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 June 30, 2000
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the Transition Period From ______________ To _______________
Commission file number 1-14122
---------
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)
-------------------------------------------------------------
(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 -- 61,832,433 shares as of August 8, 2000
-------------
This Report contains 20 pages.
----
<PAGE>
INDEX
D.R. HORTON, INC.
PART I. FINANCIAL INFORMATION. Page
------------------------------ ----
ITEM 1. Financial Statements.
Consolidated Balance Sheets--June 30, 2000 and
September 30, 1999. 3
Consolidated Statements of Income--Three Months
and Nine Months Ended June 30, 2000 and 1999. 4
Consolidated Statement of Stockholders' Equity--
Nine Months Ended June 30, 2000. 5
Consolidated Statements of Cash Flows--Nine Months
Ended June 30, 2000 and 1999. 6
Notes to Consolidated Financial Statements. 7-10
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition. 11-17
ITEM 3. Quantitative and Qualitative Disclosures about
Market Risk 18
PART II. OTHER INFORMATION.
---------------------------
ITEM 2. Changes in Securities. 19
ITEM 6. Exhibits and Reports on Form 8-K. 19
SIGNATURES. 20
----------
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, September 30,
2000 1999
---------- -------------
ASSETS (In thousands)
(Unaudited)
Homebuilding:
Cash........................................... $70,287 $122,208
Inventories:
Finished homes and construction in progress. 1,166,140 952,015
Residential lots - developed and
under development......................... 1,010,449 909,586
Land held for development .................. 5,897 4,507
----------- -----------
2,182,486 1,866,108
Property and equipment (net)................... 41,993 36,972
Earnest money deposits and other assets........ 145,527 96,807
Excess of cost over net assets acquired (net) 111,381 112,456
----------- -----------
2,551,674 2,234,551
----------- -----------
Financial Services:
Cash........................................... 8,857 6,360
Mortgage loans held for sale................... 99,929 113,786
Other assets................................... 7,464 7,111
----------- -----------
116,250 127,257
----------- -----------
$2,667,924 $2,361,808
=========== ===========
LIABILITIES
Homebuilding:
Accounts payable and other liabilities......... $362,090 $365,506
Notes payable:
Unsecured:
Revolving credit facility due 2002....... 415,000 395,000
8% senior notes due 2009, net............ 383,051 382,941
8 3/8% senior notes due 2004, net........ 148,448 148,150
10% senior notes due 2006, net........... 147,368 147,278
10 1/2% senior notes due 2005, net....... 199,265 --
Other secured............................ 13,693 12,904
----------- -----------
1,306,825 1,086,273
----------- -----------
1,668,915 1,451,779
Financial Services:
Accounts payable and other liabilities......... 3,893 3,268
Notes payable to financial institutions........ 82,201 104,350
----------- -----------
86,094 107,618
----------- -----------
1,755,009 1,559,397
----------- -----------
Minority interest.............................. 5,030 4,802
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value, 30,000,000
shares authorized, no shares issued........... -- --
Common stock, $.01 par value, 200,000,000
shares authorized, 64,415,074 at June 30, 2000
and 64,267,073 at September 30, 1999,
issued and outstanding ....................... 644 643
Additional capital............................. 420,857 419,259
Retained earnings.............................. 523,331 400,111
Treasury stock, 2,589,200 shares at
June 30, 2000 and 1,484,300 shares
at September 30, 1999, at cost ............... (36,947) (22,404)
----------- -----------
907,885 797,609
----------- -----------
$2,667,924 $2,361,808
=========== ===========
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Nine Months
Ended June 30, Ended June 30,
------------------ -------------------
2000 1999 2000 1999
------- ------ ------ ------
(In thousands, except net income per share)
(Unaudited)
Homebuilding:
Revenues
Home sales................ $930,786 $824,588 $2,493,314 $2,119,463
Land/lot sales............ 15,630 8,548 38,780 57,101
-------- -------- ---------- -----------
946,416 833,136 2,532,094 2,176,564
-------- -------- ---------- -----------
Cost of sales
Home sales................ 755,527 671,278 2,028,349 1,727,419
Land/lot sales............ 18,387 7,541 36,524 50,472
-------- -------- ---------- -----------
773,914 678,819 2,064,873 1,777,891
-------- -------- ---------- -----------
Gross profit
Home sales................ 175,259 153,310 464,965 392,044
Land/lot sales............ (2,757) 1,007 2,256 6,629
-------- -------- ---------- -----------
172,502 154,317 467,221 398,673
Selling, general and
administrative expense........ 97,243 81,753 262,073 219,344
Interest expense.............. 2,339 2,874 7,195 8,755
Other (income)................ (747) (57) (1,472) (1,781)
-------- -------- ---------- -----------
73,667 69,747 199,425 172,355
-------- -------- ---------- -----------
Financial Services:
Revenues...................... 12,800 9,814 34,926 26,097
Selling, general and
administrative expense........ 9,155 6,386 25,152 16,589
Interest expense.............. 1,485 1,403 4,191 2,815
Other (income)................ (1,700) (1,509) (4,723) (3,148)
-------- -------- ---------- -----------
3,860 3,534 10,306 9,841
-------- -------- ---------- -----------
INCOME BEFORE INCOME TAXES.. 77,527 73,281 209,731 182,196
Provision for income taxes.... 29,460 28,947 79,698 71,747
-------- -------- ---------- -----------
NET INCOME.................. $48,067 $44,334 $130,033 $110,449
======== ======== ========== ===========
Net income per share:
Basic..................... $0.78 $0.69 $2.09 $1.79
Diluted................... $0.77 $0.68 $2.08 $1.75
======== ======== ========== ===========
Weighted average number of
shares of stock outstanding:
Basic..................... 61,823 64,088 62,106 61,837
Diluted................... 62,321 64,919 62,581 63,175
======== ======== ========== ===========
Cash dividends per share...... $0.04 $0.03 $0.11 $0.0825
======== ======== ========== ===========
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Total
Common Additional Retained Treasury Stockholders'
Stock Capital Earnings Stock Equity
--------------------------------------------------
(In thousands)
(Unaudited)
Balances at October 1, 1999 $643 $419,259 $400,111 ($22,404) $797,609
Net income - - 130,033 - 130,033
Issuances under D.R. Horton,
Inc. employee benefit plans
(32,475 shares) - 346 - - 346
Exercise of stock options
(115,526 shares) 1 1,252 - - 1,253
Purchase of treasury stock
(1,104,900 shares) - - - (14,543) (14,543)
Dividends declared
($.11 per share) - - (6,813) - (6,813)
--------------------------------------------------
Balances at June 30, 2000 $644 $420,857 $523,331 ($36,947) $907,885
==================================================
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months
Ended June 30,
--------------------
2000 1999
--------- ---------
(In thousands)
(Unaudited)
OPERATING ACTIVITIES
Net income $130,033 $110,449
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 15,899 14,112
Amortization of debt premiums and fees 1,830 1,006
Changes in operating assets and liabilities:
Increase in inventories (305,929) (345,398)
Increase in earnest money deposits and other assets (33,220) (32,591)
Decrease/(increase)in mortgage loans held for sale 13,857 (30,163)
Increase/(decrease) in accounts payable and
other liabilities (2,563) 49,021
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (180,093) (233,564)
-------- --------
INVESTING ACTIVITIES
Net purchase of property and equipment (13,931) (16,120)
Net investment in venture capital entities (18,311) ---
Net cash paid for acquisitions (5,016) (1,125)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (37,258) (17,245)
-------- --------
FINANCING ACTIVITIES
Proceeds from notes payable 570,000 475,016
Repayment of notes payable (580,213) (591,164)
Issuance of Senior Notes payable 197,897 371,359
Repurchase of treasury stock (14,543) (3,976)
Proceeds from common stock offerings and
stock associated with certain employee
benefit plans 1,599 2,978
Payment of cash dividends (6,813) (5,164)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 167,927 249,049
-------- --------
DECREASE IN CASH (49,424) (1,760)
Cash at beginning of period 128,568 76,754
-------- --------
Cash at end of period $ 79,144 $ 74,994
======== ========
Supplemental cash flow information:
Interest paid, net of amounts capitalized $ 10,576 $ 10,596
======== ========
Income taxes paid $ 93,137 $ 74,207
======== ========
Supplemental disclosures of noncash activities:
Notes payable assumed related to acquisitions $ 0 $103,384
======== ========
Conversion of subordinated notes to common stock $ 0 $ 59,327
======== ========
Issuance of common stock related to acquisition $ 0 $ 55,000
======== ========
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 2000
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. Certain reclassifications have been made in prior years'
financial statements to conform to classifications used in the current year.
Operating results for the three and nine month periods ended June 30, 2000, are
not necessarily indicative of the results that may be expected for the year
ending September 30, 2000.
Business - The Company is a national builder that is engaged primarily in the
construction and sale of single-family housing in the United States. The Company
designs, builds and sells single-family houses on lots developed by the Company
and on finished lots which it purchases, ready for home construction.
Periodically, the Company sells land or lots it has developed. The Company also
provides title agency and mortgage brokerage services to its home buyers.
NOTE B - SEGMENT INFORMATION
The Company's financial reporting segments consist of homebuilding and financial
services. The Company's homebuilding operations comprise the most substantial
part of its business, with approximately 99% of consolidated revenues for the
three and nine months ended June 30, 2000 and 1999. The homebuilding operations
segment generates the majority of its revenues from the sale of completed homes
with a lesser amount from the sale of land and lots. The financial services
segment generates its revenues from originating and selling mortgages and
collecting fees for title insurance agency and closing services.
NOTE C - NET INCOME PER SHARE
Basic net income per share for the three and nine month periods ended June 30,
2000 and 1999, 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 securities outstanding.
The following table sets forth the computation of basic and diluted earnings per
share (in thousands):
Three months ended Nine months ended
June 30, June 30,
------------------- ------------------
2000 1999 2000 1999
------- ------- ------- -------
Denominator for basic
earnings per share---
weighted average shares 61,823 64,088 62,106 61,837
Effect of dilutive securities:
6 7/8% convertible
subordinated notes - - - 439
Employee stock options 498 831 475 899
------- ------- ------- -------
Denominator for diluted
earnings per share---adjusted
weighted average shares and
assumed conversions 62,321 64,919 62,581 63,175
======= ======= ======= =======
Options to purchase 1,996,000 and 1,549,000 shares of common stock at various
prices were outstanding during the nine months ended June 30, 2000 and 1999,
respectively, but were not included in the computation of diluted earnings per
share because the exercise prices were greater than the average market price of
the common shares and, therefore, their effect would be antidilutive.
-7-
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
June 30, 2000
NOTE D - INTEREST
The Company capitalizes interest during development and construction.
Capitalized interest is charged to cost of sales as the related inventory is
delivered to the home buyer. Interest costs are (in thousands):
Three months ended Nine months ended
June 30, June 30,
------------------------ ---------------------
2000 1999 2000 1999
------ ------ ------ ------
Capitalized interest,
beginning of period $ 55,148 $ 36,486 $ 41,525 $ 35,153
Interest incurred
-homebuilding 29,310 22,069 76,382 55,479
Interest expensed:
Directly-homebuilding (2,339) (2,874) (7,195) (8,755)
Amortized to
cost of sales (18,631) (14,593) (47,224) (40,789)
-------- -------- -------- --------
Capitalized interest,
end of period $ 63,488 $ 41,088 $ 63,488 $ 41,088
======== ======== ======== ========
-8-
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
June 30, 2000
NOTE E - SUMMARIZED FINANCIAL INFORMATION
The 8%, 8 3/8%, 10% and 10 1/2% Senior Notes are fully and unconditionally
guaranteed, on a joint and several basis, by all of the Company's direct and
indirect subsidiaries other than certain inconsequential subsidiaries. Each of
the guarantors is a wholly-owned subsidiary. Separate financial statements and
other disclosures concerning the guarantor subsidiaries are not presented
because management has determined that they are not material to investors.
Summarized financial information of the Company and its subsidiaries, including
the non-guarantor subsidiaries, is presented below. Additional financial
information relating to the non-guarantor financial services subsidiaries is
included in the accompanying financial statements.
As of and for the nine months ended June 30, 2000 and 1999, and for the year
ended September 30, 1999 (in thousands):
<TABLE>
<CAPTION>
June 30, 2000 Nonguarantor Subsidiaries
(Unaudited) D.R. ------------------------- Inter-
Horton, Guarantor Financial company
Inc. Subsidiaries Services Other Eliminations Total
---------- -------------- ----------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total assets............. $2,326,852 $2,159,217 $116,744 $56,828 ($1,991,717) $2,667,924
Total liabilities........ 1,418,967 1,726,593 94,831 45,267 (1,525,619) 1,760,039
Total equity............. 907,885 432,624 21,913 11,561 (466,098) 907,885
Revenues................. 390,041 2,116,776 34,926 25,277 - 2,567,020
Gross profit............. 61,317 399,399 - 5,996 509 467,221
Net income............... 130,033 127,658 5,188 (85) (132,761) 130,033
<CAPTION>
June 30, 1999 Nonguarantor Subsidiaries
(Unaudited) D.R. ------------------------- Inter-
Horton, Guarantor Financial company
Inc. Subsidiaries Services Other Eliminations Total
---------- -------------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total assets............. $1,930,501 $2,026,999 $111,348 $32,459 ($1,862,369) $2,238,938
Total liabilities........ 1,162,451 1,648,831 101,008 21,161 (1,462,563) 1,470,888
Total equity............. 768,050 378,168 10,340 11,298 (399,806) 768,050
Revenues................. 413,096 1,744,087 26,097 19,381 - 2,202,661
Gross profit............. 59,110 335,409 - 4,154 - 398,673
Net income............... 110,449 84,067 6,019 (128) (89,958) 110,449
<CAPTION>
September 30, 1999 Nonguarantor Subsidiaries
D.R. ------------------------- Inter-
Horton, Guarantor Financial company
Inc. Subsidiaries Services Other Eliminations Total
---------- -------------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total assets............. $1,996,311 $1,865,148 $125,895 $31,302 ($1,656,848) $2,361,808
Total liabilities........ 1,198,702 1,465,596 108,476 19,663 (1,228,238) 1,564,199
Total equity............. 797,609 399,552 17,419 11,639 (428,610) 797,609
Revenues................. 551,696 2,540,077 37,251 27,187 - 3,156,211
Gross profit............. 95,509 456,302 - 6,069 334 558,214
Net income............... 159,827 144,575 7,929 78 (152,582) 159,827
</TABLE>
-9-
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
June 30, 2000
NOTE E - SUMMARIZED FINANCIAL INFORMATION - Continued
Summarized cash flow information for the non-guarantor financial services
subsidiaries is presented below:
Nine months
ended
June 30,
2000 1999
---------- ----------
(In thousands)
OPERATING ACTIVITIES
Net income......................................... $ 5,188 $ 6,019
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 823 412
Changes in operating assets and liabilities:
Decrease/(increase) in other assets.......... (509) 615
Decrease/(increase) in mortgage loans held
for sale................................... 13,857 (30,163)
Increase in accounts payable and
other liabilities.......................... 624 2,017
------- -------
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES 19,983 (21,100)
------- -------
INVESTING ACTIVITIES
Purchase of property and equipment................. (667) (1,239)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (667) (1,239)
------- -------
FINANCING ACTIVITIES
Net (repayments of)/proceeds from notes payable.... (22,148) 53,405
Increase/(decrease) in amounts payable to parent... 5,329 (39,698)
------- -------
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES.. (16,819) 13,707
------- -------
INCREASE/(DECREASE) IN CASH.................. 2,497 (8,632)
Cash at beginning of period.......................... 6,360 13,017
------- -------
Cash at end of period................................ $ 8,857 $ 4,385
======= =======
Cash flows for the other non-guarantor subsidiaries are not significant in any
period presented.
-10-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - CONSOLIDATED
D. R. Horton, Inc. and subsidiaries (the "Company") provide homebuilding
activities in 23 states and 40 markets through its 47 homebuilding divisions.
Through its financial services segment, the Company also provides mortgage
banking and title agency services in many of these same markets.
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Consolidated revenues for the three months ended June 30, 2000, increased 13.8%,
to $959.2 million, from $843.0 million for the comparable period of 1999,
primarily due to increases in home sales revenues.
Income before income taxes for the three months ended June 30, 2000, increased
5.8%, to $77.5 million, from $73.3 million for the comparable period of 1999. As
a percentage of revenues, income before income taxes for the three months ended
June 30, 2000, decreased 0.6%, to 8.1%, from 8.7% for the comparable period of
1999, primarily due to an increase in selling, general and administrative
expenses as a percentage of revenues.
The consolidated provision for income taxes increased 1.8%, to $29.5 million for
the three months ended June 30, 2000, from $28.9 million for the same period of
1999, due to the corresponding increase in income before income taxes. The
effective income tax rate decreased 1.5%, to 38.0%, from 39.5% for the
comparable period of 1999, primarily due to changes in the estimated overall
effective state income tax rate.
Nine Months Ended June 30, 2000 Compared to Nine Months Ended June 30, 1999
Consolidated revenues for the nine months ended June 30, 2000, increased 16.5%,
to $2,567.0 million, from $2,202.7 million for the comparable period of 1999,
primarily due to increases in home sales revenues.
Income before income taxes for the nine months ended June 30, 2000, increased
15.1%, to $209.7 million, from $182.2 million for the comparable period of 1999.
As a percentage of revenues, income before income taxes for the nine months
ended June 30, 2000, decreased 0.1%, to 8.2%, from 8.3% for the comparable
period of 1999, primarily due to an increase in selling, general and
administrative expenses as a percentage of revenues.
The consolidated provision for income taxes increased 11.1%, to $79.7 million
for the nine months ended June 30, 2000, from $71.7 million for the same period
of 1999, primarily due to the corresponding increase in income before income
taxes. The effective income tax rate decreased 1.4%, to 38.0%, from 39.4% for
the comparable period of 1999, primarily due to changes in the estimated overall
effective state income tax rate.
-11-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - HOMEBUILDING
The following tables set forth certain operating and financial data for the
Company's homebuilding activities:
<TABLE>
<CAPTION>
Percentages of Homebuilding Revenues
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000 1999
Costs and expenses: ------ ------ ------ ------
<S> <C> <C> <C> <C>
Cost of sales........................ 81.8% 81.5% 81.5% 81.7%
Selling, general and administrative
expense.............................. 10.3 9.8 10.4 10.1
Interest expense..................... 0.2 0.3 0.3 0.4
------ ------ ------ ------
Total costs and expenses..................... 92.3 91.6 92.2 92.2
Other (income)............................... (0.1) -- (0.1) (0.1)
------ ------ ------ ------
Income before income taxes................... 7.8% 8.4% 7.9% 7.9%
====== ====== ====== ======
<CAPTION>
Homes Closed
Three Months Ended June 30, Nine Months Ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
Homes Homes Homes Homes
Closed Revenues Closed Revenues Closed Revenues Closed Revemues
-------- -------- -------- -------- -------- -------- -------- --------
($'s in millions) ($'s in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic......... 860 $178.5 787 $143.0 2,187 $ 436.1 2,126 $ 386.4
Midwest.............. 470 108.3 514 102.0 1,424 309.2 1,135 219.5
Southeast............ 767 129.7 675 108.1 2,015 337.1 1,859 296.4
Southwest............ 1,888 288.0 2,088 292.8 5,603 833.3 5,528 756.3
West................. 1,025 226.3 898 178.7 2,637 577.6 2,323 460.9
-------- -------- -------- -------- -------- --------- -------- ---------
5,010 $930.8 4,962 $824.6 13,866 $2,493.3 12,971 $2,119.5
======== ======== ======== ======== ======== ========= ======== =========
<CAPTION>
New Sales Contracts (net of cancellations)
Three Months Ended June 30, Nine Months Ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
Homes Homes Homes Homes
Sold $ Sold $ Sold $ Sold $
-------- --------- -------- -------- -------- -------- -------- --------
($'s in millions) ($'s in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic......... 754 $ 159.1 927 $177.4 2,084 $ 434.4 2,428 $ 459.8
Midwest.............. 476 118.4 564 121.2 1,317 326.4 1,358 278.3
Southeast............ 718 126.5 667 111.9 2,160 369.8 2,025 328.1
Southwest............ 1,998 321.2 2,132 307.8 5,992 937.6 6,066 861.7
West................. 1,149 276.4 987 208.5 2,827 650.8 2,568 517.6
-------- --------- -------- -------- -------- --------- -------- ---------
5,095 $1,001.6 5,277 $926.8 14,380 $2,719.0 14,445 $2,445.5
======== ========= ======== ======== ======== ========= ======== =========
<CAPTION>
Sales Backlog
June 30, 2000 June 30, 1999
------------- -------------
Homes $ Homes $
-------- --------- -------- ---------
($'s in millions)
<S> <C> <C> <C> <C>
Mid-Atlantic................................. 988 $ 241.1 1,234 $ 254.3
Midwest...................................... 1,027 264.4 1,094 231.7
Southeast.................................... 981 173.3 899 148.1
Southwest.................................... 3,470 577.3 3,581 529.3
West......................................... 1,357 326.1 1,459 308.0
-------- --------- -------- --------
7,823 $1,582.2 8,267 $1,471.4
======== ========= ======== ========
<FN>
The Company's market regions consist of the following markets:
Mid-Atlantic Charleston, Charlotte, Columbia, Greensboro, Greenville,
Hilton Head, Myrtle Beach, New Jersey, Newport News,
Raleigh/Durham, Richmond, Suburban Washington D.C. and
Wilmington
Midwest Chicago, Cincinnati, Louisville, Minneapolis/St. Paul and
St. Louis
Southeast Atlanta, Birmingham, Jacksonville, Nashville, Orlando,
Pensacola and South Florida
Southwest Albuquerque, Austin, Dallas/Fort Worth, Houston, Killeen,
Phoenix, San Antonio and Tucson
West Denver, Las Vegas, Los Angeles, Portland, Sacramento,
Salt Lake City and San Diego
</FN>
</TABLE>
-12-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Revenues from homebuilding activities increased 13.6%, to $946.4 million (5,010
homes closed) for the three months ended June 30, 2000, from $833.1 million
(4,962 homes closed) for the comparable period of 1999. Revenues from home sales
increased in four of the Company's five market regions, with percentage
increases ranging from 6.2% in the Midwest region to 26.6% in the West region.
Revenues from home sales declined 1.6% in the Southwest region. The increases in
both revenues and homes closed were due to strong housing demand throughout the
majority of the Company's markets.
The average selling price of homes closed during the three months ended June 30,
2000 was $185,800, up 11.8% from $166,200 for the same period in 1999. The
increase in average selling price was due to changes in the mix of homes closed
and, with the strong housing demand, the Company's ability to sell more custom
features with its homes and to raise prices to cover increased costs.
The value of new net sales contracts increased 8.1%, to $1,001.6 million (5,095
homes) for the three months ended June 30, 2000, from $926.8 million (5,277
homes) for the same period of 1999. The value of new net sales contracts
increased in three of the Company's five market regions, with percentage
increases ranging from 4.4% in the Southwest to 32.5% in the West. The value of
new net sales contracts declined 2.3% and 10.3% in the Midwest and Mid-Atlantic
regions, respectively. The average price of a new net sales contract in the
three months ended June 30, 2000 was $196,600, up 12.0% over the $175,600
average in the three months ended June 30, 1999. The increase in average selling
price was due to changes in the mix of homes sold and, with the strong housing
demand, the Company's ability to sell more custom features with its homes and to
raise prices to cover increased costs.
At June 30, 2000, the Company's backlog of sales contracts was $1,582.2 million
(7,823 homes), up 7.5% from $1,471.4 million (8,267 homes) at June 30, 1999. The
average sales price of homes in sales backlog was $202,300 at June 30, 2000, up
13.7% from the $178,000 average at June 30, 1999. The average sales price of
homes in backlog typically is higher than the sales price of closed homes
because it takes longer to construct more expensive homes.
Cost of sales increased by 14.0%, to $773.9 million for the three months ended
June 30, 2000, from $678.8 million for the comparable quarter of 1999. The
increase in cost of sales was primarily attributable to the increase in
revenues. Cost of home sales as a percentage of home sales revenues was down
0.2%, to 81.2% for the three months ended June 30, 2000, from 81.4% for the
comparable period of 1999, primarily due to the change in the mix of homes sold
and the higher margins obtained from selling more custom features. Cost of
land/lot sales increased to 117.6% of land/lot sales revenues for the three
months ended June 30, 2000, from 88.2% for the comparable period of 1999,
primarily due to the Company's decision in the current quarter to reduce the
carrying amount of two parcels of developed land to their net realizable value.
Total homebuilding cost of sales was 81.8% of total homebuilding revenues, up
0.3% from 81.5% for the comparable period of 1999, primarily due to the increase
in land/lot cost of sales as a percentage of revenues.
Selling, general and administrative (SG&A) expenses from homebuilding activities
increased by 18.9%, to $97.2 million in the three months ended June 30, 2000,
from $81.8 million in the comparable period of 1999. As a percentage of
revenues, SG&A expenses increased to 10.3% for the three months ended June 30,
2000, from 9.8% for the comparable period of 1999. The increase in SG&A expenses
as a percentage of revenue is primarily due to higher costs incurred in order to
ensure that the Company is properly positioned for its peak home-closing season,
which normally occurs during the fourth quarter of the fiscal year.
Interest expense associated with homebuilding activities decreased to $2.3
million in the three months ended June 30, 2000, from $2.9 million in the
comparable period of 1999. As a percentage of homebuilding revenues,
homebuilding interest expense decreased to 0.2% for the three months ended June
30, 2000, from 0.3% in the comparable period of 1999. In anticipation of summer
closings, the Company increased its inventory during the three months ended June
30, 2000. As a result, inventory under construction or development grew at a
more rapid pace than interest-bearing debt. Therefore, compared to 1999, a
larger proportion of total interest incurred was capitalized to inventory in the
third quarter of fiscal 2000. The Company follows a policy of capitalizing
interest only on inventory under construction or development. During both
periods, the Company expensed the portion of incurred interest and other
financing costs which could not be charged to inventory. Capitalized interest
and other financing costs are included in cost of sales at the time of home
closings.
-13-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended June 30, 2000 Compared to Nine Months Ended June 30, 1999
Revenues from homebuilding activities increased 16.3%, to $2,532.1 million
(13,866 homes closed) for the nine months ended June 30, 2000, from $2,176.6
million (12,971 homes closed) for the comparable period of 1999. Revenues from
home sales increased in all of the Company's market regions, with percentage
increases ranging from 10.2% in the Southwest region to 40.9% in the Midwest
region. The increases in both revenues and homes closed were due to strong
housing demand and the increases attributable to the acquisition of Cambridge
Homes in January 1999. In markets where the Company operated throughout both
nine-month periods, home sales revenues increased by 14.5%, to $2,423.8 million,
and the number of homes closed increased 4.6%, to 13,548 homes.
The average selling price of homes closed during the nine months ended June 30,
2000 was $179,800, up 10.0% from $163,400 for the same period of 1999. The
increase in average selling price was due to changes in the mix of homes closed
and, with the strong housing demand, the Company's ability to sell more custom
features with its homes and to raise prices to cover increased costs.
The value of new net sales contracts increased 11.2%, to $2,719.0 million
(14,380 homes) for the nine months ended June 30, 2000, from $2,445.5 million
(14,445 homes) for the same period of 1999. The value of new net sales contracts
increased in four of the Company's five market regions, with percentage
increases ranging from 8.8% in the Southwest to 25.7% in the West. The value of
new net sales contracts declined 5.5% in the Mid-Atlantic region. The overall
increase in the value of new net sales contracts was due in part to sales
achieved by Cambridge Homes, acquired in January 1999. In markets where the
Company operated throughout both nine-month periods, the value of new net sales
contracts increased 8.6%, to $2,650.3 million, and the number of new net sales
contracts decreased 2.0%, to 14,133 homes. The average price of a new net sales
contract in the nine months ended June 30, 2000 was $189,100, up 11.7% over the
$169,300 average in the nine months ended June 30, 1999. The increase in average
selling price was due to changes in the mix of homes closed and, with the strong
housing demand, the Company's ability to sell more custom features with its
homes and to raise prices to cover increased costs.
Cost of sales increased by 16.1%, to $2,064.9 million for the nine months ended
June 30, 2000, from $1,777.9 million for the comparable period of 1999. The
increase in cost of sales was primarily attributable to the increase in
revenues. Cost of home sales as a percentage of home sales revenues was down
0.1%, to 81.4% for the nine months ended June 30, 2000, from 81.5% for the
comparable period of 1999. Cost of land/lot sales increased to 94.2% of land/lot
sales revenues for the nine months ended June 30, 2000, from 88.4% for the
comparable period of 1999, primarily due to the Company's decision in the
current quarter to reduce the carrying amount of two parcels of developed land
to their net realizable value. Total homebuilding cost of sales was 81.5% of
total homebuilding revenue, down 0.2% from 81.7% for the comparable period of
1999.
Selling, general and administrative (SG&A) expenses from homebuilding activities
increased by 19.5%, to $262.1 million in the nine months ended June 30, 2000,
from $219.3 million in the comparable period of 1999. As a percentage of
revenues, SG&A expenses increased to 10.4% for the nine months ended June 30,
2000, from 10.1% for the comparable period of 1999. The increase in SG&A
expenses as a percentage of revenue is primarily due to higher costs incurred in
order to ensure that the Company is properly positioned for its peak
home-closing season, which normally occurs during the fourth quarter of the
fiscal year.
Interest expense associated with homebuilding activities decreased to $7.2
million in the nine months ended June 30, 2000, from $8.8 million in the
comparable period of 1999. As a percentage of homebuilding revenues,
homebuilding interest expense decreased to 0.3% for the nine months ended June
30, 2000, from 0.4% for the comparable period of 1999. In anticipation of summer
closings, the Company increased its inventory during the second and third
quarter. As a result, inventory under construction or development grew at a more
rapid pace than interest-bearing debt. Therefore, in the nine months ended June
30, 2000, a larger proportion of total interest incurred was capitalized to
inventory than in the comparable periods of fiscal 1999. The Company follows a
policy of capitalizing interest only on inventory under construction or
development. During both periods, the Company expensed the portion of incurred
interest and other financing costs which could not be charged to inventory.
Capitalized interest and other financing costs are included in cost of sales at
the time of home closings.
-14-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - FINANCIAL SERVICES
The following table summarizes financial and other information for the Company's
financial services operations:
Three months ended Nine months ended
June 30, June 30,
---------------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
($'s in thousands)
Number of loans originated....... 2,236 2,196 6,009 5,864
------ ------ ------- -------
Loan origination fees............ $2,650 $2,442 $6,995 $6,214
Sale of servicing rights and
gains from sale of mortgages... 5,428 4,435 14,695 12,399
Other revenues................... 1,142 1,205 3,344 2,928
------ ------ ------- -------
Total mortgage banking revenues.. 9,220 8,082 25,034 21,541
Title policy premiums, net....... 3,580 1,732 9,892 4,556
------ ------ ------- -------
Total revenues.................. 12,800 9,814 34,926 26,097
General and administrative
expenses........................ 9,155 6,386 25,152 16,589
Interest expense................. 1,485 1,403 4,191 2,815
Interest/other (income).......... (1,700) (1,509) (4,723) (3,148)
------ ------ ------- -------
Income before income taxes....... $3,860 $3,534 $10,306 $9,841
====== ====== ======= =======
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Revenues from the financial services segment increased 30.4%, to $12.8 million
in the three months ended June 30, 2000, from $9.8 million in the comparable
period of 1999. The increase in financial services revenues was due to the rapid
expansion of the Company's mortgage loan and title services provided to
customers of the Company's homebuilding segment. These activities are being
expanded to additional markets served by the homebuilding segment. SG&A expenses
associated with financial services increased 43.4%, to $9.2 million in the three
months ended June 30, 2000, from $6.4 million in the comparable period of 1999.
As a percentage of financial services revenues, SG&A expenses increased by 6.4%,
to 71.5% in the three months ended June 30, 2000, from 65.1% in the comparable
period in 1999, due primarily to 2000 startup expenses in new markets with
limited revenues.
Nine months Ended June 30, 2000 Compared to Nine months Ended June 30, 1999
Revenues from the financial services segment increased 33.8%, to $34.9 million
in the nine months ended June 30, 2000, from $26.1 million in the comparable
period of 1999. The increase in financial services revenues was due to the rapid
expansion of the Company's mortgage loan and title services provided to
customers of the Company's homebuilding segment. These activities are being
expanded to additional markets served by the homebuilding segment. SG&A expenses
associated with financial services increased 51.6%, to $25.2 million in the nine
months ended June 30, 2000, from $16.6 million in the comparable period of 1999.
As a percentage of financial services revenues, SG&A expenses increased by 8.4%,
to 72.0% in the nine months ended June 30, 1999, from 63.6% in the comparable
period in 1999, due primarily to 2000 startup expenses in new markets with
limited revenues.
-15-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had available cash and cash equivalents of $79.1
million. Inventories (including finished homes, construction in progress, and
developed residential lots and other land) at June 30, 2000, had increased by
$316.4 million since September 30, 1999, due to a general increase in business
activity and the expansion of operations in the Company's market areas. The
inventory increase was financed largely by issuing $200 million in senior notes,
borrowing an additional $20 million under the revolving credit facility and by
retaining earnings. As a result, the Company's ratio of homebuilding notes
payable to total capital at June 30, 2000, increased 1.3% to 59.0%, from 57.7%
at September 30, 1999. The stockholders' equity to total assets ratio increased
0.2%, to 34.0% at June 30, 2000, from 33.8% at September 30, 1999.
The Company has an $825 million, unsecured revolving credit facility, consisting
of a $775 million four-year revolving loan and a $50 million four-year letter of
credit facility that matures in 2002. Additionally, the Company has another $25
million standby letter of credit agreement and a $13.5 million non-renewable
letter of credit facility acquired with the Cambridge acquisition. At June 30,
2000, the Company had outstanding homebuilding debt of $1,306.8 million, of
which $415 million represented advances under the revolving credit facility.
Under the debt covenants associated with the revolving credit facility, at June
30, 2000, the Company had additional homebuilding borrowing capacity of $360
million. The Company has entered into multi-year interest rate swap agreements,
aggregating $200 million, that fix the interest rate on a portion of the
variable rate revolving credit facility. An additional interest rate swap
agreement, with a notional amount of $148.5 million, was entered into in
December 1999. This agreement has the effect of converting part of the Company's
fixed rate debt to a variable rate, which is currently less than the related
fixed rate, and helps re-establish the Company's balance of fixed and variable
rate debt at historical levels.
During March and June 2000, under an existing shelf registration statement, the
Company issued $200 million aggregate principal amount of 10 1/2% Senior Notes,
due 2005. The proceeds of the notes were used to repay outstanding debt under
our revolving credit facility and for general corporate purposes. The Company
has $400 million remaining on its currently effective universal shelf
registration statement, which facilitates access to the capital markets.
At June 30, 2000, the financial services segment has mortgage loans held for
sale of $99.9 million and loan commitments for $110.1 million at fixed rates.
The Company hedges the interest rate market risk on these mortgage loans held
for sale and loan commitments through the use of best-efforts whole loan
delivery commitments, mandatory forward commitments to sell mortgage-backed
securities and the purchase of options on financial instruments.
The financial services segment has a $175 million, one-year bank warehouse
facility that is secured by mortgage loans held for sale. The warehouse facility
is not guaranteed by the parent company. As of June 30, 2000, $82.2 million had
been drawn under this facility. In the future, it is anticipated that all
mortgage company activities will be financed under the warehouse facility.
The Company's rapid growth and acquisition strategy require 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 existing
credit facilities. Additionally, an effective shelf registration contains about
7.4 million shares of common stock issuable to effect, in whole or in part,
possible future acquisitions. In the future, the Company intends to maintain
effective shelf registration statements that would facilitate access to the
capital markets.
During the nine months ended June 30, 2000, the Company's Board of Directors
declared one quarterly cash dividend of $0.03 per common share and two quarterly
cash dividends of $0.04 per common share, the last of which was paid on May 22,
2000.
In November 1998, the Company's Board of Directors approved stock and debt
repurchase programs for up to $100 million each. These programs are intended to
allow the Company to repurchase securities at attractive prices should favorable
market conditions occur. During the nine months ended June 30, 2000, the Company
repurchased in the open market $14.5 million of its common stock, or 1,104,900
shares at an average cost of $13.16.
In July 1999, the Company formed GP-Encore, Inc. and Encore II, Inc., which have
since entered into three separate limited partnership agreements with the
purpose of investing in start-up and emerging growth companies whose technology
and business plans will permit the Company to leverage its size, expertise and
customer base in the homebuilding industry. The Company has agreed to invest up
to $125 million through these limited partnerships over the next four years.
These investments will be concentrated primarily in e-commerce businesses that
serve the homebuilding, real estate and financial services industries, as well
as in strategic opportunities that allow for diversification of the Company's
operations. As of June 30, 2000, the Company had made such investments totaling
$18.6 million, which are reported in homebuilding other assets.
-16-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for ordinary expenditures for the construction of homes, the acquisition
of land and lots for development and sale of homes, at June 30, 2000, the
Company had no material commitments for capital expenditures.
SAFE HARBOR STATEMENT
Certain statements contained herein, 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:
o The Company's substantial leverage
o Changes in general economic and business conditions
o Changes in interest rates and the availability of mortgage financing
o Governmental regulations and environmental matters
o Changes in costs and availability of material, supplies and labor
o Competitive conditions within the homebuilding industry
o The availability of capital
o The Company's ability to effect its growth strategies successfully
o The success of the Company's diversification efforts
-17-
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is subject to interest rate risk on its long term debt. The Company
manages its exposure to changes in interest rates by optimizing the use of
variable and fixed rate debt. In addition, the Company has hedged its exposure
to changes in interest rates on its variable rate bank debt by entering into
interest rate swap agreements to obtain a fixed interest rate for a portion of
those borrowings. Finally, in order to maintain a more appropriate balance of
variable and fixed rate debt, the Company entered into an interest rate swap
agreement exchanging a variable rate interest payment for a fixed rate payment
on a notional amount equal to the $148.5 million principal amount of the 10%
Senior Notes due 2006. The variable payment for which the Company is obligated
is fixed through the 10% Senior Notes' first call date, April 15, 2001, and will
ensure that the Company will have received a net amount of $2.3 million as of
that date. Thereafter, the variable payment will be made through the 10% Senior
Notes' maturity, April 15, 2006, and will be based upon the 90-day LIBOR rate,
plus 2.745%.
The following table shows, as of June 30, 2000, the Company's long term debt
obligations, principal cash flows by scheduled maturity, weighted average
interest rates and estimated fair market value. In addition, the table shows the
notional amounts and weighted average interest rates of the Company's interest
rate swaps.
<TABLE>
<CAPTION>
Three Months
Ended
Sept. 30, Year ended September 30,
---------- --------------------------------------------------------------------------------
($ in millions)
FMV @
2000 2001 2002 2003 2004 Thereafter Total 6/30/00
----- ----- ----- ----- ----- ---------- -------- ---------
Debt:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate.............. $4.2 $2.7 $4.8 $0 $149.6 $730.5 $891.8 $833.3
Average interest rate... 8.63% 8.00% 7.15% --- 8.45% 9.13% 9.00% ---
Variable rate........... $82.2 $0 $415.0 $0 $0 $0 $497.2 $497.2
Average interest rate... 7.65% --- 7.53% --- --- --- 7.55% ---
Interest Rate Swaps:
Variable to fixed....... $200.0 $200.0 $200.0 $200.0 $200.0 $200.0 --- $4.2
Average pay rate........ 5.10% 5.10% 5.10% 5.10% 5.10% 5.08% --- ---
Average receive rate.... 90-day LIBOR
Fixed to variable....... $148.5 $148.5 $148.5 $148.5 $148.5 $148.5 --- ($1.9)
Average pay rate........ 8.745% * -----------90-day LIBOR + 2.745%---------- --- ---
Average receive rate.... 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% --- ---
* - 8.745% until April 15, 2001; 90-day LIBOR + 2.745% thereafter.
</TABLE>
-18-
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities.
On June 8, 2000, the Company issued $50 million principal amount of its 10
1/2 % Senior Notes, due 2005 (the "Notes"). The $50 million principal amount of
Notes are in the same series as, and are in addition to, the $150 million
principal amount of Notes issued March 21, 2000 (the "Existing Notes") pursuant
to the Eighth Supplemental Indenture, dated as of March 21, 2000. Prior to the
offering of the $50 million principal amount of Notes, the Company obtained the
consents of holders of the Existing Notes to amend the Eighth Supplemental
Indenture to increase the aggregate principal amount of the Notes that may be
issued thereunder from $150 million to $200 million. The Company also executed a
Tenth Supplemental Indenture, dated as of June 5, 2000, which amended the Eighth
Supplement Indenture to permit issuance of the additional Notes. Each of the
supplemental indentures is among the Company, the Guarantors named therein and
American Stock Transfer & Trust Company, as Trustee. The Eighth Supplemental
Indenture, and the Indenture to which it relates (dated June 9, 1997, as
supplemented), impose limitations on the ability of the Company and its
subsidiaries guaranteeing the Notes to, among other things, incur indebtedness,
make "Restricted Payments" (as defined, which includes payments of dividends or
other distributions on the Common Stock of the Company), effect certain "Asset
Dispositions" (as defined), enter into certain transactions with affiliates,
merge or consolidate with any person, or transfer all or substantially all of
their properties and assets. These limitations are substantially similar to the
limitations already existing with respect to the Company's 8% Senior Notes, due
2009, and related Indenture and Supplemental Indenture. Other information
concerning the offering and issuance of the Notes has previously been reported
in, and is described in, the Company's Registration Statement on Form S-3
(Registration Number 333-76175) dated April 13, 1999, the Company's Prospectus
Supplement, dated June 5, 2000 and filed with the Securities Exchange Commission
(the "Commission") on June 6, 2000 pursuant to Rule 424(b), and the Company's
current report on Form 8-K, dated June 6, 2000 and filed with the Commission on
June 6, 2000, each of which is incorporated herein by reference.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
4.1 Indenture, dated as of June 9, 1997, among the Company, the
guarantors named therein and American Stock Transfer & Trust
Company, as Trustee, relating to Senior Debt Securities, is
incorporated herein by reference from Exhibit 4.1(a) to the
Company's Registration Statement on Form S-3 (Registration No.
333-27521), filed with the Commission on May 21, 1997.
4.2 Eighth Supplemental Indenture, dated as of March 21, 2000,
among the Company, the guarantors named therein and American
Stock Transfer & Trust Company, as Trustee, relating to the 10
1/2% Senior Notes due 2005, is incorporated herein by reference
from Exhibit 4.1 to the Company's Form 8-K, filed with the
Commission on March 17, 2000.
4.3 Tenth Supplemental Indenture, dated as of June 5, 2000, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, relating to the 10 1/2%
Senior Notes due 2005, including the form of the Company's 10
1/2% Senior Notes due 2005, is incorporated herein by reference
from Exhibit 4.1 to the Company's Form 8-K, filed with the
Commission on June 6, 2000.
4.4 Solicitation Agent Agreement, dated May 27, 2000, between the
Company and Morgan Stanley & Co. Incorporated, is filed
herewith.
(b) Reports on Form 8-K.
On June 6, 2000, the Company filed a Current Report on Form 8-K
(Items 5 and 7), which filed an underwriting agreement, a
supplemental indenture and a statement of computation of ratio of
earnings to fixed changes, all relating to the offering and issuance
of $50 million additional principal amount of the Company's 10 1/2%
Senior Notes, due 2005.
-19-
<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: August 11, 2000 By: /s/ Samuel R. Fuller
-----------------------
Samuel R. Fuller, on behalf of D.R. Horton, Inc.
and as Executive Vice President, Treasurer and
Chief Financial Officer (Principal Financial and
Accounting Officer)
-20-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4.4 Solicitation Agent Agreement, dated May 27, 2000, between the Company
and Morgan Stanley & Co. Incorporated, is filed herewith.
