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  • Table of Contents

    UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

    _______________________________________________________________________________________________________________

    FORM 10-QQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

    THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended June 30, 2017

    Commission file number 1-14122___________________________________________________________________________________________________________________

    D.R. Horton, Inc.(Exact name of registrant as specified in its charter)

    Delaware 75-2386963

    (State or other jurisdiction ofincorporation or organization)

    (I.R.S. EmployerIdentification No.)

    1341 Horton Circle

    Arlington, Texas 76011 (Address of principal executive offices) (Zip Code) (817) 390-8200 (Registrants telephone number, including area code)

    301 Commerce Street, Suite 500, Fort Worth, Texas 76102 (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 thepreceding 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 thepast 90 days.

    Yes No

    Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).

    Yes No

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerginggrowth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2of the Exchange Act.

    Large accelerated filer

    Accelerated filer

    Non-accelerated filer (Do not check if a

    smaller reporting company)

    Smaller reporting company

    Emerging growth company

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

    Yes No

    Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.Common stock, $.01 par value 374,283,035 shares as of July 19, 2017

  • D.R. HORTON, INC. AND SUBSIDIARIESFORM 10-Q

    INDEX

    Page

    PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements (unaudited)

    Consolidated Balance Sheets at June 30, 2017 and September 30, 2016 3Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended June 30, 2017 and 2016 4Consolidated Statements of Cash Flows for the nine months ended June 30, 2017 and 2016 5Notes to Consolidated Financial Statements 6

    ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 34ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 59ITEM 4. Controls and Procedures 60PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 61ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 61ITEM 6. Exhibits 62SIGNATURE 63

    2

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    PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS

    D.R. HORTON, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

    June 30,

    2017 September 30,

    2016

    (In millions)(Unaudited)

    ASSETS Homebuilding: Cash and cash equivalents $ 460.8 $ 1,271.8Restricted cash 10.9 9.5Inventories:

    Construction in progress and finished homes 4,905.6 4,034.7Residential land and lots developed and under development 4,529.2 4,135.2Land held for development 107.7 137.8Land held for sale 11.5 33.2

    9,554.0 8,340.9Deferred income taxes, net of valuation allowance of $10.4 million and $10.3 million at June 30, 2017 and September 30, 2016, respectively 383.7 476.3Property and equipment, net 179.6 139.5Other assets 470.3 456.2Goodwill 80.0 80.0 11,139.3 10,774.2Financial Services and Other: Cash and cash equivalents 51.6 31.4Mortgage loans held for sale 627.4 654.0Property and equipment, net 103.2 55.9Other assets 55.6 43.4 837.8 784.7

    Total assets $ 11,977.1 $ 11,558.9

    LIABILITIES Homebuilding: Accounts payable $ 602.6 $ 537.0Accrued expenses and other liabilities 957.6 917.1Notes payable 2,453.1 2,798.3 4,013.3 4,252.4Financial Services and Other: Accounts payable and other liabilities 53.7 40.5Mortgage repurchase facility 473.4 473.0 527.1 513.5

    Total liabilities 4,540.4 4,765.9Commitments and contingencies (Note K)

    EQUITY Preferred stock, $.10 par value, 30,000,000 shares authorized, no shares issued Common stock, $.01 par value, 1,000,000,000 shares authorized, 383,273,918 shares issued and 374,223,847 shares outstanding at June 30, 2017 and 380,123,258 shares issued and 372,923,187 shares outstanding at September 30, 2016 3.8 3.8Additional paid-in capital 2,957.2 2,865.8Retained earnings 4,670.1 4,057.2Treasury stock, 9,050,071 shares and 7,200,071 shares at June 30, 2017 and September 30, 2016, respectively, at cost (194.9) (134.3)

    Stockholders equity 7,436.2 6,792.5Noncontrolling interests 0.5 0.5

    Total equity 7,436.7 6,793.0

  • Total liabilities and equity $ 11,977.1 $ 11,558.9

    See accompanying notes to consolidated financial statements.

    3

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    D.R. HORTON, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

    Three Months Ended

    June 30, Nine Months Ended

    June 30,

    2017 2016 2017 2016

    (In millions, except per share data)

    (Unaudited)Homebuilding: Revenues:

    Home sales $ 3,662.3 $ 3,118.7 $ 9,618.1 $ 8,145.6Land/lot sales and other 22.2 30.1 56.9 65.2

    3,684.5 3,148.8 9,675.0 8,210.8Cost of sales:

    Home sales 2,936.9 2,486.5 7,713.8 6,512.1Land/lot sales and other 18.8 28.4 45.2 56.2Inventory and land option charges 5.4 8.1 19.9 16.0

    2,961.1 2,523.0 7,778.9 6,584.3Gross profit:

    Home sales 725.4 632.2 1,904.3 1,633.5Land/lot sales and other 3.4 1.7 11.7 9.0Inventory and land option charges (5.4) (8.1) (19.9) (16.0)

    723.4 625.8 1,896.1 1,626.5Selling, general and administrative expense 309.5 279.3 872.4 778.4Other (income) expense (1.3) (1.9) (7.8) (11.2)

    Homebuilding pre-tax income 415.2 348.4 1,031.5 859.3Financial Services and Other: Revenues 91.9 83.1 256.9 205.4General and administrative expense 65.0 57.5 183.1 157.1Interest and other (income) expense (2.4) (4.6) (11.2) (12.8)

    Financial services and other pre-tax income 29.3 30.2 85.0 61.1Income before income taxes 444.5 378.6 1,116.5 920.4Income tax expense 155.5 128.8 391.4 317.8

    Net income $ 289.0 $ 249.8 $ 725.1 $ 602.6

    Other comprehensive income, net of income tax: Debt securities collateralized by residential real estate:

    Net change in unrealized gain 1.2Reclassification adjustment for net gain realized in net income (2.6)

    Comprehensive income $ 289.0 $ 249.8 $ 725.1 $ 601.2

    Basic net income per common share $ 0.77 $ 0.67 $ 1.94 $ 1.63

    Net income per common share assuming dilution $ 0.76 $ 0.66 $ 1.92 $ 1.61

    Cash dividends declared per common share $ 0.10 $ 0.08 $ 0.30 $ 0.24

    See accompanying notes to consolidated financial statements.

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    D.R. HORTON, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

    Nine Months Ended

    June 30,

    2017 2016

    (In millions) (Unaudited)

    OPERATING ACTIVITIES Net income $ 725.1 $ 602.6Adjustments to reconcile net income to net cash (used in) provided by operating activities:

    Depreciation and amortization 40.4 41.4Amortization of discounts and fees 3.9 4.1Stock based compensation expense 40.4 36.8Excess income tax benefit from employee stock awards (10.5) (6.3)Deferred income taxes 92.0 46.7Inventory and land option charges 19.9 16.0Gain on sale of debt securities collateralized by residential real estate (4.5)

    Changes in operating assets and liabilities: Increase in construction in progress and finished homes (870.9) (879.1)(Increase) decrease in residential land and lots developed, under development, held for development and held for sale (352.2) 151.3Increase in other assets (29.5) (4.6)Decrease (increase) in mortgage loans held for sale 26.2 (3.5)Increase in accounts payable, accrued expenses and other liabilities 124.4 87.7

    Net cash (used in) provided by operating activities (190.8) 88.6INVESTING ACTIVITIES

    Purchases of property and equipment (103.5) (65.2)Increase in restricted cash (9.9) (2.1)Net principal decrease of other mortgage loans and real estate owned 5.3 4.3(Purchases of) proceeds from debt securities collateralized by residential real estate (8.8) 35.8Payments related to acquisition of a business (4.1)

    Net cash used in investing activities (121.0) (27.2)FINANCING ACTIVITIES

    Proc

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