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
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
-----------
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DELAWARE 75-2386963
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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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.
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.
This Report contains 28 pages.
INDEX
D.R. HORTON, INC.
PART I. FINANCIAL INFORMATION. Page
----
ITEM 1. Financial Statements.
Consolidated Balance Sheets-March 31, 2001 and September 30, 2000................................... 3
Consolidated Statements of Income--Three Months and Six Months Ended
March 31, 2001 and 2000. .................................................................... 4
Consolidated Statement of Stockholders' Equity-Six Months Ended
March 31, 2001................................................................................ 5
Consolidated Statements of Cash Flows-Six Months Ended
March 31, 2001 and 2000....................................................................... 6
Notes to Consolidated Financial Statements........................................................ 7-16
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition ......................................................................... 17-23
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.......................................... 24
PART II. OTHER INFORMATION.
ITEM 2. Changes in Securities......................................................................... 25
ITEM 4. Submission of Matters to a Vote of Security Holders........................................... 25
ITEM 6. Exhibits and Reports on Form 8-K........................................................... 26-27
SIGNATURES..................................................................................................... 28
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D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, SEPTEMBER 30,
2001 2000
------------- --------------
(IN THOUSANDS)
(UNAUDITED)
ASSETS
HOMEBUILDING:
Cash ............................................................................... $ 118,276 $ 61,798
Inventories:
Finished homes and construction in progress ................................... 1,321,174 1,095,636
Residential lots - developed and under development ........................... 1,209,044 1,092,571
Land held for development ..................................................... 2,824 2,824
------------- -------------
2,533,042 2,191,031
Property and equipment (net) ....................................................... 40,846 38,960
Earnest money deposits and other assets ............................................ 174,500 148,983
Excess of cost over net assets acquired (net) ...................................... 113,265 115,966
------------- -------------
2,979,929 2,556,738
------------- -------------
FINANCIAL SERVICES:
Cash ............................................................................... 7,871 10,727
Mortgage loans held for sale ....................................................... 129,108 119,581
Other assets ....................................................................... 10,066 7,531
------------- -------------
147,045 137,839
------------- -------------
$ 3,126,974 $ 2,694,577
============= =============
LIABILITIES
HOMEBUILDING:
Accounts payable and other liabilities ............................................. $ 350,252 $ 370,389
Notes payable:
Unsecured:
Revolving credit facility due 2002 ....................................... 314,000 192,000
8 3/8% senior notes due 2004, net ........................................ 148,745 148,547
10 1/2% senior notes due 2005, net ....................................... 199,386 199,343
10% senior notes due 2006, net ........................................... 147,499 147,398
8% senior notes due 2009, net ............................................ 383,172 383,089
9 3/4% senior subordinated notes due 2010, net ........................... 148,883 148,821
9 3/8% senior subordinated notes due 2011, net ........................... 199,678 --
Other secured ................................................................. 47,550 26,388
------------- -------------
1,588,913 1,245,586
------------- -------------
1,939,165 1,615,975
------------- -------------
FINANCIAL SERVICES:
Accounts payable and other liabilities ............................................. 4,477 4,958
Notes payable to financial institutions ............................................ 102,810 98,817
------------- -------------
107,287 103,775
------------- -------------
2,046,452 1,719,750
------------- -------------
Minority interests ................................................................. 8,299 5,264
------------- -------------
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, 75,522,310 at March
31, 2001 and 70,074,110 at September 30, 2000,
issued and outstanding ........................................................ 755 701
Additional capital ................................................................. 674,776 537,145
Retained earnings .................................................................. 396,692 468,664
Treasury stock, no shares at March 31, 2001 and 2,589,200 shares at
September 30, 2000, at cost ................................................... -- (36,947)
------------- -------------
1,072,223 969,563
------------- -------------
$ 3,126,974 $ 2,694,577
============= =============
|
See accompanying notes to consolidated financial statements.
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
----------------------------- -----------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
-----------------------------------
(UNAUDITED)
HOMEBUILDING:
Revenues
Home sales ........................................... $ 853,575 $ 780,156 $ 1,709,652 $ 1,562,528
Land/lot sales ....................................... 38,832 7,958 56,309 23,150
------------ ------------ ------------ ------------
892,407 788,114 1,765,961 1,585,678
------------ ------------ ------------ ------------
Cost of sales
Home sales ........................................... 682,760 636,990 1,372,659 1,272,822
Land/lot sales ....................................... 30,647 7,332 44,079 18,137
------------ ------------ ------------ ------------
713,407 644,322 1,416,738 1,290,959
------------ ------------ ------------ ------------
Gross profit
Home sales ........................................... 170,815 143,166 336,993 289,706
Land/lot sales ....................................... 8,185 626 12,230 5,013
------------ ------------ ------------ ------------
179,000 143,792 349,223 294,719
Selling, general and administrative expense ............. 94,101 82,133 185,999 164,830
Interest expense ........................................ 1,623 1,561 4,529 4,856
Other expense (income) .................................. 5,684 (644) 8,998 (725)
------------ ------------ ------------ ------------
77,592 60,742 149,697 125,758
------------ ------------ ------------ ------------
FINANCIAL SERVICES:
Revenues ................................................ 14,429 10,750 28,538 22,126
Selling, general and administrative expense ............. 9,830 8,022 19,967 15,997
Interest expense ........................................ 875 1,157 2,007 2,706
Other (income) .......................................... (1,213) (1,290) (2,629) (3,023)
------------ ------------ ------------ ------------
4,937 2,861 9,193 6,446
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES ........................... 82,529 63,603 158,890 132,204
Provision for income taxes .............................. 30,948 24,169 59,584 50,238
------------ ------------ ------------ ------------
Income before cumulative effect of change in
accounting principle ............................... 51,581 39,434 99,306 81,966
Cumulative effect of change in accounting principle,
net of income taxes ............................... -- -- 2,136 --
------------ ------------ ------------ ------------
NET INCOME ........................................... $ 51,581 $ 39,434 $ 101,442 $ 81,966
============ ============ ============ ============
Basic earnings per common share:
Income before cumulative effect of change in
accounting principle ............................... $ 0.68 $ 0.53 $ 1.32 $ 1.09
Cumulative effect of change in accounting principle,
net of income taxes ............................... -- -- 0.03 --
------------ ------------ ------------ ------------
Net income ........................................... $ 0.68 $ 0.53 $ 1.35 $ 1.09
============ ============ ============ ============
Diluted earnings per common share:
Income before cumulative effect of change in
accounting principle ............................... $ 0.67 $ 0.52 $ 1.30 $ 1.08
Cumulative effect of change in accounting principle,
net of income taxes ............................... -- -- 0.03 --
------------ ------------ ------------ ------------
Net income ........................................... $ 0.67 $ 0.52 $ 1.33 $ 1.08
============ ============ ============ ============
Cash dividends per share ................................ $ 0.05 $ 0.04 $ 0.09 $ 0.07
============ ============ ============ ============
|
See accompanying notes to consolidated financial statements.
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
TOTAL
COMMON ADDITIONAL RETAINED TREASURY STOCKHOLDERS'
STOCK CAPITAL EARNINGS STOCK EQUITY
------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT COMMON STOCK SHARE DATA)
(UNAUDITED)
Balances at September 30, 2000 ............... $ 701 $ 537,145 $ 468,664 $ (36,947) $ 969,563
Net income ................................... -- -- 101,442 -- 101,442
Issuances under D.R. Horton, Inc.
employee benefit plans (4,720 shares) ...... -- 73 -- -- 73
Exercise of stock options (536,833 shares) ... 5 7,246 -- -- 7,251
Cash dividends paid .......................... -- -- (6,106) -- (6,106)
Stock dividend paid .......................... 49 130,312 (167,308) 36,947 --
------------ ------------ ------------ ------------ ------------
Balances at March 31, 2001 ................... $ 755 $ 674,776 $ 396,692 $ -- $ 1,072,223
============ ============ ============ ============ ============
|
See accompanying notes to consolidated financial statements.
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS
ENDED MARCH 31,
------------------------------
2001 2000
------------ ------------
(IN THOUSANDS)
(UNAUDITED)
OPERATING ACTIVITIES
Net income ............................................................. $ 101,442 $ 81,966
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization .......................................... 11,972 10,176
Amortization of debt premiums and fees ................................. 1,165 1,106
Changes in operating assets and liabilities:
Increase in inventories .......................................... (289,052) (280,602)
Increase in earnest money deposits and other assets .............. (24,905) (25,528)
(Increase)/decrease in mortgage loans held for sale .............. (9,527) 22,353
Decrease in accounts payable and other liabilities ............... (17,584) (24,082)
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES .................................... (226,489) (214,611)
------------ ------------
INVESTING ACTIVITIES
Net purchase of property and equipment ................................. (10,356) (9,353)
Net investment in venture capital entities ............................. (2,022) (15,071)
Net cash paid for acquisitions ......................................... (1,318) (4,800)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES .................................... (13,696) (29.224)
------------ ------------
FINANCING ACTIVITIES
Proceeds from notes payable ............................................ 538,993 355,000
Repayment of notes payable ............................................. (444,808) (285,302)
Issuance of senior subordinated notes payable .......................... 198,404 148,464
Purchase of treasury stock ............................................. -- (14,543)
Proceeds from issuance of common stock associated with
certain employee benefit plans ....................................... 73 329
Proceeds from exercise of stock options ................................ 7,251 1,056
Payment of cash dividends .............................................. (6,106) (4,340)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES ................................ 293,807 200,664
------------ ------------
INCREASE / (DECREASE) IN CASH ........................................... 53,622 (43,171)
Cash at beginning of period ...................................... 72,525 128,568
------------ ------------
Cash at end of period ............................................ $ 126,147 $ 85,397
============ ============
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SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2001
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements include the accounts of D.R. Horton, Inc. and its subsidiaries (the "Company"). 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 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-month and six-month periods ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending September 30, 2001.
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 - CHANGE IN ACCOUNTING PRINCIPLE
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities", was issued in June 1998, and was later amended by SFAS 137 and 138, which were issued in June 1999 and June 2000, respectively. Pursuant to the implementation requirements of SFAS No. 133, the Company adopted it on October 1, 2000, the first day of the Company's fiscal year ending September 30, 2001. The Company's interest rate swaps, the terms of which are more fully described in Item 3, were not designated as hedges under the provisions of SFAS No. 133. The Statement requires such swaps to be recorded in the consolidated balance sheet at fair value. Changes in their fair value must be recorded in the consolidated statements of income. Accordingly, the Company recorded a cumulative effect of a change in accounting principle amounting to $2.1 million, net of income taxes of $1.3 million, as an adjustment to net income in the six months ended March 31, 2001. The fair value of the Company's interest rate swaps at March 31, 2001 is recorded in homebuilding other assets, and the change in their fair value during the three and six months ended March 31, 2001 is recorded in homebuilding other expense.
SFAS No. 133 was also implemented on October 1, 2000 for the hedging activities of the Company's financial services segment. The effects of doing so were not significant.
NOTE C - 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 more than 98% of consolidated revenues for the three months and six months ended March 31, 2001 and 2000. 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.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
MARCH 31, 2001
NOTE D - NET INCOME PER SHARE
Basic net income per share for the three and six months ended March 31, 2001 and 2000 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 weighted average number of shares of common stock and dilutive securities outstanding used in the computation of basic and diluted earnings per share (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------------------------- ---------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Denominator for basic earnings per share--weighted
average shares ................................... 75,433 74,819 75,197 75,312
Employee stock options ................................ 1,294 516 1,222 561
----------- ----------- ----------- -----------
Denominator for diluted earnings per share--adjusted
weighted average shares .......................... 76,727 75,335 76,419 75,873
=========== =========== =========== ===========
|
In February, 2001, the Company's Board of Directors declared an 11% stock dividend, payable on March 23, 2001 to stockholders of record on March 9, 2001. All average share amounts presented above for the three and six month periods ended March 31, 2000 have been restated to reflect the effects of the 11% stock dividend.
NOTE E - 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. Homebuilding interest costs are (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
---------------------------- ----------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Capitalized interest, beginning of period .... $ 74,557 $ 46,463 $ 66,092 $ 41,525
Interest incurred - homebuilding ............. 31,185 24,971 60,728 47,072
Interest expensed:
Directly - homebuilding ................. (1,623) (1,561) (4,529) (4,856)
Amortized to cost of sales .............. (18,540) (14,725) (36,712) (28,593)
----------- ----------- ----------- -----------
Capitalized interest, end of period .......... $ 85,579 $ 55,148 $ 85,579 $ 55,148
=========== =========== =========== ===========
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D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
MARCH 31, 2001
NOTE F - SUMMARIZED FINANCIAL INFORMATION
The 8%, 8 3/8%, 10% and 10 1/2% Senior Notes, and the 9 3/8% and 9 3/4% Senior Subordinated Notes are fully and unconditionally guaranteed, on a joint and several basis, by all of the Company's direct and indirect subsidiaries (Guarantor Subsidiaries), other than financial services subsidiaries and certain other inconsequential subsidiaries (collectively, Non-Guarantor Subsidiaries). Each of the Guarantor Subsidiaries is wholly-owned. In lieu of providing separate audited financial statements for the Guarantor Subsidiaries, consolidated condensed financial statements are 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.
CONSOLIDATING BALANCE SHEET
MARCH 31, 2001
NON-GUARANTOR
SUBSIDIARIES
-----------------------
D.R. GUARANTOR FINANCIAL INTERCOMPANY
HORTON, INC. SUBSIDIARIES SERVICES OTHER ELIMINATIONS TOTAL
------------ ------------ ----------- ---------- ------------ ----------
(IN THOUSANDS)
ASSETS
HOMEBUILDING:
Cash and cash equivalents ...................... $ 40,612 $ 77,121 $ -- $ 543 $ -- $ 118,276
Advances to/investments in subsidiaries ........ 2,165,816 -- -- -- (2,165,816) --
Inventories .................................... 511,685 1,997,722 -- 23,944 (309) 2,533,042
Property and equipment (net) ................... 3,400 31,965 -- 5,481 -- 40,846
Earnest money deposits and other assets ........ 46,379 109,516 -- 29,170 (10,565) 174,500
Excess of cost over net assets acquired (net) .. -- 113,265 -- -- -- 113,265
---------- ---------- ----------- ---------- ----------- ----------
2,767,892 2,329,589 -- 59,138 (2,176,690) 2,979,929
---------- ---------- ----------- ---------- ----------- ----------
FINANCIAL SERVICES:
Cash and cash equivalents ...................... -- -- 7,871 -- -- 7,871
Mortgage loans held for sale ................... -- -- 129,108 -- -- 129,108
Other assets ................................... -- -- 10,066 -- -- 10,066
---------- ---------- ----------- ---------- ----------- ----------
-- -- 147,045 -- -- 147,045
---------- ---------- ----------- ---------- ----------- ----------
TOTAL ASSETS ................................... $2,767,892 $2,329,589 $ 147,045 $ 59,138 $(2,176,690) $3,126,974
========== ========== =========== ========== =========== ==========
LIABILITIES & EQUITY
HOMEBUILDING:
Accounts payable and other liabilities ......... $ 121,911 $ 283,621 $ -- $ 1,839 $ (57,119) $ 350,252
Advances from parent/subsidiaries .............. -- 1,525,223 -- 33,089 (1,558,312) --
Notes payable .................................. 1,573,758 15,155 -- 8,391 (8,391) 1,588,913
---------- ---------- ----------- ---------- ----------- ----------
1,695,669 1,823,999 -- 43,319 (1,623,822) 1,939,165
---------- ---------- ----------- ---------- ----------- ----------
FINANCIAL SERVICES:
Accounts payable and other liabilities ......... -- -- 7,268 -- (2,791) 4,477
Advances from parent/subsidiaries .............. -- -- 5,893 -- (5,893) --
Notes payable .................................. -- -- 102,810 -- -- 102,810
---------- ---------- ----------- ---------- ----------- ----------
-- -- 115,971 -- (8,684) 107,287
---------- ---------- ----------- ---------- ----------- ----------
TOTAL LIABILITIES .............................. 1,695,669 1,823,999 115,971 43,319 (1,632,506) 2,046,452
---------- ---------- ----------- ---------- ----------- ----------
Minority interest .............................. -- -- 12 8,287 -- 8,299
---------- ---------- ----------- ---------- ----------- ----------
Common stock ................................... 755 1 6 6,155 (6,162) 755
Additional capital ............................. 674,776 84,796 2,299 10,129 (97,224) 674,776
Retained earnings .............................. 396,692 420,793 28,757 (8,752) (440,798) 396,692
---------- ---------- ----------- ---------- ----------- ----------
1,072,223 505,590 31,062 7,532 (544,184) 1,072,223
---------- ---------- ----------- ---------- ----------- ----------
TOTAL LIABILITIES & EQUITY ..................... $2,767,892 $2,329,589 $ 147,045 $ 59,138 $(2,176,690) $3,126,974
========== ========== =========== ========== =========== ==========
|
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
NOTE F - SUMMARIZED FINANCIAL INFORMATION - (CONTINUED)
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2000
NON-GUARANTOR
SUBSIDIARIES
----------------------
D.R. GUARANTOR FINANCIAL INTERCOMPANY
HORTON, INC. SUBSIDIARIES SERVICES OTHER ELIMINATIONS TOTAL
------------ ------------ --------- ---------- ------------ ----------
(IN THOUSANDS)
ASSETS
HOMEBUILDING:
Cash and cash equivalents ...................... $ 20,397 $ 40,349 $ -- $ 1,052 $ -- $ 61,798
Advances to/investments in subsidiaries ........ 1,862,988 14,653 -- -- (1,877,641) --
Inventories .................................... 395,848 1,768,934 -- 26,538 (289) 2,191,031
Property and equipment (net) ................... 3,031 30,645 -- 5,284 -- 38,960
Earnest money deposits and other assets ........ 44,463 86,134 -- 28,773 (10,387) 148,983
Excess of cost over net assets acquired (net) .. -- 115,966 -- -- -- 115,966
---------- ---------- --------- ---------- ----------- ----------
2,326,727 2,056,681 -- 61,647 (1,888,317) 2,556,738
---------- ---------- --------- ---------- ----------- ----------
FINANCIAL SERVICES:
Cash and cash equivalents ...................... -- -- 10,727 -- -- 10,727
Mortgage loans held for sale ................... -- -- 119,581 -- -- 119,581
Other assets ................................... -- -- 7,531 -- -- 7,531
---------- ---------- --------- ---------- ----------- ----------
-- -- 137,839 -- -- 137,839
---------- ---------- --------- ---------- ----------- ----------
TOTAL ASSETS ................................... $2,326,727 $2,056,681 $ 137,839 $ 61,647 $(1,888,317) $2,694,577
========== ========== ========= ========== =========== ==========
LIABILITIES & EQUITY
HOMEBUILDING:
Accounts payable and other liabilities ......... $ 124,823 $ 358,895 $ -- $ 2,355 $ (115,684) $ 370,389
Advances from parent/subsidiaries .............. 11,617 1,263,038 -- 32,775 (1,307,430) --
Notes payable .................................. 1,220,724 24,861 -- 10,222 (10,221) 1,245,586
---------- ---------- --------- ---------- ----------- ----------
1,357,164 1,646,794 -- 45,352 (1,433,335) 1,615,975
---------- ---------- --------- ---------- ----------- ----------
FINANCIAL SERVICES:
Accounts payable and other liabilities ......... -- -- 9,388 -- (4,430) 4,958
Advances from parent/subsidiaries .............. -- -- 5,653 -- (5,653) --
Notes payable .................................. -- -- 98,817 -- -- 98,817
---------- ---------- --------- ---------- ----------- ----------
-- -- 113,858 -- (10,083) 103,775
---------- ---------- --------- ---------- ----------- ----------
TOTAL LIABILITIES .............................. 1,357,164 1,646,794 113,858 45,352 (1,443,418) 1,719,750
---------- ---------- --------- ---------- ----------- ----------
Minority interest .............................. -- -- 10 5,254 -- 5,264
---------- ---------- --------- ---------- ----------- ----------
Common stock ................................... 701 1 6 6,155 (6,162) 701
Additional capital ............................. 537,145 84,794 2,299 10,129 (97,222) 537,145
Retained earnings .............................. 468,664 325,092 21,666 (5,243) (341,515) 468,664
Treasury stock ................................. (36,947) -- -- -- -- (36,947)
---------- ---------- --------- ---------- ----------- ----------
969,563 409,887 23,971 11,041 (444,899) 969,563
---------- ---------- --------- ---------- ----------- ----------
TOTAL LIABILITIES & EQUITY ..................... $2,326,727 $2,056,681 $ 137,839 $ 61,647 $(1,888,317) $2,694,577
========== ========== ========= ========== =========== ==========
|
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
NOTE F - SUMMARIZED FINANCIAL INFORMATION - (CONTINUED)
CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2001
NON-GUARANTOR
SUBSIDIARIES
------------------------
D.R. GUARANTOR FINANCIAL INTERCOMPANY
HORTON, INC. SUBSIDIARIES SERVICES OTHER ELIMINATIONS TOTAL
------------ ------------ ---------- ---------- ------------ ----------
(IN THOUSANDS)
HOMEBUILDING:
Revenues:
Home sales ................................. $ 156,304 $ 693,224 $ -- $ 4,047 $ -- $ 853,575
Land/lot sales ............................. 10,371 28,461 -- -- -- 38,832
---------- ---------- ---------- ---------- ---------- ----------
166,675 721,685 -- 4,047 -- 892,407
---------- ---------- ---------- ---------- ---------- ----------
Cost of Sales:
Home sales ................................. 125,753 554,278 -- 2,840 (111) 682,760
Land/lot sales ............................. 7,486 23,161 -- -- -- 30,647
---------- ---------- ---------- ---------- ---------- ----------
133,239 577,439 -- 2,840 (111) 713,407
---------- ---------- ---------- ---------- ---------- ----------
Gross profit:
Home sales ................................. 30,551 138,946 -- 1,207 111 170,815
Land/lot sales ............................. 2,885 5,300 -- -- -- 8,185
---------- ---------- ---------- ---------- ---------- ----------
33,436 144,246 -- 1,207 111 179,000
Selling, general and administrative expense .. 21,939 69,075 -- 2,200 887 94,101
Interest expense ............................. 1,579 42 -- 74 (72) 1,623
Other expense (income) ....................... (72,611) (413) -- 2,479 76,229 5,684
---------- ---------- ---------- ---------- ---------- ----------
82,529 75,542 -- (3,546) (76,933) 77,592
---------- ---------- ---------- ---------- ---------- ----------
FINANCIAL SERVICES:
Revenues ..................................... -- -- 14,429 -- -- 14,429
Selling, general and administrative expense .. -- -- 10,717 -- (887) 9,830
Interest expense ............................. -- -- 875 -- -- 875
Other (income) ............................... -- -- (1,213) -- -- (1,213)
---------- ---------- ---------- ---------- ---------- ----------
-- -- 4,050 -- 887 4,937
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes ................... 82,529 75,542 4,050 (3,546) (76,046) 82,529
Provision for income taxes ................... 30,948 28,328 1,519 (1,330) (28,517) 30,948
---------- ---------- ---------- ---------- ---------- ----------
Net income ................................... $ 51,581 $ 47,214 $ 2,531 $ (2,216) $ (47,529) $ 51,581
========== ========== ========== ========== ========== ==========
|
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
NOTE F - SUMMARIZED FINANCIAL INFORMATION - (CONTINUED)
CONSOLIDATING STATEMENT OF INCOME
SIX MONTHS ENDED MARCH 31, 2001
NON-GUARANTOR
SUBSIDIARIES
------------------------
D.R. GUARANTOR FINANCIAL INTERCOMPANY
HORTON, INC. SUBSIDIARIES SERVICES OTHER ELIMINATIONS TOTAL
------------ ------------ ---------- ---------- ------------ ----------
(IN THOUSANDS)
HOMEBUILDING:
Revenues:
Home sales ................................. $ 275,503 $1,421,997 $ -- $ 12,152 $ -- $1,709,652
Land/lot sales ............................. 16,609 39,700 -- -- -- 56,309
---------- ---------- ---------- ---------- ---------- ----------
292,112 1,461,697 -- 12,152 -- 1,765,961
---------- ---------- ---------- ---------- ---------- ----------
Cost of Sales:
Home sales ................................. 222,314 1,141,634 -- 8,968 (257) 1,372,659
Land/lot sales ............................. 12,274 31,805 -- -- -- 44,079
---------- ---------- ---------- ---------- ---------- ----------
234,588 1,173,439 -- 8,968 (257) 1,416,738
---------- ---------- ---------- ---------- ---------- ----------
Gross profit:
Home sales ................................. 53,189 280,363 -- 3,184 257 336,993
Land/lot sales ............................. 4,335 7,895 -- -- -- 12,230
---------- ---------- ---------- ---------- ---------- ----------
57,524 288,258 -- 3,184 257 349,223
Selling, general and administrative expense .. 42,155 137,772 -- 4,321 1,751 185,999
Interest expense ............................. 4,435 90 -- 182 (178) 4,529
Other expense (income) ....................... (147,956) (1,212) -- 3,561 154,605 8,998
---------- ---------- ---------- ---------- ---------- ----------
158,890 151,608 -- (4,880) (155,921) 149,697
---------- ---------- ---------- ---------- ---------- ----------
FINANCIAL SERVICES:
Revenues ..................................... -- -- 28,538 -- -- 28,538
Selling, general and administrative expense .. -- -- 21,718 -- (1,751) 19,967
Interest expense ............................. -- -- 2,007 -- -- 2,007
Other (income) ............................... -- -- (2,629) -- -- (2,629)
---------- ---------- ---------- ---------- ---------- ----------
-- -- 7,442 -- 1,751 9,193
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes ................... 158,890 151,608 7,442 (4,880) (154,170) 158,890
Provision for income taxes ................... 59,584 56,853 2,791 (1,830) (57,814) 59,584
---------- ---------- ---------- ---------- ---------- ----------
Income before cumulative effect of change in
accounting principle .................... 99,306 94,755 4,651 (3,050) (96,356) 99,306
Cumulative effect of change in accounting
principle, net of income taxes .......... 2,136 -- -- -- -- 2,136
---------- ---------- ---------- ---------- ---------- ----------
Net income ................................... $ 101,442 $ 94,755 $ 4,651 $ (3,050) $ (96,356) $ 101,442
========== ========== ========== ========== ========== ==========
|
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
NOTE F - SUMMARIZED FINANCIAL INFORMATION - (CONTINUED)
CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2000
NON-GUARANTOR
SUBSIDIARIES
------------------------
D.R. GUARANTOR FINANCIAL INTERCOMPANY
HORTON, INC. SUBSIDIARIES SERVICES OTHER ELIMINATIONS TOTAL
------------ ------------ ---------- ---------- ------------ ---------
(IN THOUSANDS)
HOMEBUILDING:
Revenues: ...................................... $ 122,941 $ 650,941 $ -- $ 6,274 $ -- $ 780,156
Home sales ................................... 26 7,932 -- -- -- 7,958
--------- ---------- ---------- ---------- ---------- ---------
Land/lot sales ............................... 122,967 658,873 -- 6,274 -- 788,114
--------- ---------- ---------- ---------- ---------- ---------
Cost of Sales: ................................. 103,752 528,768 -- 4,726 (256) 636,990
Home sales ................................... (49) 7,381 -- -- -- 7,332
--------- ---------- ---------- ---------- ---------- ---------
Land/lot sales ............................... 103,703 536,149 -- 4,726 (256) 644,322
--------- ---------- ---------- ---------- ---------- ---------
Gross profit: .................................. 19,189 122,173 -- 1,548 256 143,166
Home sales ................................... 75 551 -- -- -- 626
--------- ---------- ---------- ---------- ---------- ---------
Land/lot sales ............................... 19,264 122,724 -- 1,548 256 143,792
Selling, general and administrative expense ... 18,959 61,886 -- 1,292 (4) 82,133
Interest expense ............................... 1,534 25 -- 138 (136) 1,561
Other expense (income) ......................... (64,832) (1,170) -- 270 65,088 (644)
--------- ---------- ---------- ---------- ---------- ---------
63,603 61,983 -- (152) (64,692) 60,742
--------- ---------- ---------- ---------- ---------- ---------
FINANCIAL SERVICES:
Revenues ....................................... -- -- 10,750 -- -- 10,750
Selling, general and administrative expense .... -- -- 8,018 -- 4 8,022
Interest expense ............................... -- -- 1,157 -- -- 1,157
Other (income) ................................. -- -- (1,290) -- -- (1,290)
--------- ---------- ---------- ---------- ---------- ---------
-- -- 2,865 -- (4) 2,861
--------- ---------- ---------- ---------- ---------- ---------
Income before income taxes ..................... 63,603 61,983 2,865 (152) (64,696) 63,603
Provision for income taxes ..................... 24,169 23,553 1,089 (58) (24,584) 24,169
--------- ---------- ---------- ---------- ---------- ---------
Net income ..................................... $ 39,434 $ 38,430 $ 1,776 $ (94) $ (40,112) $ 39,434
========= ========== ========== ========== ========== =========
|
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
NOTE F - SUMMARIZED FINANCIAL INFORMATION - (CONTINUED)
CONSOLIDATING STATEMENT OF INCOME
SIX MONTHS ENDED MARCH 31, 2000
NON-GUARANTOR
SUBSIDIARIES
-----------------------
D.R. GUARANTOR FINANCIAL INTERCOMPANY
HORTON, INC. SUBSIDIARIES SERVICES OTHER ELIMINATIONS TOTAL
------------ ------------ --------- ---------- ------------ ----------
(IN THOUSANDS)
HOMEBUILDING:
Revenues:
Home sales .................................. $ 236,030 $1,312,523 $ -- $ 13,975 $ -- $1,562,528
Land/lot sales .............................. 976 22,174 -- -- -- 23,150
---------- ---------- --------- ---------- ---------- ----------
237,006 1,334,697 -- 13,975 -- 1,585,678
---------- ---------- --------- ---------- ---------- ----------
Cost of Sales:
Home sales .................................. 197,484 1,065,306 -- 10,379 (347) 1,272,822
Land/lot sales .............................. 940 17,197 -- -- -- 18,137
---------- ---------- --------- ---------- ---------- ----------
198,424 1,082,503 -- 10,379 (347) 1,290,959
---------- ---------- --------- ---------- ---------- ----------
Gross profit:
Home sales .................................. 38,546 247,217 -- 3,596 347 289,706
Land/lot sales .............................. 36 4,977 -- -- -- 5,013
---------- ---------- --------- ---------- ---------- ----------
38,582 252,194 -- 3,596 347 294,719
Selling, general and administrative expense .. 35,511 126,704 -- 2,619 (4) 164,830
Interest expense .............................. 4,791 65 -- 310 (310) 4,856
Other expense (income) ........................ (133,924) (1,696) -- 437 134,458 (725)
---------- ---------- --------- ---------- ---------- ----------
132,204 127,121 -- 230 (133,797) 125,758
---------- ---------- --------- ---------- ---------- ----------
FINANCIAL SERVICES:
Revenues ...................................... -- -- 22,126 -- -- 22,126
Selling, general and administrative expense ... -- -- 15,993 -- 4 15,997
Interest expense .............................. -- -- 2,706 -- -- 2,706
Other (income) ................................ -- -- (3,023) -- -- (3,023)
---------- ---------- --------- ---------- ---------- ----------
-- -- 6,450 -- (4) 6,446
---------- ---------- --------- ---------- ---------- ----------
Income before income taxes .................... 132,204 127,121 6,450 230 (133,801) 132,204
Provision for income taxes .................... 50,238 48,306 2,451 87 (50,844) 50,238
---------- ---------- --------- ---------- ---------- ----------
Net income .................................... $ 81,966 $ 78,815 $ 3,999 $ 143 $ (82,957) $ 81,966
========== ========== ========= ========== ========== ==========
|
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
NOTE F - SUMMARIZED FINANCIAL INFORMATION - (CONTINUED)
CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2001
NON-GUARANTOR
SUBSIDIARIES
-------------------
D.R. GUARANTOR FINANCIAL INTERCOMPANY
HORTON, INC. SUBSIDIARIES SERVICES OTHER ELIMINATIONS TOTAL
------------ ------------ --------- -------- ------------ --------
(IN THOUSANDS)
OPERATING ACTIVITIES
Net income ........................................... $ 101,442 $ 94,755 $ 4,651 $ (3,050) $ (96,356) $101,442
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ...................... 899 10,222 608 243 -- 11,972
Amortization of debt premiums and fees ............. 1,165 -- -- -- -- 1,165
Changes in operating assets and liabilities:
(Increase)/decrease in inventories ................ (74,649) (217,017) -- 2,594 20 (289,052)
(Increase)/decrease in earnest money
deposits and other assets ....................... (1,497) (23,194) (2,014) 1,621 179 (24,905)
Increase in mortgage loans held for sale .......... -- -- (9,527) -- -- (9,527)
Increase/(decrease) in accounts payable and
other liabilities ............................... (2,911) (75,599) (1,794) 2,518 60,202 (17,584)
--------- --------- -------- -------- --------- --------
Net cash provided by (used in) operating
activities ........................................... 24,449 (210,833) (8,076) 3,926 (35,955) (226,489)
--------- --------- -------- -------- --------- --------
INVESTING ACTIVITIES
Net purchases of property and equipment .............. (1,268) (7,477) (1,175) (436) -- (10,356)
Net investments in venture capital entities .......... -- -- -- (2,022) -- (2,022)
Net cash paid for acquisitions ....................... -- (1,318) -- -- -- (1,318)
--------- --------- -------- -------- --------- --------
Net cash used in investing activities ................... (1,268) (8,795) (1,175) (2,458) -- (13,696)
--------- --------- -------- -------- --------- --------
FINANCING ACTIVITIES
Net change in notes payable .......................... 310,262 (21,665) 3,993 (1,831) 1,830 292,589
Increase/(decrease) in intercompany payables ......... (314,446) 392,565 4,402 (146) (82,375) --
Proceeds from stock associated with certain
employee benefit plans ............................. 73 -- -- -- -- 73
Proceeds from exercise of stock options .............. 7,251 -- -- -- -- 7,251
Cash dividends/distributions paid .................... (6,106) (114,500) (2,000) -- 116,500 (6,106)
--------- --------- -------- -------- --------- --------
Net cash (used in) provided by financing
activities ........................................... (2,966) 256,400 6,395 (1,977) 35,955 293,807
--------- --------- -------- -------- --------- --------
Increase/(decrease) in cash ............................. 20,215 36,772 (2,856) (509) -- 53,622
Cash at beginning of period ............................. 20,397 40,349 10,727 1,052 -- 72,525
--------- --------- -------- -------- --------- --------
Cash at end of period ................................... $ 40,612 $ 77,121 $ 7,871 $ 543 $ -- $126,147
========= ========= ======== ======== ========= ========
|
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
NOTE F - SUMMARIZED FINANCIAL INFORMATION - (CONTINUED)
CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2000
NON-GUARANTOR
SUBSIDIARIES
----------------------
D.R. GUARANTOR FINANCIAL INTERCOMPANY
HORTON, INC. SUBSIDIARIES SERVICES OTHER ELIMINATIONS TOTAL
------------ ------------ --------- --------- ------------ ----------
(IN THOUSANDS)
OPERATING ACTIVITIES
Net income ..................................... $ 81,966 $ 78,815 $ 3,999 $ 143 $ (82,957) $ 81,966
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization ................ 730 8,528 556 362 -- 10,176
Amortization of debt premiums and fees ....... 1,106 -- -- -- -- 1,106
Changes in operating assets and liabilities:
(Increase)/decrease in inventories ......... (86,117) (196,687) -- 363 1,839 (280,602)
(Increase)/decrease in earnest money
deposits and other assets ............... (265) (23,446) 22 (1,930) 91 (25,528)
Decrease in mortgage loans held for sale ... -- -- 22,353 -- -- 22,353
Increase/(decrease) in accounts payable and
other liabilities ........................ (15,259) (53,584) (3,222) 349 47,634 (24,082)
---------- ---------- --------- --------- ---------- ---------
Net cash provided by (used in) operating
activities ..................................... (17,839) (186,374) 23,708 (713) (33,393) (214,611)
---------- ---------- --------- --------- ---------- ---------
INVESTING ACTIVITIES
Net purchases of property and equipment ........ (854) (8,194) (507) 202 -- (9,353)
Net investments in venture capital entities .... -- -- -- (15,071) -- (15,071)
Net cash paid for acquisitions ................. -- (4,800) -- -- -- (4,800)
---------- ---------- --------- --------- ---------- ---------
Net cash used in investing activities ............. (854) (12,994) (507) (14,869) -- (29,224)
---------- ---------- --------- --------- ---------- ---------
FINANCING ACTIVITIES
Net change in notes payable .................... 253,860 (8,149) (27,550) 82 (81) 218,162
Increase/(decrease) in intercompany payables ... (206,223) 255,643 4,468 14,932 (68,820) --
Repurchase of treasury stock ................... (14,543) -- -- -- -- (14,543)
Proceeds from stock associated with certain
employee benefit plans ........................ 329 -- -- -- -- 329
Proceeds from exercise of stock options ........ 1,056 -- -- -- -- 1,056
Cash dividends/distributions paid .............. (4,340) (101,594) (700) -- 102,294 (4,340)
---------- ---------- --------- --------- ---------- ---------
Net cash (used in) provided by financing
activities ..................................... 30,139 145,900 (23,782) 15,014 33,393 200,664
---------- ---------- --------- --------- ---------- ---------
Increase/(decrease) in cash ....................... 11,446 (53,468) (581) (568) -- (43,171)
Cash at beginning of period ....................... 66,777 53,468 6,360 1,963 -- 128,568
---------- ---------- --------- --------- ---------- ---------
Cash at end of period ............................. $ 78,223 $ -- $ 5,779 $ 1,395 $ -- $ 85,397
========== ========== ========= ========= ========== =========
|
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 39 markets through its 46 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 MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
Consolidated revenues for the three months ended March 31, 2001, increased 13.5%, to $906.8 million, from $798.9 million for the comparable period of 2000, primarily due to increases in home sales revenues.
Income before income taxes for the three months ended March 31, 2001, increased 29.8%, to $82.5 million, from $63.6 million for the comparable period of 2000. As a percentage of revenues, income before income taxes for the three months ended March 31, 2001, increased 1.1%, to 9.1%, from 8.0% for the comparable period of 2000, primarily due to an increase in the gross profit percentage achieved by the homebuilding segment.
The consolidated provision for income taxes increased 28.0%, to $30.9 million for the three months ended March 31, 2001, from $24.2 million for the same period of 2000, due to the corresponding increase in income before income taxes. The effective income tax rate decreased 0.5%, to 37.5%, from 38.0% for the comparable period of 2000, primarily due to changes in the estimated overall effective state income tax rate.
SIX MONTHS ENDED MARCH 31, 2001 COMPARED TO SIX MONTHS ENDED MARCH 31, 2000
Consolidated revenues for the six months ended March 31, 2001, increased 11.6%, to $1,794.5 million, from $1,607.8 million for the comparable period of 2000, primarily due to increases in home sales revenues.
Income before income taxes for the six months ended March 31, 2001, increased 20.2%, to $158.9 million, from $132.2 million for the comparable period of 2000. As a percentage of revenues, income before income taxes for the six months ended March 31, 2001, increased 0.7%, to 8.9%, from 8.2% for the comparable period of 2000, primarily due to an increase in the gross profit percentage achieved by the homebuilding segment.
The consolidated provision for income taxes increased 18.6%, to $59.6 million for the six months ended March 31, 2001, from $50.2 million for the same period of 2000, due to the corresponding increase in income before income taxes. The effective income tax rate decreased 0.5%, to 37.5%, from 38.0% for the comparable period of 2000, primarily due to changes in the estimated overall effective state income tax rate.
The cumulative effect of a change in accounting principle was an increase in income of $2.1 million, net of income taxes, for the six months ended March 31, 2001. This accounting change is the result of the Company's October 1, 2000 adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which requires the Company to recognize its interest rate swap agreements in the consolidated balance sheet at fair value.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - HOMEBUILDING
The following tables set forth certain operating and financial data for the
Company's homebuilding activities:
PERCENTAGES OF HOMEBUILDING REVENUES
---------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- --------------------
2001 2000 2001 2000
-------- -------- -------- --------
Cost and expenses:
Cost of sales .................................. 79.9% 81.8% 80.2% 81.4%
Selling, general and administrative expense .... 10.6 10.4 10.5 10.4
Interest expense ............................... 0.2 0.2 0.3 0.3
-------- -------- -------- --------
Total costs and expenses ......................... 90.7 92.4 91.0 92.1
Other expense (income) ........................... 0.6 (0.1) 0.5 --
-------- -------- -------- --------
Income before income taxes ....................... 8.7% 7.7% 8.5% 7.9%
======== ======== ======== ========
|
HOMES CLOSED THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
--------------------------------------------- ---------------------------------------------
2001 2000 2001 2000
--------------------- --------------------- --------------------- ---------------------
HOMES HOMES HOMES HOMES
CLOSED REVENUES CLOSED REVENUES CLOSED REVENUES CLOSED REVENUES
--------- --------- --------- --------- --------- --------- --------- ---------
($'S IN MILLIONS) ($'S IN MILLIONS)
Mid-Atlantic ...... 630 $ 139.5 680 $ 133.7 1,225 $ 273.5 1,327 $ 257.6
Midwest ........... 386 89.7 443 95.9 874 208.4 954 200.9
Southeast ......... 593 104.5 656 109.4 1,158 204.7 1,248 207.5
Southwest ......... 1,886 314.3 1,825 270.1 3,678 602.8 3,715 545.2
West .............. 835 205.6 760 171.1 1,685 420.3 1,612 351.3
--------- --------- --------- --------- --------- --------- --------- ---------
4,330 $ 853.6 4,364 $ 780.2 8,620 $ 1,709.7 8,856 $ 1,562.5
========= ========= ========= ========= ========= ========= ========= =========
|
NEW NET SALES THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
CONTRACTS ---------------------------------------------------- ----------------------------------------------------
2001 2000 2001 2000
------------------------ ------------------------ ------------------------ ------------------------
HOMES HOMES HOMES HOMES
SOLD $ SOLD $ SOLD $ SOLD $
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
($'S IN MILLIONS) ($'S IN MILLIONS)
Mid-Atlantic .. 860 $ 184.3 761 $ 153.2 1,410 $ 312.7 1,330 $ 275.3
Midwest ....... 595 155.6 476 110.0 921 235.6 841 208.0
Southeast ..... 850 154.0 824 142.5 1,398 252.0 1,442 243.3
Southwest ..... 2,795 453.4 2,360 363.2 4,474 731.1 3,994 616.4
West .......... 1,612 408.6 1,013 226.1 2,738 724.7 1,678 374.4
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
6,712 $ 1,355.9 5,434 $ 995.0 10,941 $ 2,256.1 9,285 $ 1,717.4
========== ========== ========== ========== ========== ========== ========== ==========
|
SALES CONTRACT BACKLOG MARCH 31, 2001 MARCH 31, 2000
------------------------ ------------------------
HOMES $ HOMES $
---------- ---------- ---------- ----------
($'S IN MILLIONS)
Mid-Atlantic ....... 1,008 $ 246.8 1,094 $ 260.5
Midwest ............ 947 252.7 1,021 254.3
Southeast .......... 1,227 225.0 1,030 176.4
Southwest .......... 3,985 679.8 3,360 544.1
West ............... 2,542 679.0 1,233 276.1
---------- ---------- ---------- ----------
9,709 $ 2,083.3 7,738 $ 1,511.4
========== ========== ========== ==========
|
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 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
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
Revenues from homebuilding activities increased 13.2%, to $892.4 million (4,330 homes closed) for the three months ended March 31, 2001, from $788.1 million (4,364 homes closed) for the comparable period of 2000. Revenues from home sales increased in three of the Company's five market regions, with percentage increases ranging from 4.4% in the Mid-Atlantic region to 20.1% in the West region. Revenues from homebuilding activities declined 4.5% and 6.5% in the Southeast and Midwest regions, respectively. The increases in total homebuilding revenues and revenues from home sales were due to strong housing demand throughout the majority of the Company's markets, and an increase in the average selling price of homes closed.
The average selling price of homes closed during the three months ended March 31, 2001 was $197,100, up 10.2% from $178,800 for the same period in 2000. 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 in some of its markets.
The value of new net sales contracts increased 36.3%, to $1,355.9 million (6,712 homes) for the three months ended March 31, 2001, from $995.0 million (5,434 homes) for the same period of 2000. The value of new net sales contracts increased in all of the Company's five market regions, with percentage increases ranging from 8.1% in the Southeast region to 80.7% in the West region. The average price of a new net sales contract in the three months ended March 31, 2001 was $202,000, up 10.3% over the $183,100 average in the three months ended March 31, 2000. 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 in some of its markets.
At March 31, 2001, the Company's backlog of sales contracts was $2,083.3 million (9,709 homes), up 37.8% from $1,511.4 million (7,738 homes) at March 31, 2000. The average sales price of homes in sales backlog was $214,600 at March 31, 2001, up 9.9% from the $195,300 average at March 31, 2000. The average sales price of homes in backlog typically is higher than the average sales price of closed homes because it takes longer to construct more expensive homes.
Cost of sales increased by 10.7%, to $713.4 million for the three months ended March 31, 2001, from $644.3 million for the comparable quarter of 2000. 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 declined 1.6%, to 80.0% for the three months ended March 31, 2001, from 81.6% for the comparable period of 2000, due to the increase in average selling price of homes closed, higher margins obtained from selling more custom features, and reduced material costs. Cost of land/lot sales decreased to 78.9% of land/lot sales revenues for the three months ended March 31, 2001, from 92.1% for the comparable period of 2000. Total homebuilding cost of sales was 79.9% of total homebuilding revenues, down 1.9% from 81.8% for the comparable period of 2000, primarily due to the decline in cost of home sales as a percentage of revenues.
Selling, general and administrative (SG&A) expenses from homebuilding activities increased by 14.6%, to $94.1 million in the three months ended March 31, 2001, from $82.1 million in the comparable period of 2000. As a percentage of homebuilding revenues, SG&A expenses increased to 10.6% for the three months ended March 31, 2001, from 10.4% for the comparable period of 2000.
Interest expense associated with homebuilding activities was $1.6 million or 0.2% of homebuilding revenues in both three month periods. During both periods, the Company expensed the portion of incurred interest and other financing costs which could not be charged to inventory. The Company follows a policy of capitalizing interest only on inventory under construction or development. Capitalized interest and other financing costs are included in cost of sales at the time of home closings.
Other expense associated with homebuilding activities was $5.7 million in the three months ended March 31, 2001, as compared to $0.6 million of other income in the comparable period of 2000. The expense in 2001 is primarily due to the change in fair value of the Company's interest rate swap agreements during the quarter, resulting from the Company's adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," on October 1, 2000, and an adjustment to the carrying value of the Company's investments in venture capital entities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2001 COMPARED TO SIX MONTHS ENDED MARCH 31, 2000
Revenues from homebuilding activities increased 11.4%, to $1,766.0 million (8,620 homes closed) for the six months ended March 31, 2001, from $1,585.7 million (8,856 homes closed) for the comparable period of 2000. Revenues from home sales increased in four of the Company's five market regions, with percentage increases ranging from 3.7% in the Midwest region to 19.6% in the West region. Revenues from homebuilding activities declined 1.3% in the Southeast region. The increases in total homebuilding revenues and revenues from home sales were due to strong housing demand throughout the majority of the Company's markets, and an increase in the average selling price of homes closed.
The average selling price of homes closed during the six months ended March 31, 2001 was $198,300, up 12.4% from $176,400 for the same period in 2000. 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 in some of its markets.
The value of new net sales contracts increased 31.4%, to $2,256.1 million (10,941 homes) for the six months ended March 31, 2001, from $1,717.4 million (9,285 homes) for the same period of 2000. The value of new net sales contracts increased in all of the Company's five market regions, with percentage increases ranging from 3.6% in the Southeast region to 93.5% in the West region. The average price of a new net sales contract in the six months ended March 31, 2001 was $206,200, up 11.5% over the $185,000 average in the six months ended March 31, 2000. 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 in some of its markets.
Cost of sales increased by 9.7%, to $1,416.7 million for the six months ended March 31, 2001, from $1,291.0 million for the comparable period of 2000. 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 declined 1.2%, to 80.3% for the six months ended March 31, 2001, from 81.5% for the comparable period of 2000, due to the increase in average selling price of homes closed, higher margins obtained from selling more custom features, and reduced material costs. Cost of land/lot sales was 78.3% of land/lot sales revenues for the six months ended March 31, 2001 and 2000. Total homebuilding cost of sales was 80.2% of total homebuilding revenues, down 1.2% from 81.4% for the comparable period of 2000, due to the decline in cost of home sales as a percentage of revenues.
Selling, general and administrative (SG&A) expenses from homebuilding activities increased by 12.8%, to $186.0 million in the six months ended March 31, 2001, from $164.8 million in the comparable period of 2000. As a percentage of homebuilding revenues, SG&A expenses increased to 10.5% for the six months ended March 31, 2001, from 10.4% for the comparable period of 2000.
Interest expense associated with homebuilding activities decreased to $4.5 million in the six months ended March 31, 2001, from $4.9 million in the comparable period of 2000. As a percentage of homebuilding revenues, homebuilding interest expense was 0.3% for both six month periods. During both periods, the Company expensed the portion of incurred interest and other financing costs which could not be charged to inventory. The Company follows a policy of capitalizing interest only on inventory under construction or development. Capitalized interest and other financing costs are included in cost of sales at the time of home closings.
Other expense associated with homebuilding activities was $9.0 million in the six months ended March 31, 2001, as compared to $0.7 million of other income in the comparable period of 2000. The expense in 2001 is primarily due to the change in fair value of the Company's interest rate swap agreements during the period, resulting from the Company's adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," on October 1, 2000, and an adjustment to the carrying value of the Company's investments in venture capital entities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - FINANCIAL SERVICES
The following table summarizes financial and other information for the Company's financial services operations:
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
----------------------------- -----------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
($ IN THOUSANDS) ($ IN THOUSANDS)
Number of loans originated .......................... 2,738 1,987 5,075 4,085
------------ ------------ ------------ ------------
Loan origination fees ............................... $ 3,080 $ 2,146 $ 5,726 $ 4,345
Sale of servicing rights and gains from sale of
mortgages ........................................... 6,160 4,514 12,987 9,267
Other revenues ...................................... 1,750 994 3,021 2,202
------------ ------------ ------------ ------------
Total mortgage banking revenues ..................... 10,990 7,654 21,734 15,814
Title policy premiums, net .......................... 3,439 3,096 6,804 6,312
------------ ------------ ------------ ------------
Total revenues ...................................... 14,429 10,750 28,538 22,126
General and administrative expense .................. 9,830 8,022 19,967 15,997
Interest expense .................................... 875 1,157 2,007 2,706
Interest/other (income) ............................. (1,213) (1,290) (2,629) (3,023)
------------ ------------ ------------ ------------
Income before income taxes .......................... $ 4,937 $ 2,861 $ 9,193 $ 6,446
============ ============ ============ ============
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THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
Revenues from the financial services segment increased 34.2%, to $14.4 million in the three months ended March 31, 2001, from $10.8 million in the comparable period of 2000. 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. General and administrative expenses associated with financial services increased 22.5%, to $9.8 million in the three months ended March 31, 2001, from $8.0 million in the comparable period of 2000. As a percentage of financial services revenues, general and administrative expenses decreased by 6.5%, to 68.1% in the three months ended March 31, 2001, from 74.6% in the comparable period in 2000, due primarily to fiscal year 2000 startup expenses in new markets with limited revenues.
SIX MONTHS ENDED MARCH 31, 2001 COMPARED TO SIX MONTHS ENDED MARCH 31, 2000
Revenues from the financial services segment increased 29.0%, to $28.5 million in the six months ended March 31, 2001, from $22.1 million in the comparable period of 2000. 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. General and administrative expenses associated with financial services increased 24.8%, to $20.0 million in the six months ended March 31, 2001, from $16.0 million in the comparable period of 2000. As a percentage of financial services revenues, general and administrative expenses decreased by 2.3%, to 70.0% in the six months ended March 31, 2001, from 72.3% in the comparable period in 2000, due primarily to fiscal year 2000 startup expenses in new markets with limited revenues.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, the Company had available cash and cash equivalents of $126.1 million. Inventories (including finished homes, construction in progress, and developed residential lots and other land) at March 31, 2001, had increased by $342.0 million since September 30, 2000, 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 borrowing an additional $122 million under the revolving credit facility, issuing $200 million of senior subordinated notes and by retaining earnings. As a result, the Company's ratio of homebuilding notes payable to total capital at March 31, 2001, increased 3.5% to 59.7%, from 56.2% at September 30, 2000. The stockholders' equity to total assets ratio decreased 1.7%, to 34.3% at March 31, 2001, from 36.0% at September 30, 2000.
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 $45 million standby letter of credit agreement maturing in 2003 and a $1.7 million non-renewable letter of credit facility. At March 31, 2001, the Company had outstanding homebuilding debt of $1,588.9 million, of which $314.0 million represented advances under the revolving credit facility. Under the debt covenants associated with the revolving credit facility, at March 31, 2001, the Company had additional homebuilding borrowing capacity of $461.0 million. The Company has entered into multi-year interest rate swap agreements aggregating $200 million that serve to 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. It exchanged one of the Company's fixed rate obligations for a variable rate one. In accordance with its terms, it was canceled by the counterparty in April 2001.
At March 31, 2001, the Company had $50 million remaining on its universal shelf registration. In April, 2001, a new universal shelf registration statement for an aggregate amount of $750 million was filed, which included the $50 million remaining on the prior registration. It was declared effective by the Securities and Exchange Commission on April 20, 2001. Under the new shelf registration statement, on May 11, 2001, the Company issued $381.1 million (at maturity) in zero coupon convertible senior notes due May 11, 2021. Each $1,000 note was sold for $524.78, providing a yield-to-maturity of 3.25% per year. Each note is convertible into 17.4927 shares of the Company's common stock. The holders of the notes may put them to the Company at their accreted value on May 11, 2003, May 11, 2008 or May 11, 2013. The Company may call the notes at any time after May 11, 2003. Beginning on May 11, 2003, the Company is obligated to pay contingent interest on the notes should their market price rise to more than 120% of their accreted value.
At March 31, 2001, the financial services segment has mortgage loans held for sale of $129.1 million and loan commitments for $82.5 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 March 31, 2001, $102.8 million had been drawn under this facility. All mortgage company activities are 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 continue to maintain effective shelf registration statements that would facilitate access to the capital markets.
During the three months ended March 31, 2001, the Company's Board of Directors declared a quarterly cash dividend of $0.05 per common share, which was paid on February 15, 2001 to stockholders of record on February 5, 2001. Additionally, the Company's Board of Directors declared an 11% stock dividend on February 27, 2001, paid on March 23, 2001 to stockholders of record on March 9, 2001. Cash was paid in lieu of fractional shares.
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. At March 31, 2001, the Company had repurchased $36.9 million of its common stock, or 2,589,200 shares. No shares were repurchased during the six months ended March 31, 2001. In March 2001, all treasury shares were distributed to shareholders as part of the 11% stock dividend.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In 1999 and 2000, the Company entered into three separate limited partnership agreements with the purpose of investing in start-up and emerging growth companies whose technology and business plans have the potential of permitting the Company to leverage its size, expertise and customer base in the homebuilding industry. The Company originally authorized investment of up to $125 million in such companies over a four-year period. In January 2001, the original $125 million authorization was reduced to $75 million, of which $31.3 million has been invested in such companies to date. The investments are concentrated in e-commerce businesses that serve the homebuilding, real estate and financial service industries, as well as in businesses whose strategic focus allows for the diversification of the Company's operations. As of March 31, 2001, the carrying value of the Company's investments in such companies, reported in homebuilding other assets, amounted to $27.3 million.
Except for ordinary expenditures for the construction of homes, the acquisition of land and lots for development and sale of homes, at March 31, 2001, 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:
- Changes in general economic, real estate and business conditions
- Changes in interest rates and the availability of mortgage financing
- Governmental regulations and environmental matters
- The Company's substantial leverage
- Competitive conditions within the homebuilding industry
- The availability of capital
- The Company's ability to effect its growth strategies successfully
Additional information about issues that could lead to material changes in performance is contained in the Company's annual report on Form 10-K, which is filed with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to interest rate risk on its long term debt. The Company monitors its exposure to changes in interest rates and utilizes both fixed and variable rate debt. For fixed rate debt, changes in interest rates generally affect the value of the debt instrument, but not the Company's earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not impact the fair value of the debt instrument, but may affect the Company's future earnings and cash flows. The Company has mitigated 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 the variable rate borrowings. The Company does not have an obligation to prepay fixed-rate debt prior to maturity and, as a result, interest rate risk and changes in fair value would not have a significant impact on the Company's fixed-rate debt until such time as the Company is required to refinance or repay such debt. In efforts to decrease the Company's overall cost of funds, favorably priced interest rate swaps that obligate the Company to pay a variable rate debt cost and receive a fixed cost are sometimes considered; however, their favorable impact on the Company's overall cost of funds cannot be assured. At March 31, 2001, the Company had such an interest rate swap agreement in the notional amount of $148.5 million. Under its terms, the agreement was canceled in April 2001 by the counterparty. Over the life of the agreement, the Company received a net amount of $2.3 million, which reduced interest incurred.
The Company's interest rate swaps were not designated as hedges under Statement of Financial Accounting Standards No. 133 when it was adopted on October 1, 2001. Since their maturities and other terms did not match the related debt, they were determined to be ineffective hedges (as defined by the Statement). Therefore, the Company is exposed to market risk associated with changes in the fair values of the swaps, since any such changes must be reflected in the Company's income statements.
The following table shows, as of March 31, 2001, the Company's long term debt obligations, principal cash flows by scheduled maturity, weighted average interest rates and estimated fair market value. In addition, the table shows the notional amounts and weighted average interest rates of the Company's interest rate swaps.
Six Months
Ended
Sept. 30, Year ended September 30,
--------- ---------------------------------------------
($ in millions)
FMV @
2001 2002 2003 2004 2005 Thereafter Total 03/31/01
------- ------- ------- -------- -------- ---------- --------- ---------
DEBT:
Fixed rate .............. $ 10.6 $ 23.5 $ 12.1 $ 150.1 $ 199.4 $ 879.2 $ 1,274.9 $ 1,276.0
Average interest rate ... 8.50% 7.01% 6.36% 8.72% 10.85% 9.18% 9.31% --
Variable rate ........... $ 102.8 $ 314.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 416.8 $ 416.8
Average interest rate ... 6.08% 5.65% -- -- -- -- 5.76% --
INTEREST RATE SWAPS:
Variable to fixed ....... $ 200.0 $ 200.0 $ 200.0 $ 200.0 $ 200.0 $ 200.0 -- $ (3.4)
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 -- $ 0.1
Average pay rate ........ * * * * * * -- --
Average receive rate .... 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% -- --
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* - 8.745% until April 15, 2001; 90-day LIBOR + 2.745% thereafter. The fixed to variable interest rate swap agreement was canceled in April 2001.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
On March 12, 2001, the Company issued $200 million principal amount of its 9.375 % Senior Subordinated Notes, due 2011 (the "Notes"). As part of that issuance, the Company executed a Second Supplemental Indenture, dated as of March 12, 2000, among the Company, the Guarantors named therein and American Stock Transfer & Trust Company, as Trustee, authorizing the Notes. The Supplemental Indenture, and the Indenture to which it relates (dated September 11, 2000, 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 9.75% Senior Subordinated Notes, due 2010, and related Indentures and Supplemental Indentures. 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 March 5, 2001 and filed with the Securities Exchange Commission (the "Commission") on March 8, 2001 pursuant to Rule 424(b), and the Company's current report on Form 8-K, dated March 5, 2001 and filed with the Commission on March 8, 2001, each of which is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) On January 25, 2001, the Company held its Annual Meeting of Stockholders (the "Meeting"). At the Meeting, the stockholders re-elected ten members of the Board of Directors of the Company to serve until the Company's next annual meeting of stockholders and until their respective successors are elected and qualified. The names of the ten directors, the votes cast for and the number of votes withheld were as follows:
NAME VOTES FOR VOTES WITHHELD
---- --------- --------------
DONALD R. HORTON 60,076,921 3,132,816
BRADLEY S. ANDERSON 60,356,792 2,852,945
RICHARD BECKWITT 60,072,793 3,136,944
SAMUEL R. FULLER 60,075,990 3,133,747
RICHARD I. GALLAND 60,049,800 3,159,937
RICHARD L. HORTON 59,810,177 3,399,560
TERRILL J. HORTON 59,810,177 3,399,560
FRANCINE I. NEFF 60,372,074 2,837,663
SCOTT J. STONE 57,373,830 5,835,907
DONALD J. TOMNITZ 60,212,918 2,996,819
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(b) At the Meeting, a vote was taken for the approval and adoption of a proposal to amend and restate the D.R. Horton, Inc. 1991 Stock Incentive Plan. The following votes were cast upon this proposal:
FOR: 39,718,081 AGAINST: 23,417,722 ABSTAIN: 73,930 |
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
EXHIBIT NO. DESCRIPTION
4.1 Indenture, dated as of September 11, 2000, among D.R. Horton,
Inc., the guarantors named therein and American Stock Transfer
and Trust Company, as Trustee, relating to the Senior
Subordinated Debt Securities of D.R. Horton, Inc., is
incorporated herein by reference from Exhibit 4.1(a) to the
Company's Current Report on Form 8-K filed with the Commission
on September 7, 2000.
4.2 First Supplemental Indenture, dated as of September 11, 2000,
among D.R. Horton, Inc., the guarantors named therein and
American Stock Transfer and Trust Company, as Trustee, relating
to the 9.75% Senior Subordinated Notes due 2010 of D.R. Horton,
Inc., is incorporated herein by reference from Exhibit 4.1(b) to
the Company's Current Report on Form 8-K filed with the
Commission on September 7, 2000.
4.3 Second Supplemental Indenture, dated as of March 12, 2001, among
D.R. Horton, Inc., the guarantors named therein and American
Stock Transfer and Trust Company, as Trustee, relating to the
9.375% Senior Subordinated Notes due 2011 of D.R. Horton, Inc.,
is incorporated herein by reference from Exhibit 4.1(a) to the
Company's Current Report on Form 8-K filed with the Commission
on March 8, 2001.
4.4 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.
4.5 First Supplemental Indenture, dated as of June 1, 1997, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, relating to the 8 3/8%
Senior Notes due 2009, is incorporated by reference from Exhibit
4.1 to the Company's Form 8-K/A dated April 1, 1997, filed with
the Commission on June 6, 1997.
4.6 Second Supplemental Indenture, dated as of September 30, 1997,
among the Company, the guarantors named therein and American
Stock Transfer & Trust Company, as Trustee, is incorporated by
reference from Exhibit 4.4 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1997, filed
with the Commission on December 8, 1997.
4.7 Third Supplemental Indenture, dated as of April 17, 1998, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, is incorporated by
reference form Exhibit 4.3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998, filed with
Commission on May 14, 1998.
4.8 Fourth Supplemental Indenture, dated as of April 20, 1998, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, is incorporated by
reference from 4.4 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998, filed with Commission
on May 14, 1998.
4.9 Fifth Supplemental Indenture, dated as of August 31, 1998, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, is incorporated herein by
reference from Exhibit 4.7 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1998, filed
with the Commission on December 10, 1998.
4.10 Sixth Supplemental Indenture, dated as of February 4, 1999,
among the Company, the guarantors named therein and American
Stock Transfer & Trust Company, as Trustee, relating to the 8%
Senior Notes due 2009, is incorporated herein by reference from
Exhibit 4.1 to the Company's Form 8-K filed with the Commission
on February 2, 1999.
4.11 Seventh Supplemental Indenture, dated as of August 31, 1999,
among the Company, the guarantors named therein and American
Stock Transfer & Trust Company, as Trustee, is incorporated
herein by reference from Exhibit 4.9 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
1999, filed with the Commission on December 10, 1999.
-26-
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4.12 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 Current Report on Form 8-K, filed
with the Commission on March 17, 2000.
4.13 Ninth Supplemental Indenture, dated as of March 31, 2000, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, is incorporated herein by
reference from Exhibit 4.5 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000, filed with the
Commission on May 12, 2000.
4.14 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, is incorporated herein by reference from
Exhibit 4.1 to the Company's Current Report on Form 8-K, filed
with the Commission on June 6, 2000.
4.15 Indenture dated as of April 15, 1996 between Continental Homes
Holding Corp. ("Continental") and First Union National Bank, as
Trustee, relating to the 10% Senior Notes due 2006, is
incorporated herein by reference from Exhibit 4.1 to
Continental's Annual Report on Form 10-K for the year ended May
31, 1996. The Commission file number for Continental is 1-10700.
4.16 First Supplemental Indenture, dated as of April 20, 1998, among
the Company, the guarantors named therein and First Union
National Bank, as Trustee, is incorporated by reference from
Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998, filed with the Commission on
May 14, 1998
4.17 Second Supplemental Indenture, dated as of August 31, 1998,
among the Company, the guarantors named herein and First Union
National Bank, as Trustee, is incorporated by reference from
Exhibit 4.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 301, 1998, filed with the Commission
on December 10, 1998.
4.18 Third Supplemental Indenture, dated as of August 31, 1999, among
the Company, the guarantors named herein and First Union
National Bank, as Trustee, is incorporated by reference from
Exhibit 4.13 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1999, filed with the Commission
on December 10, 1999.
10.1 Amended and Restated Master Loan and Inter-Creditor Agreement
dated as of July 1, 1999, among D.R. Horton, Inc., as a
Borrower; Nationsbank, N.A., Bank of America National Trust and
Savings Association, Fleet National Bank, Bank United, Comerica
Bank, Credit Lyonnais New York Branch, Societe Generale,
Southwest Agency, The First National Bank of Chicago, PNC Bank,
National Association, Amsouth Bank, Bank One, Arizona, NA, First
American Bank Texas, SSB, Harris Trust and Savings Bank, Sanwa
Bank California, Norwest Bank Arizona, National Association,.
Wachovia Mortgage Company and Summit Bank, as Banks; and
Nationsbank, N.A., as Administrative Agent, is incorporated by
reference from Exhibit 10.21 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1999, filed
with the Commission on December 10, 1999.
10.2* The D.R. Horton, Inc. 1991 Stock Incentive Plan, as amended and
restated.
10.3* Amendment No. 1 to the D.R. Horton, Inc. 1991 Stock Incentive
Plan, as amended and restated.
10.4* Indemnification Agreement, dated as of February 1, 2001, for a
director and executive officer of the Company, Samuel R. Fuller.
(On the same date, an Indemnification Agreement in substantially
identical form was executed for Stacey H. Dwyer, an executive
officer of the Company.
----------
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* filed herewith
(b) Reports on Form 8-K.
On March 8, 2001, 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 $200 million principal amount of the Company's 9.375% Senior Subordinated Notes, due 2011.
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: May 15, 2001 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)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.1 Indenture, dated as of September 11, 2000, among D.R. Horton,
Inc., the guarantors named therein and American Stock Transfer
and Trust Company, as Trustee, relating to the Senior
Subordinated Debt Securities of D.R. Horton, Inc., is
incorporated herein by reference from Exhibit 4.1(a) to the
Company's Current Report on Form 8-K filed with the Commission
on September 7, 2000.
4.2 First Supplemental Indenture, dated as of September 11, 2000,
among D.R. Horton, Inc., the guarantors named therein and
American Stock Transfer and Trust Company, as Trustee, relating
to the 9.75% Senior Subordinated Notes due 2010 of D.R. Horton,
Inc., is incorporated herein by reference from Exhibit 4.1(b) to
the Company's Current Report on Form 8-K filed with the
Commission on September 7, 2000.
4.3 Second Supplemental Indenture, dated as of March 12, 2001, among
D.R. Horton, Inc., the guarantors named therein and American
Stock Transfer and Trust Company, as Trustee, relating to the
9.375% Senior Subordinated Notes due 2011 of D.R. Horton, Inc.,
is incorporated herein by reference from Exhibit 4.1(a) to the
Company's Current Report on Form 8-K filed with the Commission
on March 8, 2001.
4.4 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.
4.5 First Supplemental Indenture, dated as of June 1, 1997, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, relating to the 8 3/8%
Senior Notes due 2009, is incorporated by reference from Exhibit
4.1 to the Company's Form 8-K/A dated April 1, 1997, filed with
the Commission on June 6, 1997.
4.6 Second Supplemental Indenture, dated as of September 30, 1997,
among the Company, the guarantors named therein and American
Stock Transfer & Trust Company, as Trustee, is incorporated by
reference from Exhibit 4.4 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1997, filed
with the Commission on December 8, 1997.
4.7 Third Supplemental Indenture, dated as of April 17, 1998, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, is incorporated by
reference form Exhibit 4.3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998, filed with
Commission on May 14, 1998.
4.8 Fourth Supplemental Indenture, dated as of April 20, 1998, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, is incorporated by
reference from 4.4 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998, filed with Commission
on May 14, 1998.
4.9 Fifth Supplemental Indenture, dated as of August 31, 1998, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, is incorporated herein by
reference from Exhibit 4.7 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1998, filed
with the Commission on December 10, 1998.
4.10 Sixth Supplemental Indenture, dated as of February 4, 1999,
among the Company, the guarantors named therein and American
Stock Transfer & Trust Company, as Trustee, relating to the 8%
Senior Notes due 2009, is incorporated herein by reference from
Exhibit 4.1 to the Company's Form 8-K filed with the Commission
on February 2, 1999.
4.11 Seventh Supplemental Indenture, dated as of August 31, 1999,
among the Company, the guarantors named therein and American
Stock Transfer & Trust Company, as Trustee, is incorporated
herein by reference from Exhibit 4.9 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
1999, filed with the Commission on December 10, 1999.
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EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.12 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 Current Report on Form 8-K, filed
with the Commission on March 17, 2000.
4.13 Ninth Supplemental Indenture, dated as of March 31, 2000, among
the Company, the guarantors named therein and American Stock
Transfer & Trust Company, as Trustee, is incorporated herein by
reference from Exhibit 4.5 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000, filed with the
Commission on May 12, 2000.
4.14 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, is incorporated herein by reference from
Exhibit 4.1 to the Company's Current Report on Form 8-K, filed
with the Commission on June 6, 2000.
4.15 Indenture dated as of April 15, 1996 between Continental Homes
Holding Corp. ("Continental") and First Union National Bank, as
Trustee, relating to the 10% Senior Notes due 2006, is
incorporated herein by reference from Exhibit 4.1 to
Continental's Annual Report on Form 10-K for the year ended May
31, 1996. The Commission file number for Continental is 1-10700.
4.16 First Supplemental Indenture, dated as of April 20, 1998, among
the Company, the guarantors named therein and First Union
National Bank, as Trustee, is incorporated by reference from
Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998, filed with the Commission on
May 14, 1998
4.17 Second Supplemental Indenture, dated as of August 31, 1998,
among the Company, the guarantors named herein and First Union
National Bank, as Trustee, is incorporated by reference from
Exhibit 4.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 301, 1998, filed with the Commission
on December 10, 1998.
4.18 Third Supplemental Indenture, dated as of August 31, 1999, among
the Company, the guarantors named herein and First Union
National Bank, as Trustee, is incorporated by reference from
Exhibit 4.13 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1999, filed with the Commission
on December 10, 1999.
10.1 Amended and Restated Master Loan and Inter-Creditor Agreement
dated as of July 1, 1999, among D.R. Horton, Inc., as a
Borrower; Nationsbank, N.A., Bank of America National Trust and
Savings Association, Fleet National Bank, Bank United, Comerica
Bank, Credit Lyonnais New York Branch, Societe Generale,
Southwest Agency, The First National Bank of Chicago, PNC Bank,
National Association, Amsouth Bank, Bank One, Arizona, NA, First
American Bank Texas, SSB, Harris Trust and Savings Bank, Sanwa
Bank California, Norwest Bank Arizona, National Association,.
Wachovia Mortgage Company and Summit Bank, as Banks; and
Nationsbank, N.A., as Administrative Agent, is incorporated by
reference from Exhibit 10.21 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1999, filed
with the Commission on December 10, 1999.
10.2* The D.R. Horton, Inc. 1991 Stock Incentive Plan, as amended and
restated.
10.3* Amendment No. 1 to the D.R. Horton, Inc. 1991 Stock Incentive
Plan, as amended and restated.
10.4* Indemnification Agreement, dated as of February 1, 2001, for a
director and executive officer of the Company, Samuel R. Fuller.
(On the same date, an Indemnification Agreement in substantially
identical form was executed for Stacey H. Dwyer, an executive
officer of the Company.
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EXHIBIT 10.2
D.R. HORTON, INC.
1991 STOCK INCENTIVE PLAN
(As amended and restated November 9, 2000)
1. Purpose. The purpose of this Plan is to attract and retain directors, officers, key employees and other agents and consultants for D.R. Horton, Inc. (the "Company") and its Subsidiaries and to provide to such persons incentives and rewards for superior performance.
2. Definitions. As used in this Plan,
"Appreciation Right" means a right granted pursuant to Paragraph 5 of this Plan.
"Award" means an Appreciation Right, an Option Right, an award of Performance Shares, a Performance Unit or an award of Restricted Stock.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as in effect from time to time.
"Committee" means the committee to which the Board has delegated its authority to administer this Plan pursuant to Paragraph 13 of this Plan.
"Common Stock" means the Common Stock, par value $.01 per share, of the Company or any security into which such Common Stock may be changed by reason of any transaction or event of the type described in Paragraph 10 of this Plan.
"Company Security" means any security (as that term is defined in Section 2(1) of the Securities Act of 1933) of the Company other than Common Stock.
"Date of Grant" means the date specified by the Board on which a grant of Option Rights, Appreciation Rights, Performance Units or Performance Shares or a grant or sale of Restricted Stock shall become effective (which date shall not be earlier than the date on which the Board takes action with respect thereto).
"ERISA" means the Employee Retirement Income Security Act of 1974, as in effect from time to time.
"Fair Market Value" means the value of any Company Security as determined by the Board in its sole discretion as of the date of any such determination.
"Grant Price" means the price per share of Common Stock at which an Appreciation Right not granted in tandem with an Option Right is granted.
"Management Objectives" means the objectives, if any, established by the Board that
are to be achieved with respect to an Award granted under this Plan, which may be described in terms of Company-wide objectives, in terms of objectives that are related to performance of the division, Subsidiary, department or function within the Company or a Subsidiary in which the Participant receiving the Award is employed or in other terms, and which shall relate to the Performance Period determined by the Board. The Board may adjust Management Objectives and any minimum acceptable level of achievement with respect to any Management Objectives if, in the sole judgment of the Board, events or transactions have occurred which are unrelated to the performance of the Participant and result in a distortion of the Management Objectives or such minimum acceptable level of achievement.
"Market Value per Share" means, at any date, the average of the inside bid and asked price of the Common Stock at the close of trading on that date in the principal market in which the Common Stock is traded, or, if no market for the Common Stock exists, the price determined by the Board in its sole discretion at the time of any such determination.
"Option Price" means the price per share payable on exercise of an Option Right.
"Option Right" means the right to purchase a share of Common Stock upon exercise of an option granted pursuant to Paragraph 4 of this Plan.
"Participant" means a person who is selected by the Board to receive benefits under this Plan and who is at the time a director, officer, key employee, consultant or agent of the Company or any of its Subsidiaries, or who has agreed to commence serving in any such capacity within 90 days of the Date of Grant. Notwithstanding the foregoing, no non-employee director of the Company shall be eligible to receive any benefit under this Plan if he or she would thereby cease to be a "non-employee director" as that term is defined in Rule 16b-3.
"Performance Period" means, in respect of an Award, a period of time established by the Board within which the Management Objectives relating to such Award are to be achieved.
"Performance Shares" means shares of Common Stock granted pursuant to Paragraph 8 of this Plan.
"Performance Unit" means a unit of specified dollar amount established by the Board and awarded pursuant to Paragraph 7 of this Plan.
"Restricted Stock" means shares of Common Stock granted or sold pursuant to Paragraph 6 of this Plan as to which neither the substantial risk of forfeiture nor the restrictions on transfer referred to therein has expired.
"Rule 16b-3" means Rule 16b-3 of the Securities and Exchange Commission (or any successor rule to the same effect) as in effect from time to time.
"Spread" means the excess of the Market Value per Share on the date when an Appreciation Right is exercised over (a) the Option Price provided for in the related Option Right or (b) if there is no tandem Option Right, the Grant Price provided for in the Appreciation Right, multiplied by the number of shares of Common Stock in respect of which the Appreciation Right is exercised.
"Subsidiary" means any corporation, trust, joint venture, partnership or other unincorporated entity in which, at the time, the Company owns or controls, directly or indirectly, (i) in the case of a corporation, not less than 50% of the total combined voting power represented by all classes of stock issued by such corporation, or (ii) in the case of a trust, joint venture, partnership or other unincorporated entity, not less than 50% of the beneficial interest of such entity.
3. Shares Available Under Plan. The shares of Common Stock and any
other Company Security which may be (a) sold upon the exercise of Option Rights,
(b) delivered upon the exercise of Appreciation Rights, (c) granted or sold as
Restricted Stock and released from substantial risks of forfeiture and
restrictions on transfer thereof or (d) delivered in payment of any Performance
Units or as Performance Shares (or in lieu thereof), shall not exceed in the
aggregate 7,419,273 shares, subject to adjustment as provided in Paragraph 10 of
this Plan. Such shares may be shares of original issuance or treasury shares or
a combination of the foregoing. Upon exercise of any Appreciation Rights, there
shall be deemed to have been delivered under this Plan for purposes of this
Paragraph 3 the number of shares of Common Stock covered by the Appreciation
Rights or the related Option Rights, regardless of whether such Appreciation
Rights were paid in cash, Company Securities or shares of Common Stock. Subject
to the provisions of the preceding sentence, any shares of Common Stock which
are subject to Option Rights or Appreciation Rights or are awarded or sold as
Restricted Stock that are terminated, unexercised, forfeited or surrendered or
which expire for any reason will again be available for issuance under this
Plan.
4. Option Rights. The Board may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of options to purchase shares of Common Stock. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the limitations, contained in the following provisions:
(a) Each grant shall specify the number of shares of Common Stock to which it pertains.
(b) Each grant shall specify the Option Price, which shall not be less than 50% of the Market Value per Share on the Date of Grant.
(c) Each grant shall specify that the Option Price shall be payable (i) in cash or by check acceptable to the Company, (ii) by the transfer to the Company of shares of Common Stock having an aggregate Market Value per Share at the time of exercise equal to the aggregate Option Price or (iii) by a combination of such methods of payment. Any grant may provide for deferred payment of the Option Price from the proceeds of sale through a broker on the exercise date of some or all of the shares to which such exercise relates.
(d) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.
(e) Each grant shall specify the required period or periods of continuous service by the Participant with the Company or any Subsidiary and/or the Management Objectives to be achieved before the Option Rights or installments thereof will become exercisable.
(f) Each grant the exercise of which, or the timing of the exercise of which, is dependent, in whole or in part, on the achievement of Management Objectives may specify a minimum level of achievement in respect of the specified Management Objectives below which no Options Rights will be exercisable and may set forth a formula or other method for determining the number of Option Rights that will be exercisable if performance is at or above such minimum but short of full achievement of the Management Objectives.
(g) Option Rights granted under this Plan may be (i) options
which are intended to qualify under particular provisions of the Code,
(ii) options which are not intended to so qualify or (iii) combinations
of the foregoing.
(h) No Option Right shall be exercisable more than ten years from the Date of Grant.
(i) Each grant of Option Rights shall be evidenced by an agreement executed on behalf of the Company by any officer and delivered to the Participant and containing such terms and provisions, consistent with this Plan, as the Board may approve.
5. Appreciation Rights. The Board may also authorize the granting to any Participant of Appreciation Rights. Appreciation Rights may be granted in tandem with Option Rights or separate and apart from a grant of Option Rights. An Appreciation Right shall be a right of the Participant who has been granted such Award to receive from the Company upon exercise an amount which shall be determined by the Board at the Date of Grant and shall be expressed as a percentage of the Spread (not exceeding 100%) at the time of exercise. An Appreciation Right granted in tandem with an Option Right may be exercised only by surrender of the related Option Right. Each grant of an Appreciation Right may utilize any or all of the authorizations, and shall be subject to all of the limitations, contained in the following provisions:
(a) Each grant shall state whether it is made in tandem with Option Rights and, if not made in tandem with any Option Rights, shall specify the number of shares of Common Stock in respect of which it is made.
(b) Each grant made in tandem with Option Rights shall specify the Option Price and each grant not made in tandem with Option Rights shall specify the Grant Price, which in either case shall not be less than 50% of the Market Value per Share on the Date of Grant.
(c) Any grant may specify that the amount payable on exercise of an Appreciation Right may be paid by the Company in (i) cash, (ii) shares of Common Stock having an aggregate Market Value per Share equal to the Spread, (iii) Company Securities having an aggregate Fair Market Value equal to the Spread or (iv) any combination thereof, as determined by the Board in its sole discretion at the time of payment.
(d) Any grant may specify that the amount payable on exercise of an Appreciation Right (valuing shares of Common Stock for this purpose at their Market Value per Share at the date of exercise and valuing Company Securities for this purpose at their Fair Market Value at the date of exercise) may not exceed a maximum specified by the Board at the Date of Grant.
(e) Each grant shall specify the required period or periods of continuous service by the Participant with the Company or any Subsidiary and/or Management Objectives to be achieved before the Appreciation Rights or installments thereof will become exercisable, and shall provide that no Appreciation Right may be exercised except at a time when the Spread is positive and, with respect to any grant made in tandem with Option Rights, when the related Option Right is also exercisable.
(f) Each grant the exercise of which, or the timing of the exercise of which, is dependent, in whole or in part, on the achievement of Management Objectives may specify a minimum level of achievement in respect of the specified Management Objectives below which no Appreciation Rights will be exercisable and may set forth a formula or other method for determining the number of Appreciation Rights that will be exercisable if performance is at or above such minimum but short of full achievement of the Management Objectives.
(g) Each grant of an Appreciation Right shall be evidenced by a notification executed on behalf of the Company by any officer and delivered to and accepted by the Participant receiving the grant, which notification shall describe such Appreciation Right, identify any Option Right granted in tandem with such Appreciation Right, state that such Appreciation Right is subject to all the terms and conditions of this Plan and contain such other terms and provisions, consistent with this Plan, as the Board may approve.
6. Restricted Stock. The Board may also authorize the granting or sale to Participants of Restricted Stock. Each such grant or sale may utilize any or all of the authorizations, and shall be subject to all of the limitations, contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate transfer of the ownership of shares of Common Stock to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall provide that the shares of Restricted Stock covered by such grant or sale shall be subject, for a period to be determined by the Board at the Date of Grant, to a "substantial risk of forfeiture" within the meaning of Section 83 of the Code and the regulations of the Internal Revenue Service thereunder.
(d) Each such grant or sale shall provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock shall be prohibited or restricted in a manner and to the extent prescribed by the Board at the Date of Grant (which restrictions may include, without limiting the generality of the foregoing, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee).
(e) Each grant or sale of Restricted Stock shall be evidenced by an agreement executed on behalf of the Company by any officer and delivered to and accepted by the Participant and shall contain such terms and provisions, consistent with this Plan, as the Board may approve.
7. Performance Units. The Board may also authorize the granting of Performance Units which will become payable to a Participant upon achievement of specified Management Objectives. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the limitations, contained in the following provisions:
(a) Each grant shall specify the number of Performance Units to which it pertains.
(b) Each grant shall specify the Management Objectives that are to be achieved by the Participant.
(c) Each grant shall specify a minimum acceptable level of achievement in respect of the specified Management Objectives below which no payment will be made and
may set forth a formula or other method for determining the amount of the payment to be made if performance is at or above such minimum but short of full achievement of the Management Objectives.
(d) Each grant shall specify the time and manner of payment of Performance Units which have become payable, which payment may be made in (i) cash, (ii) shares of Common Stock having an aggregate Market Value per Share equal to the aggregate value of the Performance Units which have become payable, (iii) Company Securities having an aggregate Fair Market Value equal to the aggregate value of the Performance Units which have become payable or (iv) any combination thereof, as determined by the Board in its sole discretion at the time of payment.
(e) Each grant of a Performance Unit shall be evidenced by a notification executed on behalf of the Company by any officer and delivered to and accepted by the Participant, which notification shall describe the Performance Units, state that such Performance Units are subject to all the terms and conditions of this Plan, and contain such other terms and provisions, consistent with this Plan, as the Board may approve.
8. Performance Shares. The Board may also authorize the granting to Participants of Performance Shares. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the limitations, contained in the following provisions:
(a) Each grant shall specify the number of Performance Shares to which it pertains.
(b) Each grant shall specify the Management Objectives that are to be achieved by the Participant.
(c) Each grant shall specify a minimum acceptable level of achievement in respect of the specified Management Objectives below which no delivery of Performance Shares will occur and may set forth a formula or other method for determining the number of Performance Shares to be delivered if performance is at or above such minimum but short of full achievement of the Management Objectives.
(d) Each grant shall specify the time and manner of delivery of Performance Shares which have been earned, provided that in lieu of the delivery of all or any Performance Shares, the Participant may receive (i) cash in an amount equal to the aggregate Market Value per Share of the Performance Shares, (ii) Company Securities having an aggregate Fair Market Value equal to the aggregate Market Value per Share of the Performance Shares or (iii) any combination thereof, as determined by the Board in its sole discretion at the time of payment.
(e) Each grant of Performance Shares shall be evidenced by a notification executed on behalf of the Company by any officer and delivered to and accepted by the Participant, which notification shall state that such Performance Shares are subject to all the terms and conditions of this Plan and contain such other terms and provisions, consistent with this Plan, as the Board may approve.
9. Transferability. No Option Right, Appreciation Right, Performance Unit that has not become payable or Performance Share that has not been delivered shall be transferable by a Participant other than by will or the laws of descent and distribution. Option Rights or Appreciation Rights shall be exercisable during the Participant's lifetime only by the Participant or by the Participant's guardian or legal representative.
10. Adjustments. The Board may make or provide for such adjustments in the maximum number of shares specified in Paragraph 3 of this Plan, in the numbers of shares of Common Stock covered by outstanding Option Rights, Appreciation Rights, awards of Restricted Stock, awards of Performance Units and awards of Performance Shares granted hereunder, and/or in the Option Price or Grant Price applicable to such Option Rights and Appreciation Rights, as the Board in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of Participants that otherwise would result from any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, merger, consolidation, spin-off, reorganization, partial or complete liquidation, issuance of rights or warrants to purchase securities or any other corporate transaction or event having an effect similar to any of the foregoing.
11. Fractional Shares. The Company shall not be required to issue any fractional share of Common Stock or of any Company Security pursuant to this Plan. The Board may provide for the elimination of fractions or for the settlement of fractions in cash.
12. Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld, which arrangements in the discretion of the Board may include relinquishment of a portion of such benefit.
13. Administration of the Plan.
(a) This Plan shall be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to a committee of not less than two non-employee directors appointed by the Board, each of whom shall be a "non-employee director" within the meaning of Rule 16b-3 (the "Committee"). To the extent of such delegation, references herein to the "Board" shall include the Committee. A majority of the Committee shall constitute a quorum, and the action of the members of the Committee present at any
meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the Committee.
(b) The interpretation and construction by the Board of any provision of this Plan or of any agreement, notification or document evidencing the grant of an Award and any determination by the Board pursuant to any provision of this Plan or of any such agreement, notification or document shall be final and conclusive. No member of the Board or the Committee shall be liable for any such action or determination made in good faith.
(c) Notwithstanding any other provision of this Plan, this Plan may be administered by the Chairman of the Board of the Company with respect to matters relating solely to Participants who are not subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended, and any references to the "Board" or the "Committee", as the case may be, shall include the Chairman of the Board; provided, however, that no such authority shall be deemed to have been granted hereunder to the extent that any such grant shall cause the disqualification of this Plan from reliance on the exemption provided by Rule 16b-3.
14. Amendments, Etc.
(a) This Plan may be amended from time to time by the Board but may not be amended by the Board without further approval by the stockholders of the Company if such amendment would result in this Plan no longer satisfying the requirements of Rule 16b-3.
(b) The Board may, with the concurrence of the affected Participant, cancel any agreement evidencing any Award granted under this Plan. In the event of such cancellation, the Board may authorize the granting of new Awards (which may or may not cover the same number of shares or units which had been the subject of the prior Award) in such manner, at such price and subject to the same terms, conditions and discretions as would have been applicable under this Plan had the canceled Awards not been granted.
(c) In case of termination of employment by reason of death, disability or retirement under a retirement plan of the Company or a Subsidiary of an Optionee who holds an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Performance Units which have not become fully payable or any Performance Shares that have not been delivered, the Board may, in its sole discretion, accelerate the time at which such Option Right or Appreciation Right may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time at which such Performance Units will be deemed to have become fully payable or Performance Shares will be delivered.
(d) This Plan shall not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor shall it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant's employment or other service at any time.
EXHIBIT 10.3
D.R. HORTON, INC.
1991 STOCK INCENTIVE PLAN
(Restated)
AMENDMENT NO. 1
As of February 27, 2001, the Board of Directors of D.R. Horton, Inc. declared an 11% stock dividend payable in shares of its common stock. To give effect to such stock dividend, the Committee has amended the D.R. Horton, Inc. 1991 Stock Incentive Plan, as amended and restated (the "Plan"), in the following respects:
1. The first sentence of Paragraph 3 of the Plan is hereby amended to read in its entirety as follows:
The shares of Common Stock and any other Company Security which may be
(a) sold upon the exercise of Option Rights, (b) delivered upon the
exercise of Appreciation Rights, (c) granted or sold as Restricted Stock
and released from substantial risks of forfeiture and restrictions on
transfer thereof or (d) delivered in payment of any Performance Units or as
Performance Shares (or in lieu thereof), shall not exceed in the aggregate
8,040,373 shares, subject to adjustment as provided in Paragraph 10 of this
Plan.
2. In all other respects, the Plan as previously approved is hereby ratified and confirmed. March 9, 2001
D.R. Horton, Inc.
By: /s/ Samuel R. Fuller --------------------------------------- Samuel R. Fuller, Executive Vice President, Treasurer and Chief Financial Officer Attest: /s/ Paul W. Buchschacher ------------------------------------------ Paul W. Buchschacher, Assistant Secretary |
EXHIBIT 10.4
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the 1st day of February, 2001, by and between D.R. Horton, Inc., a Delaware corporation (the "Company"), and Samuel R. Fuller, a director and officer of the Company (the "Indemnitee").
RECITALS
A. The Indemnitee is presently serving as a director and officer of the Company and the Company desires the Indemnitee to continue to serve in such capacities. The Indemnitee is willing, subject to certain conditions including without limitation the execution and performance of this Agreement by the Company, to continue to serve in such capacities.
B. In addition to the indemnification to which the Indemnitee is entitled under the certificate of incorporation of the Company (the "Certificate"), the Company may in its discretion obtain at its sole expense insurance protecting its officers and directors including the Indemnitee against certain losses arising out of actual or threatened actions, suits or proceedings to which such persons may be made or threatened to be made parties. If such insurance is obtained, there can be no assurance that such insurance will not be cancelled by the insurer or that the Company will elect not to continue or renew such insurance.
Accordingly, and in order to induce the Indemnitee to continue to serve in his present capacities, the Company and Indemnitee agree as follows:
1. Continued Service: The Indemnitee will continue to serve as a director of the Company so long as he is duly elected and qualified in accordance with the bylaws of the Company (the "Bylaws") or until he resigns in writing in accordance with applicable law and will continue to
serve as an officer of the Company at the pleasure of its Board of Directors (the "Board") so long as he is duly appointed or elected by the Board or until he resigns in writing in accordance with applicable law.
2. Initial Indemnity. (a) The Company shall indemnify the Indemnitee when he was or is a party or is threatened to be made a party to any pending, threatened or completed action, suit or proceeding, whether civil, administrative, investigative or criminal (other than an action by or in the name of the Company), by reason of the fact that he is or was or had agreed to become a director or officer of the Company, or is or was serving or had agreed to serve at the written request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in any such case owned or controlled by the Company, or by reason of any action alleged to have been taken or omitted in such capacity, against any and all costs, charges and expenses, including without limitation, attorneys' and others' fees and expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee in connection therewith and any appeal therefrom if the Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the Indemnitee did not satisfy the foregoing standard of conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee when he was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding
by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was or had agreed to become a director or officer of the Company, or is or was serving or had agreed to serve at the written request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in any such case owned or controlled by the Company, against costs, charges and expenses (including attorneys' and others' fees and expenses) actually and reasonably incurred by him in connection with the defense or settlement thereof or any appeal therefrom if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such action, suit or proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
(c) To the extent that the Indemnitee has been successful on the merits or otherwise, including without limitation the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections 2(a) or 2(b) hereof or in defense of any claim, issue or matter therein, he shall be indemnified against costs, charges and expenses (including attorneys' and others' fees and expenses) actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under Sections 2(a) or 2(b) (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination in
accordance with Section 4 hereof or any applicable provision of the Certificate, Bylaws, other agreement, resolution or otherwise. Such determination shall be made (i) by the Board, by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding or (ii) if such a quorum of disinterested directors is not available or so directs, by independent legal counsel (designated in the manner provided below in this subsection (d)) in a written opinion or (iii) by the stockholders of the Company (the "Stockholders"). Independent legal counsel shall be designated by vote of a majority of the disinterested directors; provided, however, that if the Board is unable or fails to so designate, such designation shall be made by the Indemnitee subject to the approval of the Company (which approval shall not be unreasonably withheld). Independent legal counsel shall not be any person or firm who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of such independent legal counsel and to indemnify fully such counsel against costs, charges and expenses (including attorneys' and others' fees and expenses) actually and reasonably incurred by such counsel in connection with this Agreement or the opinion of such counsel pursuant hereto.
(e) All expenses (including attorneys' and others' fees and expenses) incurred by the Indemnitee in his capacity as a director or officer of the Company in defending a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding in the manner prescribed by Section 4(b) hereof.
(f) The Company shall not adopt any amendment to the Certificate or Bylaws the effect of which would be to deny, diminish or encumber the Indemnitee's rights to indemnity
pursuant to the Certificate, Bylaws, the General Corporation Law of the State of Delaware (the "DGCL") or any other applicable law as applied to any act or failure to act occurring in whole or in part prior to the date (the "Effective Date") upon which the amendment was approved by the Board or the Stockholders, as the case may be. In the event that the Company shall adopt any amendment to the Certificate or Bylaws the effect of which is to so deny, diminish or encumber the Indemnitee's rights to indemnity, such amendment shall apply only to acts or failures to act occurring entirely after the Effective Date thereof unless the Indemnitee shall have voted in favor of such adoption as a director or holder of record of the Company's voting stock, as the case may be.
3. Additional Indemnification. (a) Pursuant to Section 145(f) of the
DGCL, without limiting any right which the Indemnitee may have pursuant to
Section 2 hereof, the Certificate, the Bylaws, the DGCL, any policy of insurance
or otherwise, but subject to the limitations on the maximum permissible
indemnity which may exist under applicable law at the time of any request for
indemnity hereunder determined as contemplated by Section 3(a) hereof, the
Company shall indemnify the Indemnitee against any amount which he is or becomes
legally obligated to pay relating to or arising out of any claim made against
him because of any act, failure to act or neglect or breach of duty, including
any actual or alleged error, misstatement or misleading statement, which he
commits, suffers, permits or acquiesces in while acting in his capacity as a
director or officer of the Company, or, at the written request of the Company,
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, in any such case owned or controlled
by the Company. The payments which the Company is obligated to make pursuant to
this Section 3 shall include without limitation damages, judgments, settlements
and charges, costs, expenses, expenses of investigation and expenses of defense
of legal actions,
suits, proceedings or claims and appeals therefrom, and expenses of appeal, attachment or similar bonds; provided, however, that the Company shall not be obligated under this Section 3(a) to make any payment in connection with any claim against the Indemnitee:
(i) to the extent of any fine or similar governmental imposition which the Company is prohibited by applicable law from paying which results in a final, non- appealable order; or
(ii) to the extent based upon or attributable to the Indemnitee gaining in fact a personal profit to which he was not legally entitled, including without limitation profits made from the purchase and sale by the Indemnitee of equity securities of the Company which are recoverable by the Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, and profits arising from transactions in publicly traded securities of the Company which were effected by the Indemnitee in violation of Section 10(b) of the Securities Exchange Act of 1934, including Rule l0b-5 promulgated thereunder. The determination of whether the Indemnitee shall be entitled to indemnification under this Section 3(a) may be, but shall not be required to, be made in accordance with Section 4(a) hereof. If that determination is so made, it shall be binding upon the Company and the Indemnitee for all purposes.
(b) Expenses (including without limitation attorneys' and others' fees
and expenses) incurred by Indemnitee in defending any actual or threatened civil
or criminal action, suit, proceeding or claim shall be paid by the Company in
advance of the final disposition thereof as authorized in accordance with
Section 4(b) hereof.
4. Certain Procedures Relating to Indemnification and Advancement of Expenses. (a) Except as otherwise permitted or required by the DGCL, for purposes of pursuing his rights to indemnification under Sections 2(a), 2(b) or 3(a) hereof, as the case may be, the Indemnitee may, but shall not be required to, (i) submit to the Board a sworn statement of request for indemnification substantially in the form of Exhibit 1 attached hereto and made a part hereof (the "Indemnification Statement") averring that he is entitled to indemnification hereunder; and (ii) present to the Company reasonable evidence of all indemnification amounts for which payment is requested. Submission of an Indemnification Statement to the Board shall create a presumption that the Indemnitee is entitled to indemnification under Sections 2(a), 2(b) or 3(a) hereof, as the case may be, and the Board shall be deemed to have determined that the Indemnitee is entitled to such indemnification unless within 30 calendar days after submission of the Indemnification Statement the Board shall determine by vote of a majority of the directors at a meeting at which a quorum is present, based upon clear and convincing evidence (sufficient to rebut the foregoing presumption) and the Indemnitee shall have received notice within such period in writing of such determination that the Indemnitee is not so entitled to indemnification, which notice shall disclose with particularity the evidence in support of the Board's determination. The foregoing notice shall be sworn to by all persons who participated in the determination and voted to deny indemnification. The provisions of this Section 4(a) are intended to be procedural only and shall not affect the right of the Indemnitee to indemnification under this Agreement and any determination by the Board that the Indemnitee is not entitled to indemnification and any failure to make the payments requested in the Indemnification Statement shall be subject to judicial review as provided in Section 6 hereof.
(b) For purposes of determining whether to authorize advancement of expenses pursuant to Section 2(e) hereof, the Indemnitee shall submit to the Board a sworn statement of request for advancement of expenses substantially in the form of Exhibit 2 attached hereto and made a part hereof (the "Undertaking"), averring that (i) he has reasonably incurred or will reasonably incur actual expenses in defending an actual civil or criminal action, suit, proceeding or claim and (ii) he undertakes to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Company under this Agreement or otherwise. For purposes of requesting advancement of expenses pursuant to Section 3(b) hereof, the Indemnitee may, but shall not be required to, submit an Undertaking or such other form of request as he determines to be appropriate (an "Expense Request"). Upon receipt of an Undertaking or Expense Request, as the case may be, the Board shall within 10 calendar days authorize immediate payment of the expenses stated in the Undertaking or Expense Request, as the case may be, whereupon such payments shall immediately be made by the Company. No security shall be required in connection with any Undertaking or Expense Request and any Undertaking or Expense Request shall be accepted without reference to the Indemnitee's ability to make repayment.
5. Subrogation; Duplication of Payments. (a) In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make any payment in connection with any claim made against the Indemnitee to the extent the Indemnitee has actually
received payment (under any insurance policy, the Certificate, the Bylaws or otherwise) of the amounts otherwise payable hereunder.
6. Enforcement. (a) If a claim for indemnification made to the Company pursuant to Section 4 hereof is not paid in full by the Company within 30 calendar days after a written claim has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim.
(b) In any action brought under Section 6(a) hereof, it shall be a defense to a claim for indemnification pursuant to Sections 2(a) or 2(b) hereof (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the Undertaking, if any is required, has been tendered to the Company) that the Indemnitee has not met the standards of conduct which make it permissible under the DGCL for the Company to indemnify the Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure of the Company (including the Board, independent legal counsel or the Stockholders) to have made a determination prior to commencement of such action that indemnification of the Indemnitee is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Company (including the Board, independent legal counsel or the Stockholders) that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct.
(c) It is the intent of the Company that the Indemnitee not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Indemnitee hereunder. Accordingly, if it should
appear to the Indemnitee that the Company has failed to comply with any of its
obligations under the Agreement or in the event that the Company or any other
person takes any action to declare the Agreement void or unenforceable, or
institutes any action, suit or proceeding designed (or having the effect of
being designed) to deny, or to recover from, the Indemnitee the benefits
intended to be provided to the Indemnitee hereunder, the Company irrevocably
authorizes the Indemnitee from time to time to retain counsel of his choice, at
the expense of the Company as hereafter provided, to represent the Indemnitee in
connection with the initiation or defense of any litigation or other legal
action, whether by or against the Company or any director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction. Regardless of
the outcome thereof, the Company shall pay and be solely responsible for any and
all costs, charges and expenses, including without limitation attorneys' and
others' fees and expenses, reasonably incurred by the Indemnitee (i) as a result
of the Company's failure to perform this Agreement or any provision thereof or
(ii) as a result of the Company or any person contesting the validity or
enforceability of this Agreement or any provision thereof as aforesaid.
7. Merger or Consolidation. In the event that the Company shall be a constituent corporation in a consolidation, merger or other reorganization, the Company, if it shall not be the surviving, resulting or other corporation therein, shall require as a condition thereto the surviving, resulting or acquiring corporation to agree to indemnify the Indemnitee to the full extent provided in Section 3 hereof. Whether or not the Company is the resulting, surviving or acquiring corporation in any such transaction, the Indemnitee shall also stand in the same position under this Agreement with respect to the resulting, surviving or acquiring corporation as he would have with respect to the Company if its separate existence had continued.
8. Nonexclusivity and Severability. (a) The right to indemnification provided by this Agreement shall not be exclusive of any other rights to which the Indemnitee may be entitled under the Certificate, Bylaws, the DGCL, any other statute, insurance policy, agreement, vote of Stockholders or of directors or otherwise, both as to actions in his official capacity and as to actions in another capacity while holding such office, and shall continue after the Indemnitee has ceased to be a director, officer, employee or agent and shall inure to the benefit of his heirs, executors and administrators.
(b) If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.
9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof.
10. Modification; Survival. This Agreement contains the entire agreement of the parties relating to the subject matter hereof. This Agreement may be modified only by an instrument in writing signed by both parties hereto. The provisions of this Agreement shall survive the death, disability, or incapacity of the Indemnitee or the termination of the Indemnitee's service as a director or officer of the Company and shall inure to the benefit of the Indemnitee's heirs, executors and administrators.
11. Certain Terms. For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes
assessed on Indemnitee with respect to any employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefit plan, its participants or beneficiaries; references to the masculine shall include the feminine and vice versa; references to the singular shall include the plural and vice versa; and if the Indemnitee acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan he shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
D.R. HORTON, INC.
By: /s/ Donald J. Tomnitz -------------------------------------- Donald J. Tomnitz, Vice Chairman, President and Chief Executive Officer /s/ Samuel R. Fuller -------------------------------------- Samuel R. Fuller |
Exhibit 1
INDEMNIFICATION STATEMENT
STATE OF TEXAS )
) ss.
COUNTY OF TARRANT )
|
I, ______________________________, being first duly sworn, do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the Indemnification Agreement, dated as of ____________________, 200__, between D.R. Horton, Inc., a Delaware corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against charges, costs, expenses (including attorneys' and others' fees and expenses), judgments, fines and amounts paid in settlement, all of which (collectively, "Liabilities") have been or will be incurred by me in connection with an actual or threatened action, suit, proceeding or claim to which I am a party or am threatened to be made a party.
3. With respect to all matters related to any such action, suit, proceeding or claim, I am entitled to be indemnified as herein contemplated pursuant to the aforesaid Indemnification Agreement.
4. Without limiting any other rights which I have or may have, I am requesting indemnification against Liabilities which have or may arise out of
Subscribed and sworn to before me, a Notary Public in and for said County and State, this _____ day of _________________, 200__.
[Seal]
My commission expires the ____ day of ________________, 200___.
Exhibit 2
UNDERTAKING
STATE OF TEXAS )
) ss.
COUNTY OF TARRANT )
|
I, ___________________________, being first duly sworn do depose and say as follows:
1. This Undertaking is submitted pursuant to the Indemnification Agreement, dated as of ____________________, 200___, between D.R. Horton, Inc., a Delaware corporation (the "Company"), and the undersigned.
2. I am requesting advancement of certain costs, charges and expenses which I have incurred or will incur in defending an actual or pending civil or criminal action, suit, proceeding or claim.
3. I hereby undertake to repay this advancement of expenses if it shall ultimately be determined that I am not entitled to be indemnified by the Company under the aforesaid Indemnification Agreement or otherwise.
Subscribed and sworn to before me, a Notary Public in and for said County and State, this _____ day of _________________, 200__.
[Seal]
My commission expires the ____ day of ________________, 200___.