What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-11-19 compared with 2023-11-17 · 118 added, 128 removed, 1235 unchanged (17% of the section changed)

47 unchanged sentences

We have served as the Company’s auditor since 2018.

Dallas, Texas

Fort Worth, Texas

November 19, 2024

24 unchanged sentences

/s/ Ernst & Young LLP

Dallas, Texas

Fort Worth, Texas

November 19, 2024

46 unchanged sentences

Selling, general and administrative expense 3,599.5 3,248.8 2,933.7

Gain on sale of assets — — ( 14.0 )

Loss on extinguishment of debt — — 18.1

Other (income) expense ( 348.8 ) ( 213.1 ) ( 59.3 )

33 unchanged sentences

— — — ( 1,105.9 ) — ( 1,105.9 )

Distributions to noncontrolling interests — — — — ( 0.1 ) ( 0.1 )

Change of ownership interest in Forestar — ( 1.6 ) — — 3.5 1.9

Noncontrolling interest acquired — — — — 18.0 18.0

Balances at September 30, 2022 ( 343,953,023 shares)

12 unchanged sentences

Change of ownership interest in Forestar — ( 2.8 ) — — 2.9 0.1

Noncontrolling interest acquired — — — — 18.0 18.0

Balances at September 30, 2023 ( 334,848,565 shares)

27 unchanged sentences

Inventory and land option charges 78.8 80.3 70.4

Gain on sale of assets — — ( 14.0 )

Loss on extinguishment of debt — — 18.1

Changes in operating assets and liabilities:

4 unchanged sentences

Increase in rental properties ( 214.6 ) ( 151.8 ) ( 1,723.2 )

Decrease (increase) in other assets 23.8 ( 1,111.5 ) ( 440.7 )

Increase in mortgage loans held for sale ( 133.9 ) ( 358.8 ) ( 498.3 )

(Decrease) increase in accounts payable, accrued expenses and other liabilities ( 101.8 ) 1,035.5 845.1

(Increase) decrease in other assets ( 331.4 ) 23.8 ( 1,111.5 )

Decrease (increase) in mortgage loans held for sale 42.4 ( 133.9 ) ( 358.8 )

Increase (decrease) in accounts payable, accrued expenses and other liabilities 19.6 ( 101.8 ) 1,035.5

Net cash provided by operating activities 2,189.8 4,304.1 561.8

2 unchanged sentences

Proceeds from sale of assets 19.4 52.0 —

Expenditures related to rental properties — — ( 173.9 )

Payments related to business acquisitions, net of cash acquired ( 40.4 ) ( 212.9 ) ( 271.5 )

4 unchanged sentences

Repayment of notes payable ( 1,055.8 ) ( 1,823.9 ) ( 3,801.2 )

Borrowings on mortgage repurchase facility, net 51.3 123.7 362.0

(Repayment) borrowings on mortgage repurchase facilities, net ( 135.8 ) 51.3 123.7

Proceeds from stock associated with certain employee benefit plans 20.6 25.5 33.2

17 unchanged sentences

Notes payable issued for inventory $ 43.4 $ 54.5 $ 64.3

Reduction of notes payable upon deconsolidation of variable interest entity $ ( 127.8 ) $ — $ —

Stock issued under employee incentive plans $ 174.3 $ 111.4 $ 130.9

Repurchases of common stock not settled $ — $ — $ 25.6

See accompanying notes to consolidated financial statements.

35 unchanged sentences

accounted for at fair value through revenues at the time of commitment.

The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers.

The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers, typically within 60 days of origination.

Interest income is earned from the date a mortgage loan is originated until the loan is sold.

51 unchanged sentences

Land purchase contracts can result in the creation of a variable interest in the entity holding the land parcel under contract.

There was one variable interest entity consolidated for $ 118.8 million and $ 64.3 million in the Company’s balance sheets at September 30, 2023 and 2022, respectively, because the Company determined it controlled the activities that most significantly impacted the variable interest entity’s economic performance.

There was one variable interest entity consolidated for $ 118.8 million in the Company’s balance sheet at September 30, 2023.

During fiscal 2024, the Company determined that it no longer controlled the activities that most significantly impacted the variable interest entity’s economic performance, and the variable interest entity is no longer consolidated.

The maximum exposure to losses related to the Company’s unconsolidated variable interest entities is limited to the amounts of the Company’s related deposits.

14 unchanged sentences

Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.

In December 2022, the Company acquired the homebuilding operations of Riggins Custom Homes in Northwest Arkansas for approximately $ 107 million in cash.

The assets acquired included approximately 170 homes in inventory and 3,000 lots.

The purchase price was recorded to inventory, and no goodwill was recorded as a result of this transaction.

In June 2023, the Company acquired the homebuilding operations of Truland Homes for approximately $ 110 million in cash.

Truland Homes operates in Baldwin County, Alabama and Northwest Florida.

The assets acquired included approximately 155 homes in inventory and 620 lots.

The Company also acquired control of approximately 660 additional lots through land purchase contracts.

The purchase price was recorded to inventory, and no goodwill was recorded as a result of this transaction.

There were no material business acquisitions made in fiscal 2024.

The Company records goodwill associated with its acquisitions of businesses when the purchase price of the business exceeds the fair value of the identifiable net assets acquired.

4 unchanged sentences

As a result of the qualitative assessments performed in fiscal 2024, 2023 and 2022, no impairment charges were indicated or recorded.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s goodwill balances by reporting segment were as follows:

9 unchanged sentences

Total goodwill $ 163.5 $ 163.5

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Warranty Claims

17 unchanged sentences

The Company records a valuation allowance when it determines it is more likely than not that a portion of the deferred tax assets will not be realized.

The accounting for

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

deferred taxes is based upon estimates of future results.

The accounting for deferred taxes is based upon estimates of future results.

Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company’s consolidated results of operations or financial position.

5 unchanged sentences

Changes in the recognition or measurement of uncertain tax positions could result in increases or decreases in the Company’s income tax expense in the period in which the change is made.

The Company’s unrecognized tax benefits totaled $ 1.4 million and $ 2.9 million at September 30, 2023 and 2022, respectively.

The Company had no unrecognized tax benefits at September 30, 2024 and $ 1.4 million of unrecognized tax benefits at September 30, 2023.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Earnings Per Share

3 unchanged sentences

The Company’s stockholders formally authorize shares of its common stock to be available for future grants of stock-based compensation awards.

From time to time, the Compensation Committee of the Company’s Board of Directors authorizes the grant of stock-based compensation to its employees and directors from these available shares.

At September 30, 2023, the outstanding stock-based compensation awards include stock options and restricted stock units.

Grants of restricted stock units vest over a certain number of years as determined by the Compensation Committee of the Board of Directors.

From time to time, the Compensation Committee of the Company’s Board of Directors (Compensation Committee) authorizes the grant of stock-based compensation to its employees and directors from these available shares.

At September 30, 2024, all outstanding stock-based compensation awards were in the form of restricted stock units.

Grants of restricted stock units vest over a certain number of years as determined by the Compensation Committee.

Restricted stock units outstanding at September 30, 2024 have a remaining vesting period up to 4.9 years.

Stock options are granted at exercise prices which equal the market value of the Company’s common stock at the date of the grant.

All stock options outstanding at September 30, 2023 have vested and expire 10 years after the dates on which they were granted.

The compensation expense for stock-based awards is based on the fair value of the award and is recognized on a straight-line basis over the remaining vesting period.

The fair values of restricted stock units are based on the Company’s stock price on the date of grant.

The fair values of stock options granted are calculated on the date of grant using a Black-Scholes option pricing model.

Determining the fair value of stock options requires judgment in developing assumptions and involves a number of estimates.

These estimates include, but are not limited to, the expected stock price volatility over the term of the awards, the expected dividend yield and expected stock option exercise behavior.

Compensation expense for restricted stock unit awards is based on the fair value of the award (the Company’s stock price on the date of grant), and is recognized on a straight-line basis over the remaining vesting period.

Fair Value Measurements

3 unchanged sentences

Fair value measurements are used for the Company’s mortgage loans held for sale, mortgage servicing rights, interest rate lock commitments and other derivative instruments on a recurring basis and are used for inventories, other mortgage loans and real estate owned on a nonrecurring basis, when events and circumstances indicate that the carrying value is not recoverable.

Pending Accounting Standards

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosures.

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

It also requires disclosure of the amount and description of the composition of other segment items and interim disclosures of a reportable segment’s profit or loss and assets.

The standard is effective for the Company’s annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026 on a retrospective basis to all periods presented.

This standard will impact the Company’s disclosures but will not impact its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures.

The standard is effective for the Company beginning October 1, 2025, with early adoption permitted.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements.

The standard is effective for the Company’s annual periods beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029, with early adoption permitted.

The Company is currently evaluating the impact this standard will have on its disclosures.

AND SUBSIDIARIES

1 unchanged sentence

NOTE B – SEGMENT INFORMATION

The Company’s operating segments are its 81 homebuilding divisions, its majority-owned Forestar residential lot development operations, its financial services operations, its rental operations and its other business activities.

The Company’s operating segments are its 88 homebuilding divisions, its rental operations, its majority-owned Forestar residential lot development operations, its financial services operations and its other business activities.

The Company’s reporting segments are its homebuilding reporting segments, its Forestar lot development segment, its financial services segment and its rental operations segment.

7 unchanged sentences

Georgia, North Carolina, South Carolina and Tennessee

Delaware, Illinois, Indiana, Iowa, Kentucky, Maryland, Minnesota, Nebraska,

New Jersey, Ohio, Pennsylvania, Virginia and West Virginia

Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, New Jersey, Ohio, Pennsylvania, Virginia, West Virginia and Wisconsin

Homebuilding is the Company’s core business, generating 92 %, 90 % and 95 % of consolidated revenues in fiscal 2024, 2023 and 2022, respectively.

2 unchanged sentences

The Company’s rental segment consists of single-family and multi-family rental operations.

The single-family rental operations primarily construct and lease single-family homes within a community and then market each community for a bulk sale of rental homes.

The multi-family rental operations develop, construct, lease and sell residential rental properties.

The single-family rental operations construct and lease single-family homes within a community and then generally market each community for a bulk sale of rental homes.

The multi-family rental operations develop, construct, lease and sell residential rental properties that are primarily apartment communities.

The Forestar segment is a residential lot development company with operations in 59 markets across 24 states.

4 unchanged sentences

The segment generates the substantial majority of its revenues from originating and selling mortgages and collecting fees for title insurance agency and closing services.

The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers.

The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers, typically within 60 days of origination.

In addition to its homebuilding, rental, Forestar and financial services operations, the Company engages in other business activities through its subsidiaries.

14 unchanged sentences

Residential land and lots — developed and under development 11,011.7 — 2,126.1 — ( 189.7 ) 12,948.1

8,992.3 — 1,760.8 — ( 131.2 ) 10,621.9

Land held for development 20.5 — 140.1 — — 160.6

20.5 — 29.5 — — 50.0

Land held for sale 12.7 — — — — 12.7

8.7 — — — — 8.7

Rental properties — 2,902.4 — — 3.6 2,906.0

26 unchanged sentences

Residential land and lots — developed and under development 8,992.3 — 1,760.8 — ( 131.2 ) 10,621.9

7,322.5 — 1,932.6 — ( 82.0 ) 9,173.1

Land held for development 20.5 — 29.5 — — 50.0

21.0 — 89.8 — — 110.8

Land held for sale 8.7 — — — — 8.7

29.4 — — — — 29.4

Rental properties — 2,708.4 — — ( 17.1 ) 2,691.3

39 unchanged sentences

$ 79.4 $ 2.4 $ 3.0 $ 1.8 $ 0.5 $ 87.1

Cash provided by operating activities $ 3,078.4 $ 739.2 $ 364.1 $ 13.2 $ 109.2 $ 4,304.1

Cash provided by (used in) operating activities $ 2,239.0 $ ( 231.0 ) $ ( 158.6 ) $ 281.6 $ 58.8 $ 2,189.8

_____________

29 unchanged sentences

$ 64.0 $ 2.4 $ 3.0 $ 2.1 $ 20.1 $ 91.6

Cash provided by (used in) operating activities $ 1,916.7 $ ( 1,391.0 ) $ 108.7 $ ( 10.5 ) $ ( 62.1 ) $ 561.8

Cash provided by operating activities $ 3,078.4 $ 739.2 $ 364.1 $ 13.2 $ 109.2 $ 4,304.1

_____________

24 unchanged sentences

Selling, general and administrative expense 2,186.7 91.1 93.6 547.6 14.7 2,933.7

Gain on sale of assets — — ( 2.5 ) — ( 11.5 ) ( 14.0 )

Loss on extinguishment of debt — — 18.1 — — 18.1

Other (income) expense ( 16.4 ) ( 27.1 ) ( 5.4 ) ( 43.2 ) 32.8 ( 59.3 )

5 unchanged sentences

_____________

(1) Amounts include the results of the Company’s other businesses, reconciling amounts between segment and consolidated balances and the elimination of intercompany transactions.

(1) Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.

(2) Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment.

66 unchanged sentences

5.0 % senior notes due 2034 (1)

1.4 % senior notes due 2027 (1)

Other secured notes 239.8 156.6

2,926.8 2,329.9

Revolving credit facility 745.0 400.0

Other notes 5.7 —

Revolving credit facility — —

1 unchanged sentence

5.0 % senior notes due 2028 (2)

Other secured notes — 12.5

Other notes 9.9 —

Financial Services

7 unchanged sentences

(2) Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $ 3.5 million and $ 5.0 million at September 30, 2024 and 2023, respectively.

As of September 30, 2023, maturities of consolidated notes payable, assuming the mortgage repurchase facility is not extended or renewed, are $ 1.9 billion in fiscal 2024, $ 522.7 million in fiscal 2025, $ 1.3 billion in fiscal 2026, $ 607.2 million in fiscal 2027, $ 800 million in fiscal 2028 and none thereafter.

As of September 30, 2024, maturities of consolidated notes payable, assuming the mortgage repurchase facility is not extended or renewed, are $ 2.2 billion in fiscal 2025, $ 910.3 million in fiscal 2026, $ 600.4 million in fiscal 2027, $ 1.5 billion in fiscal 2028, $ 17.5 million in fiscal 2029 and $ 700 million thereafter.

AND SUBSIDIARIES

5 unchanged sentences

At September 30, 2024, there were no borrowings outstanding and $ 210.1 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 1.98 billion.

In February 2023, the Company repaid $ 300 million principal amount of its 4.75 % senior notes at maturity, and in July 2023, the Company redeemed $ 400 million principal amount of its 5.75 % senior notes due August 2023.

The senior notes were redeemed at a price equal to 100 % of the principal amount of the notes, together with accrued and unpaid interest.

The Company’s homebuilding revolving credit facility imposes restrictions on its operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if the leverage ratio exceeds a certain level.

1 unchanged sentence

A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.

The credit agreement governing the facility and the indentures governing the senior notes also impose restrictions on the creation of secured debt and liens.

The credit agreement governing the facility and the indenture governing the senior notes also impose restrictions on the creation of secured debt and liens.

At September 30, 2024, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations.

The Company’s homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R.

Horton, Inc.’s significant wholly-owned homebuilding subsidiaries.

Horton has an automatically effective universal shelf registration statement filed with the SEC in July 2024, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.

The key terms of the Company’s homebuilding senior notes outstanding as of September 30, 2023 are summarized below.

In August 2024, the Company issued $ 700 million principal amount of 5.0 % senior notes due October 15, 2034 , with interest payable semi-annually.

The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 5.2 %.

The key terms of the Company’s homebuilding senior unsecured notes outstanding as of September 30, 2024 are summarized below.

Notes Payable Principal Amount Date Issued Date Due Redeemable

6 unchanged sentences

1.4% senior notes $ 500 October 2020 October 15, 2027 Yes 1.6 %

_____________

5.0% senior notes $ 700 August 2024 October 15, 2034 Yes 5.2 %

(1) The Company may redeem the notes in whole at any time or in part from time to time, at a redemption price equal to the greater of 100 % of their principal amount or the present value of the remaining scheduled payments discounted to the redemption date, plus accrued and unpaid interest.

In addition, the 2.5 % senior notes, the 2.6 % senior notes and the 1.3 % senior notes are redeemable at a redemption price of 100 % of their principal amount, plus accrued and unpaid interest, on or after the date that is one month prior to the final maturity date of the notes.

In October 2024, the Company repaid $ 500 million principal amount of its 2.5 % senior notes at maturity.

The 2.6 % senior notes and the 1.3 % senior notes are redeemable at a redemption price of 100 % of their principal amount, plus accrued and unpaid interest, on or after the date that is one month prior to the final maturity date of the notes.

The 1.4 % senior notes are redeemable at a redemption price of 100 % of their principal amount, plus accrued and unpaid interest, on or after the date that is two months prior to the final maturity of the notes.

The 5.0 % senior notes are redeemable at a redemption price of 100 % of their principal amount, plus accrued and unpaid interest, on or after the date that is three months prior to the final maturity of the notes.

(2) Interest is payable semi-annually on each of the series of senior notes.

3 unchanged sentences

All series of homebuilding senior notes and borrowings under the homebuilding revolving credit facility are senior obligations and rank pari passu in right of payment to all existing and future unsecured indebtedness and senior to all existing and future indebtedness expressly subordinated to them.

The homebuilding senior notes and borrowings under the homebuilding revolving credit facility are guaranteed by entities that hold approximately 76 % of the Company’s assets.

Upon the occurrence of both a change of control of the Company and a ratings downgrade event, as defined in the indentures governing its senior notes, the Company would be required in certain circumstances to offer to repurchase these notes at 101 % of their principal amount, along with accrued and unpaid interest.

The homebuilding senior notes and borrowings under the homebuilding revolving credit facility are guaranteed by entities that hold approximately 76 % of the Company’s assets at September 30, 2024.

Upon the occurrence of both a change of control of the Company and a ratings downgrade event, as defined in the indenture governing its senior notes, the Company would be required in certain circumstances to offer to repurchase these notes at 101 % of their principal amount, along with accrued and unpaid interest.

Also, a change of control as defined in the revolving credit facility would constitute an event of default under the revolving credit facility, which could result in the acceleration of any borrowings outstanding under the facility and the termination of the commitments thereunder.

The Company’s homebuilding revolving credit facility and homebuilding senior unsecured notes are guaranteed by D.R.

Horton, Inc.’s significant wholly-owned homebuilding subsidiaries.

In July 2024, the Board of Directors authorized the repurchase of up to $ 500 million of the Company’s debt securities.

4 unchanged sentences

The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $ 100 million and 50 % of the total revolving credit commitments.

The maturity date of the facility is March 4, 2026.

Borrowings and repayments under the facility totaled $ 700 million and $ 1.1 billion, respectively, during fiscal 2023.

The maturity date of the facility is October 10, 2027.

Borrowings and repayments under the facility totaled $ 1.4 billion and $ 1.1 billion, respectively, during fiscal 2024.

At September 30, 2024, there were $ 745 million of borrowings outstanding at a 6.9 % annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $ 305 million.

In October 2023, DRH Rental’s credit facility was amended to extend its maturity date to October 10, 2027 and to increase its accordion feature to allow for an increase in the size of the facility up to $ 2.0 billion, subject to certain conditions and availability of additional bank commitments.

The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.

3 unchanged sentences

At September 30, 2024, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

The rental revolving credit facility is guaranteed by DRH Rental’s wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries.

The rental revolving credit facility is guaranteed by DRH Rental’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

The rental revolving credit facility is not guaranteed by D.R.

17 unchanged sentences

At September 30, 2024, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.

Forestar’s revolving credit facility and its senior notes are guaranteed by Forestar’s wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries.

Forestar’s revolving credit facility and its senior unsecured notes are guaranteed by Forestar’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

They are not guaranteed by D.R.

6 unchanged sentences

DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.

The committed mortgage repurchase facility has a total capacity of $ 2.0 billion and a maturity date of February 16, 2024.

The capacity of the committed mortgage repurchase facility can be increased to $ 2.3 billion subject to the availability of additional commitments.

In August 2024, the committed mortgage repurchase facility was amended to extend its maturity date to May 9, 2025.

The facility has a total capacity of $ 1.6 billion, which can be increased to $ 2.0 billion subject to the availability of additional commitments.

At September 30, 2024, DHI Mortgage had an obligation of $ 1.2 billion under the committed mortgage repurchase facility at a 6.5 % annual interest rate.

In April 2023, DHI Mortgage entered into a master repurchase agreement providing for an uncommitted mortgage repurchase facility.

At September 30, 2023, DHI Mortgage could borrow up to $ 300 million under the uncommitted mortgage repurchase facility and had an obligation of $ 296.3 million at a 6.6 % annual interest rate.

At September 30, 2024, the uncommitted mortgage repurchase facility had a borrowing capacity of $ 500 million, of which DHI Mortgage had an obligation of $ 304.5 million at a 6.1 % annual interest rate.

As of September 30, 2024, $ 2.09 billion of mortgage loans held for sale with a collateral value of $ 2.05 billion were pledged under the committed mortgage repurchase facility, and $ 322.3 million of mortgage loans held for sale with a collateral value of $ 310.8 million were pledged under the uncommitted mortgage repurchase facility.

16 unchanged sentences

_________________________

(1) Interest incurred in fiscal 2023, 2022 and 2021 includes interest on the Company's mortgage repurchase facility of $ 45.9 million, $ 18.9 million and $ 17.0 million, respectively, and Forestar interest of $ 32.8 million, $ 32.9 million and $ 41.6 million, respectively.

Interest incurred in fiscal 2023 also includes interest on DRH Rental’s revolving credit facility of $ 56.0 million.

(1) Interest incurred in fiscal 2024, 2023 and 2022 includes interest on the Company's mortgage repurchase facilities of $ 58.6 million, $ 45.9 million and $ 18.9 million, respectively, and Forestar interest of $ 32.7 million, $ 32.8 million and $ 32.9 million, respectively.

Interest incurred in fiscal 2024 and 2023 also includes interest on the rental revolving credit facility of $ 61.9 million and $ 56.0 million, respectively.

NOTE F – PROPERTY AND EQUIPMENT

36 unchanged sentences

The Company also uses hedging instruments as part of a program to offer below market interest rate financing to its homebuyers.

At September 30, 2023 and 2022, the Company had MBS totaling $ 1.1 billion and $ 532.4 million, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned and recorded an asset of $ 15.7 million and $ 4.8 million, respectively, for the fair value of such MBS position.

At September 30, 2024 and 2023, the Company had MBS totaling $ 637.9 million and $ 1.1 billion, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned and recorded an asset of $ 2.4 million and $ 15.7 million, respectively, for the fair value of such MBS position.

Loan Commitments and Related Derivatives

88 unchanged sentences

Valuation Allowance

The Company has a valuation allowance of $ 14.8 million and $ 17.9 million at September 30, 2023 and 2022, respectively, related to deferred tax assets for state NOL, state capital loss and tax credit carryforwards that are expected to expire before being realized.

The Company has a valuation allowance of $ 14.9 million and $ 14.8 million at September 30, 2024 and 2023, respectively, related to deferred tax assets for state NOL and tax credit carryforwards that are expected to expire before being realized.

The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to the remaining state NOL and tax credit carryforwards.

6 unchanged sentences

Unrecognized tax benefits, beginning of year $ 1.4 $ 2.9

Additions for tax positions taken in the current or prior years — —

Decreases for tax positions taken in the current or prior years ( 1.4 ) —

Settlements — ( 1.5 )

Unrecognized tax benefits, end of year $ — $ 1.4

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $ 1.4 million and $ 2.9 million in fiscal 2023 and 2022, respectively.

All $ 1.4 million of the unrecognized tax benefits recognized in fiscal 2024 impacted the effective tax rate.

The Company had no accrued interest or penalties related to unrecognized tax benefits in fiscal 2024 or 2023.

3 unchanged sentences

The statute of limitations for D.R.

Horton’s major tax jurisdictions remains open for examination for fiscal years 2019 through 2023.

Horton’s major tax jurisdictions remains open for examination for fiscal years 2019 and 2021 through 2024.

Fiscal year 2019 is open with respect to a federal refund claim related to additional energy efficient tax credits.

3 unchanged sentences

Forestar is subject to federal income tax and state income tax in multiple jurisdictions.

The statute of limitations for Forestar’s federal income tax remains open for examination for tax years 2020 through 2023.

The statute of limitations for Forestar’s major state tax jurisdictions generally remains open for examination for tax years 2018 through 2023.

Forestar is not currently under audit for federal or state income taxes.

The statute of limitations for Forestar’s federal income tax remains open for examination for fiscal years 2021 through 2024.

The statute of limitations for Forestar’s major state tax jurisdictions generally remains open for examination for fiscal years 2019 through 2024.

Forestar is not currently under audit for federal income taxes.

Forestar is under audit by various states;

however, Forestar is not aware of any significant findings by the state taxing authorities.

AND SUBSIDIARIES

19 unchanged sentences

No shares of preferred stock were issued or outstanding.

In April 2023, the Board of Directors authorized the repurchase of up to $ 1.0 billion of the Company’s common stock, replacing the previous authorization.

During fiscal 2023, the Company repurchased 11.1 million shares of its common stock at a total cost, including commissions and excise taxes, of $ 1.2 billion.

At September 30, 2023, there was $ 234.0 million remaining on the repurchase authorization.

In October 2023, the Board of Directors authorized the repurchase of up to $ 1.5 billion of the Company’s common stock, replacing the previous authorization, which at that time had only $ 32.8 million remaining due to repurchases made subsequent to year end.

In July 2024, the Board of Directors authorized the repurchase of up to $ 4.0 billion of the Company’s common stock, replacing the previous authorization.

The authorization has no expiration date.

The Board of Directors approved and paid quarterly cash dividends of $ 0.25 per common share in fiscal 2023 and $ 0.225 per common share in fiscal 2022.

In October 2023, the Board of Directors approved a quarterly cash dividend of $ 0.30 per common share, payable on November 28, 2023, to stockholders of record on November 21, 2023.

Forestar has an effective shelf registration statement, filed with the SEC in October 2021, registering $ 750 million of equity securities, of which $ 300 million was reserved for sales under its at-the-market equity offering (ATM) program that became effective in November 2021.

During fiscal 2023, there were no shares issued under Forestar’s ATM program.

At September 30, 2023, $ 748.2 million remained available for issuance under Forestar’s shelf registration statement, of which $ 298.2 million was reserved for sales under its ATM program.

During fiscal 2024, the Company repurchased 12.5 million shares of its common stock at a total cost, including commissions and excise taxes, of $ 1.8 billion, of which $ 1.4 billion was repurchased under previous authorizations.

At September 30, 2024, there was $ 3.6 billion remaining on the repurchase authorization.

The Board of Directors approved and the Company paid quarterly cash dividends of $ 0.30 per common share in fiscal 2024 and $ 0.25 per common share in fiscal 2023.

In October 2024, the Board approved a quarterly cash dividend of $ 0.40 per common share, payable on November 19, 2024 to stockholders of record on November 12, 2024.

Cash dividends declared and paid in fiscal 2024 totaled $ 395.2 million.

Forestar had an effective shelf registration statement, filed with the SEC in October 2021, registering $ 750 million of equity securities, of which $ 300 million was reserved for sales under an at-the-market equity offering (ATM) program.

During fiscal 2024, Forestar issued 546,174 shares of common stock under its ATM program for proceeds of $ 19.7 million, net of commissions and other issuance costs totaling $ 0.4 million.

In September 2024, Forestar filed a new shelf registration statement, which became effective in October 2024, registering $ 750 million of equity securities.

At the time of filing the new registration statement, $ 728.1 million of equity securities remained available for issuance under Forestar’s prior registration statement, which has since expired.

Forestar’s ATM program expired in October 2024, and Forestar anticipates entering into a new ATM program under its September 2024 shelf registration statement.

AND SUBSIDIARIES

16 unchanged sentences

The Company records as SG&A expense the amount that the employee contributions would have earned had the funds been invested in the designated investments.

Related to this plan, the Company recorded a charge to expense of $ 17.0 million in fiscal 2023, a credit to expense of $ 24.0 million in fiscal 2022 and a charge to expense of $ 21.7 million in fiscal 2021.

Related to this plan, the Company recorded a charge to expense of $ 36.5 million and $ 17.0 million in fiscal 2024 and 2023, respectively, and a credit to expense of $ 24.0 million in fiscal 2022.

Employee Stock Purchase Plan

15 unchanged sentences

The RSUs have no dividend or voting rights until vested.

During fiscal 2024, the Board of Directors and the Company’s stockholders authorized an increase of 18.9 million shares to the common stock reserved for issuance under the Stock Incentive Plan.

At September 30, 2024, the Company had 21.3 million shares of common stock reserved for issuance and 19.7 million shares available for future grants under the Stock Incentive Plan.

24 unchanged sentences

The number of units that ultimately vest depends on the Company’s relative position as compared to its peers in achieving certain performance criteria and can range from 0 % to 200 % of the number of units granted.

The performance criteria are total shareholder return, return on investment, SG&A expense containment and gross profit.

Compensation expense related to these grants is based on the Company’s performance against its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

The performance criteria for the awards issued in fiscal 2022 and 2023 were total shareholder return, return on investment, SG&A expense containment and homebuilding gross profit.

The performance criteria for the awards issued in fiscal 2024 were total shareholder return, return on assets and operating margin.

Compensation expense related to these grants is based on the Company’s performance against a market index or its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

AND SUBSIDIARIES

5 unchanged sentences

(In millions)

November 2020 September 2023 360,000 $ 70.60 $ 11.0 $ 12.5 $ 12.5

October 2021 (1) September 2024 430,000 $ 80.58 $ 7.0 $ 14.3 $ 14.3

October 2022 September 2025 600,000 79.97 10.0 11.6 —

October 2023 (2) September 2026 277,779 146.72 13.1 — —

$ 30.1 $ 25.9 $ 14.3

1 unchanged sentence

(1) The performance RSUs granted in October 2021 totaled 390,000 ;

however, in March 2022, the Compensation Committee of the Company’s Board of Directors approved an amendment and restatement of this award to increase the RSUs granted from 390,000 to 430,000 .

however, in March 2022, the Compensation Committee approved an amendment and restatement of this award to increase the RSUs granted from 390,000 to 430,000 .

Concurrent with this change, the Compensation Committee amended the executive officer short-term performance bonus plan to reduce the amount of the award that could be earned.

(2) The performance RSUs granted in October 2023 were subsequently modified in December 2023 to change the performance criteria to total shareholder return, return on assets and operating margin.

In October 2024, the Compensation Committee approved the issuance of the performance-based RSUs that vested in September 2024 in the form of 545,558 shares of common stock to satisfy the awards.

1 unchanged sentence

Stock options are granted at exercise prices which equal the market value of the Company’s common stock at the date of the grant.

The options outstanding at September 30, 2023 are all exercisable and expire 10 years after the dates on which they were granted.

The Company did not grant stock options during fiscal 2023, 2022 or 2021.

The following table provides information related to stock option activity during those years.

The Company has not granted stock options in recent years and there were no options outstanding as of September 30, 2024.

The following table provides additional information related to stock option activity during fiscal 2024, 2023 and 2022.

Year Ended September 30,

11 unchanged sentences

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the option exercise price.

The aggregate intrinsic value of options outstanding and exercisable at September 30, 2023 was $ 18.4 million.

Exercise prices for options outstanding at September 30, 2023 ranged from $ 23.57 to $ 23.86 .

The weighted average remaining contractual lives of options outstanding and exercisable at September 30, 2023 is 0.4 years.

AND SUBSIDIARIES

5 unchanged sentences

The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates.

The estimation of these costs is subject to a high degree of variability due to uncertainties related to these factors.

Due to the high degree of judgment required in establishing the liability for warranty claims, actual future costs could differ significantly from current estimated amounts, and it is not possible for the Company to make a reasonable estimate of the possible loss or range of loss in excess of its warranty liability.

The estimation of these costs is subject to variability due to uncertainties related to these factors.

Due to the judgment required in establishing the liability for warranty claims, actual future costs could differ from current estimated amounts, and it is not possible for the Company to make a reasonable estimate of the possible loss or range of loss in excess of its warranty liability.

Changes in the Company’s warranty liability during fiscal 2024 and 2023 were as follows:

11 unchanged sentences

The estimated liabilities for these contingencies were $ 949.6 million and $ 858.9 million at September 30, 2024 and 2023, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets.

Approximately 97 % and 99 % of these reserves related to construction defect matters at September 30, 2023 and 2022, respectively.

Approximately 97 % of these reserves related to construction defect matters at both September 30, 2024 and 2023.

Expenses related to the Company’s legal contingencies were $ 164.0 million, $ 139.7 million and $ 138.0 million in fiscal 2024, 2023 and 2022, respectively.

62 unchanged sentences

Earnest money and refundable deposits $ 2,210.6 $ 1,859.6

Mortgage hedging instruments and commitments 153.6 330.2

Water rights and other water-related assets 319.1 319.6

Other receivables 167.2 210.9

Insurance receivables 156.8 165.8

Other receivables 147.1 167.2

Prepaid assets 117.9 93.0

Contract assets - insurance agency commissions 117.5 93.9

Interest rate lock commitments 2.3 47.7

Margin deposits related to hedging instruments 71.3 —

Lease right of use assets 51.4 46.6

Interest rate lock commitments 44.5 2.3

Mortgage servicing rights 5.9 11.1

Mortgage hedging instruments and commitments 2.8 153.6

Other 72.7 80.3

7 unchanged sentences

Inventory related accruals 451.2 353.6

Broker deposits related to hedging instruments 118.9 240.9

Customer deposits 99.7 147.1

Interest rate lock commitments 33.9 183.5

Federal and state income tax liabilities 233.8 110.9

Accrued property taxes 77.6 69.2

Mortgage hedging instruments and commitments 63.0 15.7

Lease liabilities 53.3 48.1

Accrued interest 34.8 33.6

Mortgage hedging instruments and commitments 15.7 12.4

Federal and state income tax liabilities 27.7 233.8

Broker deposits related to hedging instruments — 118.9

Interest rate lock commitments — 33.9

Other 123.2 147.6

52 unchanged sentences

Derivatives not designated as hedging instruments (3):

Interest rate lock commitments (4) Other assets and other liabilities — — ( 31.6 ) ( 31.6 )

Interest rate lock commitments (4) Other assets — — 44.5 44.5

Mortgage hedging instruments and commitments (5) Other assets and other liabilities — ( 60.2 ) — ( 60.2 )

27 unchanged sentences

Mortgage loans held for sale valued using Level 3 inputs at September 30, 2024 and 2023 include $ 10.6 million and $ 11.6 million, respectively, of loans for which the Company elected the fair value option upon origination and did not sell into the secondary market.

Mortgage loans held for sale totaling $ 9.7 million and $ 7.0 million were transferred to Level 3 during fiscal 2023 and 2022, respectively, due to significant unobservable inputs used in determining the fair value of these loans.

Mortgage loans held for sale totaling $ 0.2 million were transferred out of Level 3 to Level 2 during fiscal 2024 due to significant observable inputs used in determining the fair value of these loans.

Mortgage loans held for sale totaling $ 9.7 million were transferred to Level 3 during fiscal 2023 due to significant unobservable inputs used in determining the fair value of these loans.

The fair value of these mortgage loans held for sale is generally calculated considering pricing in the secondary market and adjusted for the value of the underlying collateral, including interest rate risk, liquidity risk and prepayment risk.

2 unchanged sentences

The valuation at the time the servicing asset is retained is reflected in the purchases/originations column with subsequent changes in value classified as realized and unrealized gains (losses).

The key assumptions used in the valuation, which are generally unobservable inputs, are mortgage prepayment rates, discount rates and delinquency rates, which were 10 %, 11 % and 8 %, respectively, at September 30, 2023.

The key assumptions used in the valuation, which are generally unobservable inputs, are mortgage prepayment rates, discount rates and delinquency rates, which were 13 %, 11 % and 9 %, respectively, at September 30, 2024 and 10 %, 11 % and 8 % at September 30, 2023.

(3) Fair value measurements of these derivatives represent changes in fair value, as calculated by reference to quoted prices for similar assets, and are reflected in the balance sheet as other assets or accrued expenses and other liabilities.

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(4) The fair value of interest rate lock commitments at September 30, 2024 reflects a $ 44.5 million change in fair value in other assets.

The fair value of interest rate lock commitments at September 30, 2023 reflects a $ 2.3 million change in fair value in other assets and a $ 33.9 million change in fair value in other liabilities.

The fair value of interest rate lock commitments at September 30, 2022 reflects $ 47.7 million of servicing release premiums in other assets and a $ 183.5 million change in fair value in other liabilities.

(5) The fair value of mortgage hedging instruments and commitments at September 30, 2024 reflects a $ 2.8 million change in fair value in other assets and a $ 63.0 million change in fair value in other liabilities.

9 unchanged sentences

Other assets 1.3 9.8 — 2.2

Real estate owned (1) (4)

Other assets — 0.4 — —

______________________

(1) The fair values included in the table above represent only those assets whose carrying values were adjusted to fair value as a result of impairment at September 30, 2024 and 2023, respectively.

(2) In performing its impairment analysis of communities, a discount rate of 12 % was used in the period of impairment.

(2) In performing its impairment analysis of communities, discount rates ranging from 10 % to 14 % were used in the periods of impairment.

(3) These mortgage loans have some degree of impairment affecting their marketability and are valued at the lower of carrying value or fair value.

1 unchanged sentence

otherwise, a cash flow valuation model is used to determine fair value (Level 3).

(4) The fair values of other mortgage loans were determined based on the value of the underlying collateral .

(4) The fair values of other mortgage loans and real estate owned were determined based on the value of the underlying collateral .

For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at September 30, 2024 and 2023.

20 unchanged sentences

(2) The fair value of the senior notes is determined based on quoted prices, which is classified as Level 2 within the fair value hierarchy.

(3) The fair values of other secured notes and borrowings on the revolving credit facility and the mortgage repurchase facility approximate carrying value due to their short-term nature or floating interest rate terms, as applicable, and are classified as Level 3 within the fair value hierarchy.

(3) The fair values of other notes and borrowings on the revolving credit facilities and the mortgage repurchase facilities approximate carrying value due to their short-term nature or floating interest rate terms, as applicable, and are classified as Level 3 within the fair value hierarchy.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data