in income before income taxes and an increase in the estimated effective income
tax rate anticipated for fiscal 1998.
-10-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had available cash and cash equivalents of
$40.4 million. Inventories (including finished homes and construction in
progress, developed residential lots and other land) at December 31, 1997,
increased by $48.6 million from September 30, 1997, due to a general increase in
business activity and the expansion of operations in the newer market areas.
Because the inventory increase was financed largely by borrowing, the Company's
ratio of notes payable to total capital increased to 58.9% at December 31, 1997,
from 57.5% at September 30, 1997. The equity to total assets ratio decreased
slightly during the three months, to 35.7% at December 31, 1997, from 36.5% at
September 30, 1997.
The Company's financing needs depend upon the results of its operations, sales
volume, inventory levels, inventory turnover, and acquisitions. The Company has
financed its operations through borrowings from financial institutions, through
the sale of public debt securities, through funds from earnings, and, in 1992,
1996 and 1997, from the sale of common stock.
At December 31, 1997, the Company has $625 million of unsecured borrowing
capacity, consisting of a $200 million five-year term loan, a $400 million
revolving loan, and a $25 million annual revolving loan. The Company's credit
facilities also include $150,000,000 of 8 3/8% Senior Notes due 2004.
At December 31, 1997, the Company had outstanding debt under the unsecured bank
facilities, senior notes, and other credit agreements, of $392.1 million, of
which $240.0 million represented advances under existing bank credit facilities.
Based upon the most restrictive existing debt covenants, at December 31, 1997,
the Company had additional borrowing capacity of $120.0 million.
On December 18, 1997, D.R. Horton, Inc. and Continental Homes Holding Corp.
announced that they had entered into a definitive agreement and plan of merger
pursuant to which Continental would be merged into Horton. The ratio of Horton
shares to be exchanged for Continental shares will be determined based on the
average of Horton's closing stock prices for fifteen randomly selected trading
days within the thirty consecutive trading days ending five days prior to the
closing date. The merger with Continental will be treated as a pooling of
interests for accounting purposes.
On January 14, 1998, D.R. Horton, Inc. announced an agreement in principle to
acquire the outstanding stock of C. Richard Dobson Builders, Inc. (Dobson), and
certain of its affiliated companies, for the lesser of $22.9 million or 1.5
times Dobson's book value. In addition, D.R. Horton will repay Dobson's net
debt, which approximated $45.0 million at August 31, 1997. This transaction will
be treated as a purchase for accounting purposes.
Both the Continental merger and the purchase of Dobson are expected to close
during the Company's second fiscal quarter.
The Company's rapid growth requires significant amounts of cash. It is
anticipated that future home construction, lot and land purchases and
acquisitions will be funded through internally generated funds and new and
existing borrowing relationships. The Company continuously evaluates its capital
structure and, in the future, may seek to further increase unsecured debt and
obtain additional equity to fund ongoing operations as well as to pursue
additional growth opportunities.
Except for ordinary expenditures for the construction of homes and, to a limited
extent, the acquisition of land and lots for development and sale of homes, at
December 31, 1997, the Company had no material commitments for capital
expenditures.
-11-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Safe Harbor Statement
Certain statements in this Quarterly Report on Form 10-Q, as well as statements
made by the Company in periodic press releases, and oral statements made by the
Company's officials to analysts and stockholders in the course of presentations
about the Company, may be construed as "Forward-Looking Statements" as defined
in the Private Securities Litigation Reform Act of 1995. Such statements may
involve unstated risks, uncertainties and other factors that may cause actual
results to differ materially from those initially anticipated. Such risks,
uncertainties and other factors include, but are not limited to, changes in
general economic conditions, fluctuations in interest rates, increases in costs
of material, supplies and labor and general competitive conditions.
-12-
<PAGE>
PART II. OTHER INFORMATION.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
2.1 Agreement and Plan of Merger, dated as of December 18, 1997,
by and between the Registrant and Continental Homes Holding
Corp. The Registrant agrees to furnish supplementally a copy
of omitted schedules to the Commission upon request (1).
10.1 First Amended and Restated Master Loan and Intercreditor
Agreement, dated as of December 19, 1997, among D.R. Horton,
Inc., as Borrower, NationsBank, N.A., Bank of America
National Trust and Savings Association, Fleet National Bank,
Bank United, Comerica Bank, The First National Bank of
Chicago, Credit Lyonnais New York Branch, PNC Bank, National
Association, Amsouth Bank of Alabama, Bank One, Arizona, NA,
Societe Generale, Southwest Agency, First American Bank
Texas, SSB, Harris Trust and Savings Bank, and Sanwa Bank
California as Banks; and NationsBank, N.A., as Administrative
Agent (2).
------------
(1) Incorporated by reference from Exhibit 2.1 to the Registrant's
Registration Statement on Form S-4, filed with the Commission
on January 15, 1998.
(2) Filed herewith.
(b) Reports on Form 8-K.
The Registrant filed a Current Report on Form 8-K dated
December 19, 1997.
-13-
<PAGE>
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.
Date: January 27, 1998 By /s/ David J. Keller
----------------------
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)
-14-
Exhibit 10.1
FIRST AMENDED AND RESTATED
MASTER LOAN AND INTERCREDITOR AGREEMENT
THIS FIRST AMENDED AND RESTATED MASTER LOAN AND INTERCREDITOR AGREEMENT
dated as of the 19th day of December, 1997 (the "Amendment") is made by and
among D.R. HORTON, INC., a Delaware corporation (the "Borrower"); NATIONSBANK,
N.A., BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, FLEET NATIONAL
BANK, BANK UNITED, COMERICA BANK, THE FIRST NATIONAL BANK OF CHICAGO, CREDIT
LYONNAIS NEW YORK BRANCH, PNC BANK, NATIONAL ASSOCIATION, AMSOUTH BANK OF
ALABAMA, BANK ONE, ARIZONA, NA, SOCIETE GENERALE, SOUTHWEST AGENCY, FIRST
AMERICAN BANK TEXAS, SSB, HARRIS TRUST AND SAVINGS BANK, and SANWA BANK
CALIFORNIA, as banks (collectively, the "Banks"); and NATIONSBANK, N.A., as
administrative agent for the Banks (in such capacity, the "Administrative
Agent").
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower, the Banks, the Administrative Agent, the Issuing
Bank (as defined therein), the Co-Agents (as defined therein), the Documentation
Agent (as defined therein), and the Syndication Agent (as defined therein) are
parties to that certain Master Loan and Intercreditor Agreement dated as of June
12, 1997 (the "Loan Agreement"); and
WHEREAS, the Borrower, the Banks and the Administrative Agent have
agreed to amend the Loan Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree that all capitalized terms used herein shall have the
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
Amendment to Section 5.7. Section 5.7 of the Loan Agreement, Financial and
Inventory Covenants, is hereby amended by deleting subsection (f)(ii) thereof in
its entirety and by inserting the word "[Intentionally Omitted]" in the place
thereof.
No Other Amendment or Waiver. Notwithstanding the agreement of the
Administrative Agent and the Banks to the terms and provisions of this
Amendment, the Borrower acknowledges and expressly agrees that this Amendment is
limited to the extent expressly set forth herein and shall not constitute a
modification of the Loan Agreement or a course of dealing at variance with the
terms of the Loan Agreement (other than as expressly set forth above) so as to
<PAGE>
require further notice by the Administrative Agent or the Banks, or any of them,
of its or their intent to require strict adherence to the terms of the Loan
Agreement in the future. All of the terms, conditions, provisions and covenants
of the Loan Agreement and the other Loan Documents shall remain unaltered and in
full force and effect except as expressly modified by this Amendment.
Counterparts. This Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such separate
counterparts shall together constitute one and the same instrument.
Loan Documents. Each reference in the Loan Agreement and in any other Loan
Document to the term "Loan Agreement" shall hereafter mean and refer to the Loan
Agreement as amended hereby or as the same may hereafter be amended
Governing Law. This Amendment shall be construed in accordance with and
governed by the laws of the State of Georgia, without giving effect to any
conflict of laws principles.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers or representatives to execute and deliver this
Amendment as of the day and year first above written, to be effective as of the
day and year first above written.
BORROWER: D.R. HORTON, INC., a Delaware corporation
By: /s/ David J. Keller
-------------------------------------
Its: Chief Financial Officer
-------------------------------
ADMINISTRATIVE AGENT NATIONSBANK, N.A., as Administrative Agent and
AND BANKS: as a Bank
By: /s/ Henry A. Dyer, Jr.
-------------------------------------
Its: Senior Vice President
-------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
SAVINGS ASSOCIATION, as a Bank
By: /s/ Elena Bennett
-------------------------------------
Its: Vice President
-------------------------------
FLEET NATIONAL BANK, as a Bank
By: /s/ Patrick T. Burns
-------------------------------------
Its: Vice President
-------------------------------
<PAGE>
BANK UNITED, as a Bank
By: /s/ Carolynn S. Alexander
-------------------------------------
Its: Regional Director
-------------------------------
COMERICA BANK, as a Bank
By: /s/ Kurt R. Strehlke
-------------------------------------
Its: Vice President
-------------------------------
CREDIT LYONNAIS NEW YORK BRANCH, as a Bank
By: /s/ Robert Ivosevich
-------------------------------------
Its: Senior Vice President
-------------------------------
THE FIRST NATIONAL BANK OF CHICAGO, as a Bank
By: /s/ Gregory A. Gilbert
-------------------------------------
Its: Vice President
-------------------------------
PNC BANK, NATIONAL ASSOCIATION, as a Bank
By: /s/ Douglas G. Paul
-------------------------------------
Its: Vice President
-------------------------------
<PAGE>
AMSOUTH BANK OF ALABAMA, as a Bank
By: /s/ Ronny Hudspeth
-------------------------------------
Its: Vice President
-------------------------------
BANK ONE, ARIZONA, NA, as a Bank
By: /s/ Jennifer Pescatore
-------------------------------------
Its: Vice President
-------------------------------
SOCIETE GENERALE, SOUTHWEST AGENCY, as a Bank
By: /s/ Louis P. Laville, III
-------------------------------------
Its: Vice President
-------------------------------
FIRST AMERICAN BANK TEXAS, SSB, as a Bank
By: /s/ William L. Kinard
-------------------------------------
Its: Vice President
-------------------------------
HARRIS TRUST AND SAVINGS BANK, as a Bank
By: /s/ Gregory M. Bins
-------------------------------------
Its: Vice President
-------------------------------
<PAGE>
SANWA BANK CALIFORNIA, as a Bank
By: /s/ Russ Wakeham
-------------------------------------
Its: Vice President
-------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 40,362
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 653,157
<CURRENT-ASSETS> 693,519
<PP&E> 12,892
<DEPRECIATION> 0
<TOTAL-ASSETS> 765,077
<CURRENT-LIABILITIES> 99,777
<BONDS> 0
0
0
<COMMON> 374
<OTHER-SE> 272,848
<TOTAL-LIABILITY-AND-EQUITY> 765,077
<SALES> 231,152
<TOTAL-REVENUES> 231,152
<CGS> 187,212
<TOTAL-COSTS> 187,212
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,169
<INCOME-PRETAX> 17,794
<INCOME-TAX> 6,960
<INCOME-CONTINUING> 10,834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,834
<EPS-PRIMARY> .29
<EPS-DILUTED> .28
</TABLE>
