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目录
美国证券交易委员会
华盛顿特区，20549
表格：10-K
(标记一)
☒根据1934年证券交易法第13或15（d）条提交的年度报告
日终了的财政年度 九月30, 2024
或
☐
根据1934年证券交易法第13或15（d）条提交的过渡报告
过渡期从              到             
佣金文件编号1-14122
L1_DRH-CO_Logo_Blue_1500W.jpg
D.R.霍顿公司
(注册人的确切姓名载于其章程)
特拉华75-2386963
(注册成立或组织的国家或其他司法管辖区)(国际税务局雇主身分证号码)
霍顿圆环1341号, 阿灵顿, 德克萨斯州 76011
(主要行政办公室地址)(邮政编码)
(817) 390-8200
(注册人的电话号码，包括区号)
根据该法第12(B)节登记的证券：
每个班级的标题交易符号注册的每个交易所的名称
普通股，每股面值0.01美元DHI纽约证券交易所
2034年到期的5.000%优先票据DHI 34纽约证券交易所
根据该法第12（g）条登记的证券：无
如果注册人是《证券法》第405条所定义的知名经验丰富的发行人，则通过勾选标记进行验证。 是的 ý    不是的。o
如果注册人无需根据该法案第13条或第15（d）条提交报告，则通过勾选标记进行验证。 是的 o 没有 ý
用复选标记表示注册人(1)是否在过去12个月内(或注册人被要求提交此类报告的较短期限内)提交了1934年《证券交易法》第13条或15(D)节要求提交的所有报告，以及(2)在过去90天内是否符合此类提交要求。是的 ý不是，不是，不是。o
通过勾选标记检查注册人是否已在过去12个月内（或在注册人被要求提交此类文件的较短期限内）以电子方式提交了根据S-t法规第405条（本章第232.405条）要求提交的所有交互数据文件。 是的 ý不是，不是，不是。o
用复选标记表示注册人是大型加速申报公司、加速申报公司、非加速申报公司、较小的报告公司或新兴成长型公司。请参阅《交易法》第12b-2条规则中“大型加速申报公司”、“加速申报公司”、“较小申报公司”和“新兴成长型公司”的定义。
大型加速文件服务器ý加速的文件管理器
☐
非加速文件服务器
☐
规模较小的新闻报道公司
☐
新兴市场为公司增长提供支持
☐
如果是一家新兴的成长型公司，用复选标记表示注册人是否已选择不使用延长的过渡期来遵守根据《交易所法》第13(A)节提供的任何新的或修订的财务会计准则。☐
用复选标记表示注册人是否提交了一份报告，证明其管理层根据《萨班斯-奥克斯利法案》(《美国联邦法典》第15编，第7262(B)节)第404(B)条对其财务报告的内部控制的有效性进行了评估，该评估是由编制或发布其审计报告的注册会计师事务所进行的。ý
如果证券是根据该法第12(B)条登记的，应用复选标记表示登记人的财务报表是否反映了对以前发布的财务报表的错误更正。☐
用复选标记表示这些错误更正中是否有任何重述需要对注册人的任何执行人员在相关恢复期间根据第240.10D-1(B)条收到的基于激励的补偿进行恢复分析。☐
通过勾选标记检查注册人是否是空壳公司（定义见《交易法》第120亿.2条）。 是的 ☐不是，不是，不是。ý
截至2024年3月28日，注册人非关联公司持有的注册人普通股总市值约为美元53.3 根据纽约证券交易所报告的收盘价计算，价值10亿美元。
截至2024年11月14日，已有 321,169,526 注册人的流通普通股股份。
以引用方式并入的文件
注册人为2025年股东年度会议提交的最终委托声明的部分内容通过引用（在指定范围内）纳入本文第三部分。

目录
D.R.霍顿公司和子公司
2024年10-K表格年度报告
目录
  页面



目录
第I部分

第一项：商业银行业务

D.R.霍顿公司按关闭房屋数量衡量，该公司是美国最大的房屋建筑公司。我们通过运营部门在36个州的125个市场建造和销售房屋。我们的普通股被纳入标准普尔500指数，并在纽约证券交易所（NYSE）上市，股票代码为“DHI”。除非上下文另有所要求，术语“DR霍顿、本文中使用的“公司”、“我们”和“我们的”是指DR霍顿公司，一家特拉华州公司及其前身和子公司。

我们的住宅建筑业务于1978年在德克萨斯州沃斯堡开始，我们的普通股自1992年以来一直公开交易。多年来，我们通过在现有市场投资资本和组建人员团队、在新市场开展初创业务以及收购其他住宅建筑公司，扩大了住宅建筑业务的地理位置并实现了多元化。在46年的历史中，我们已经关闭了超过110万套房屋，自2002年以来，我们一直是美国每年销量最大的房屋建筑商。

我们的业务包括住宅建设、租赁、拥有多数股权的住宅地块开发公司、金融服务和其他活动。我们的房屋建筑业务是我们的核心业务，在2024财年创造了368美元亿的综合收入的92%，在2023财年创造了355美元亿的综合收入的90%，在2022财年创造了335亿的综合收入的95%。我们的房屋建筑业务的大部分收入来自出售已建成的房屋，其次是出售土地和地块。2024财年，我们约87%的房屋销售收入来自单户独立住宅的销售，其余来自联排住宅、复式住宅和三层住宅等附属住宅的销售。我们的产品包括为入门级、搬家、活跃的成年人和奢侈品买家提供广泛的住房。我们的房子通常面积从1000到4000平方英尺，价格从20万美元到100多万美元。在截至2024年9月30日的一年中，我们的住房建设业务完成了89,690套住房，平均收盘价为378,000美元。

我们的租赁部门包括单户和多户租赁业务。单户租赁业务在社区内建造和租赁单户住宅，然后通常向每个社区推销大量租赁房屋。多家庭租赁业务开发、建造、租赁和销售住宅租赁物业，其中大部分是公寓社区。截至2024年9月30日的一年里，我们的租赁业务关闭了3，970套单户租赁房屋和2，202套多户租赁单位。

截至2024年9月30日，我们拥有Forestar Group Inc. 62%的已发行股份（Forestar）是一家在纽约证券交易所上市的上市住宅地块开发公司，股票代码为“FOR”。Forestar在我们的许多住宅建筑运营市场开展业务，是我们住宅建筑战略的关键部分，旨在维持与土地开发商的关系，并通过土地购买合同控制我们大部分土地和地块头寸。截至2024年9月30日的一年里，Forestar向房屋建筑商出售了15，068件拍品，其中包括向DR出售的13，267件拍品霍顿。

我们的金融服务业务为许多房屋建筑市场的购房者提供抵押贷款融资和产权代理服务。DHI Mortgage是我们的全资子公司，主要向我们的购房者提供抵押贷款融资服务，并在发起后将其发起的几乎所有抵押贷款以及相关服务权出售给第三方买家。截至2024年9月30日的一年里，DHI Mortgage发放或代理了70，693笔抵押贷款。我们的全资子公司所有权公司主要向我们的房屋建筑客户提供所有权保险单、检查、承保和结案服务，作为所有权保险代理人。

除了房屋建筑、租赁、Forestar和金融服务业务外，我们还通过子公司从事其他业务活动。我们开展与保险相关的业务，拥有水权和其他与水相关的资产，并拥有非住宅房地产，包括牧场和装修。这些操作的结果对于单独报告来说并不重要，因此被分组在一起并作为其他列报。
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可用信息

我们在合理可行的范围内尽快在我们的网站上提供， www.drhorton.com，我们向美国证券交易委员会（SEC）提交或提供的所有报告。这些报告可在我们网站“财务信息”下的“投资者关系”部分找到，包括我们10-k和10-Q表格的年度和季度报告、8-k表格的当前报告、3、4和5表格的受益所有权报告、委托书和此类报告的修订。我们的SEC文件也可在SEC网站www.sec.gov上向公众提供。除了我们的SEC文件外，我们的公司治理文件，包括我们的首席执行官、首席财务官和高级财务官道德行为准则，也可在我们网站的“投资者关系”部分“ESG”下查看。我们的股东还可以根据向我们的投资者关系部门提出的要求免费获得这些纸质文件。

我们的主要行政办公室位于1341 Horton Circle，Arlington，Texas 76011，我们的电话号码是（817）390-8200。除非明确注明，否则我们网站上或链接到我们网站的信息不会以引用的方式纳入本10-k表格的年度报告中。

运营结构和流程

以下概述了我们公司的运营结构以及支持我们的业务控制、战略和绩效的重要流程。

房屋建筑市场

我们的住宅建筑业务在36个州的125个市场开展业务，这为我们的住宅建筑库存投资以及收入和盈利来源提供了地域多元化。我们相信，我们的地理多元化通过减轻当地和区域经济周期的影响来降低我们的运营风险，并且通过提供更多样化的业务投资机会来增强我们的盈利潜力。
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我们在以下地理区域、州和市场开展房屋建筑业务。我们的住宅建筑运营部门汇总为六个报告部门，也称为报告地区，包括以下市场。我们的财务报表及其附注包含有关分部业绩的额外信息。

状态报告地区/市场状态报告地区/市场状态报告地区/市场
西北地区东南部地区北域
科罗拉多州科罗拉多泉阿拉巴马州鲍德温县特拉华特拉华州北部
丹佛伯明翰南特拉华
柯林斯堡亨茨维尔伊利诺伊州芝加哥
俄勒冈州弯曲莫比尔县印第安纳州韦恩堡
尤金/斯普林菲尔德蒙哥马利印第安纳波利斯
梅德福塔斯卡卢萨印第安纳州西北
波特兰/塞勒姆佛罗里达迈尔斯堡/那不勒斯爱荷华州得梅因
犹他州盐湖城盖恩斯维尔爱荷华市/锡达拉皮兹
圣乔治杰克逊维尔堪萨斯州/密苏里州堪萨斯城
华盛顿布雷默顿莱克兰肯塔基州路易斯维尔
中央华盛顿墨尔本/维罗海滩马里兰州巴尔的摩
肯纳威克/帕斯科/里奇兰迈阿密/劳德代尔堡马里兰州东部
西雅图/塔科马/埃弗里特/奥林匹亚奥卡拉华盛顿郊区
斯波坎奥兰多马里兰州西部
温哥华巴拿马城明尼苏达州明尼阿波利斯/圣保罗
彭萨科拉内布拉斯加州奥马哈
西南地区圣露西港新泽西新泽西州北部
亚利桑那州凤凰城塔拉哈西新泽西州南部
图森坦帕/萨拉索塔俄亥俄州辛辛那提/代顿
加利福尼亚贝克斯菲尔德沃卢西亚县哥伦布
湾区路易斯安那州巴吞鲁日宾夕法尼亚宾夕法尼亚州中部
弗雷斯诺/图拉雷查尔斯湖/拉斐特费城
洛杉矶县密西西比墨西哥湾沿岸匹兹堡
莫德斯托/默塞德/斯托克顿哈蒂斯堡维吉尼亚北弗吉尼亚州
雷丁/奇科/尤巴城杰克逊里士满
河滨县弗吉尼亚海滩/威廉斯堡
萨克拉门托东域西弗吉尼亚
圣贝纳迪诺县佐治亚州亚特兰大西弗吉尼亚州西弗吉尼亚州东部
夏威夷瓦胡岛奥古斯塔美国西弗吉尼亚北部
内华达州拉斯维加斯佐治亚州中部威斯康星州威斯康星州东南
里诺萨凡纳
新墨西哥州阿尔布开克瓦尔多斯塔
圣达菲北卡罗来纳阿什维尔
夏洛特
中南地区格林斯伯勒/温斯顿塞勒姆
阿肯色州小石城新伯尔尼/格林维尔
阿肯色州西北罗利/达勒姆/费耶特维尔
俄克拉荷马州俄克拉荷马城威尔明顿
塔尔萨南卡罗来纳查尔斯顿
德克萨斯州阿比林哥伦比亚
奥斯汀格林维尔/斯帕坦堡
博蒙特希尔顿黑德
布莱恩/学院站美特尔海滩
科珀斯克里斯蒂田纳西州查塔努加
达拉斯诺克斯维尔
东德克萨斯孟菲斯
沃斯堡纳什维尔
休斯敦田纳西州东北
基林/坦普尔/韦科
拉伯克
米德兰/敖德萨
新布劳恩费尔斯/圣马科斯
圣安东尼奥
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在评估新的或现有的住宅建筑市场以进行资本配置时，我们会考虑当地的特定市场因素，其中包括：
•经济状况;
•就业水平和就业增长;
•潜在购房者的收入水平;
•当地住房负担能力和使用的典型抵押贷款产品;
•以我们的目标价格点销售房屋市场;
•以可接受的条件在理想地点提供土地和地块;
•土地权利和开发过程;
•合格分包商的可用性;
•新房和二手房销售活动;
•竞争;
•流行住房产品、功能、成本和定价;以及
•我们当地管理团队的绩效能力。

规模经济

按照2024财年关闭的房屋数量衡量，我们是美国最大的房屋建筑公司，也是我们运营的大多数市场中最大的建筑商之一。我们相信，我们的国家、地区和地方规模的运营为我们提供了其他一些小型房屋建筑商可能无法获得的同等程度的好处，例如：
•由于我们的资产负债表实力以及我们的贷款和资本市场关系，更多地获得资本并降低资本成本;
•国家、地区和当地材料供应商的批量折扣和回扣以及某些分包商的较低劳动力价格;以及
•增强了我们一般和行政活动的杠杆作用，这使我们能够灵活地适应市场条件的变化并在整个市场中进行有效竞争。

分散的房屋建筑运营

我们将住宅建设视为一项本地业务；因此，我们的大部分直接住宅建设活动都是分散的，以便为我们的当地经理在做出运营决策时提供灵活性。我们相信，我们当地的管理团队熟悉当地的市场情况，拥有最佳的信息，可以做出许多关于他们运营的决定。截至2024年9月30日，我们拥有88个独立的住宅建筑运营部门，其中许多部门在多个市场区域运营。一般来说，每个事业部由一个事业部总裁；一名财务总监和会计人员；一名土地权利、收购和开发人员；一名销售经理和销售营销人员；一名施工经理和施工主管；一名客服人员；一名采购经理和办公室工作人员组成。如果我们的部门总裁实现了与其运营部门相关的目标财务和运营指标，他们将获得基于绩效的薪酬。以下是我们分散在当地运营部门的房屋建设活动以及集中在我们区域和公司办事处的控制和监督职能的摘要。
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运营部门职责

每个住宅建筑运营部门负责：
•选址，其中涉及
- 可行性研究;
- 土壤和环境审查;
- 审查现有的分区和其他政府要求;
- 审查获得项目权利所需的场外工作的需求和范围;以及
- 潜在项目的财务分析;
•谈判地块购买、土地征用及相关合同;
•获得所有必要的土地开发和房屋建设批准;
•选择分包商并确保他们的工作符合我们合同的范围;
•选择建筑和建筑计划;
•规划和管理房屋建设时间表;
•确定特定社区每个房屋计划和选项的定价;
•制定和实施当地营销和销售计划;
•协调销售、建筑和房屋关闭过程中与客户和房地产经纪人的所有互动;以及
•确保向客户提供的关闭后服务和保修维修的质量和及时性。

集中控制

我们通过区域和公司办事处集中了房屋建筑业务的许多重要风险要素。我们设有单独的房屋建筑区域办事处，通常由区域总裁、首席财务官、法律顾问和其他运营和办公室支持人员组成。我们的每位地区总裁及其管理团队负责监督多个房屋建筑运营部门的运营，包括：
•审查和批准部门业务计划和预算;
•审查和批准所有土地和地块收购合同;
•审查潜在土地和地块库存投资的所有业务和财务分析;
•监督土地和房屋库存水平;
•监控部门的财务和运营绩效;以及
•审查重大人事决策和部门激励薪酬计划。

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我们的企业高管和企业办公室部门负责制定我们的运营政策和内部控制标准，并监控我们整个运营过程中对既定政策和控制的遵守情况。公司办公室还主要负责通过以下集中职能直接管理某些关键风险要素和计划：
•融资;
•现金管理;
•资本配置;
•发布和监测库存投资指南;
•土地和地块收购的批准和资助;
•监控和分析盈利能力、回报、成本和库存水平;
•风险和诉讼管理;
•土地和地块收购的环境评估;
•支持运营、营销和财务信息管理的技术系统，包括预防、监控和报告网络安全问题;
•会计和管理报告;
•所得税;
•内部审计;
•公共报道以及投资者和媒体关系;
•工资和员工福利的管理;
•国家采购合同谈判;
•管理、报告和监控客户调查和问题解决方案;以及
•批准重大人事决策和管理层激励薪酬计划。

土地/地块收购和库存管理

我们在完成尽职调查后，通常在获得开始开发或建设工作的权利（称为权利）以产生可接受数量的住宅地块后，购买土地用于我们的运营。在我们获得大片或大片土地之前，我们会完成可行性研究，其中包括土壤测试、独立环境研究、其他工程工作和财务分析。我们还评估开发和使用该房产进行房屋建设所需的必要分区和其他政府权利的状况。

我们还签订土地/地块合同，其中我们获得权利，但通常不是义务，在与预期房屋关闭或计划开发相称的明确时间表内以预定价格购买土地或地块。这些合同通常是无追索权的，这限制了我们对根据合同条款存入托管机构的诚意金的财务风险以及我们产生的任何收购前尽职调查成本。这使我们能够以有限的资本投资控制土地和地块头寸，从而大大降低了与土地所有权相关的风险。

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我们试图通过以下方式减轻房地产库存风险：
•控制我们的库存投资水平并管理我们通过购买合同拥有和控制的土地/地块的供应，以匹配我们每个运营市场的预期住房需求;
•监测当地市场和人口趋势、住房偏好和相关经济发展，包括根据当地学校的质量、新就业机会、当地增长举措和个人收入趋势确定理想的住房子市场;
•利用土地/地块购买合同并寻求收购已基本准备好用于房屋建设的已开发地块（如果可能的话）;以及
•监控和管理每个分区建造的投机性住宅（未执行销售合同的在建住宅）的数量。

土地开发和住宅建设

我们几乎所有的土地开发和房屋建设工作都由分包商执行。分包商通常是在竞争性投标过程后选择的，并根据合同保留特定的细分或系列房屋计划，该合同要求分包商以商定的价格完成工程范围。我们雇用土地开发和建筑人员来监控建筑活动，参与重大建筑决策，协调分包商和供应商的活动，审查分包商的质量和成本控制工作，并监控分区和建筑规范的遵守情况。此外，我们的施工人员在施工过程中与购房者互动，并指导购房者进行关门后的房屋维护。

我们的房屋设计是在每个市场中选择或准备的，以满足当地购房者对负担能力、房屋尺寸和功能的期望，我们的当地管理团队根据需要调整产品供应以满足买家需求。在某些社区，我们向购房者提供可选的室内和室外设施，但需支付额外费用。

除了活跃开发项目和在建房屋的在制品材料外，我们通常不会保留大量的土地开发或建筑材料库存。一般来说，我们运营中使用的建筑材料可以从多种来源随时获得，并且我们与某些建筑材料供应商签订了超过一年的合同，我们可以选择取消这些合同。我们房屋的建设时间取决于劳动力、材料和用品的可用性、天气、房屋的大小和其他因素。2024财年，我们在两到五个月内完成了大多数房屋的建设。

我们受到影响我们土地开发和建设运营的政府法规的约束。我们经常在收到市政府或其他政府机构的必要批准方面遇到延误，这经常会延误我们预期的开发和建设活动。

成本控制

我们通过有效地设计房屋、尽可能一致地利用共同住宅计划以及获得建筑材料和劳动力的竞争性投标来控制建筑成本。我们还根据我们在当地、地区和国家范围内购买的服务和产品数量与分包商和供应商协商定价。我们监控每个房屋和社区的土地开发支出和建设成本与预算的关系，并与其业务计划和业绩预期进行比较，审查每个运营市场的库存水平、利润率、费用、盈利能力和回报。

我们通过集中某些会计和行政职能、监控人员配备和薪酬水平以及将技术应用于业务流程以在可行的情况下提高生产力来控制管理费用。我们审查其他一般和行政成本，以确定运营部门以及区域和企业办事处的效率和节省机会。我们还将大部分促销活动引导至数字营销计划和当地房地产经纪人，我们认为这是我们营销支出的有效利用。

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市场营销和销售

我们主要使用DR霍顿品牌名称营销和销售我们的房屋。我们提供各种楼层平面图和产品类型，主要关注首次和首次搬家购房者，这占我们房屋关闭的大部分。我们还为注重负担能力的买家提供入门级住宅、高端升级住宅和豪华住宅，以及为寻求低维护生活方式的活跃成年买家提供住宅。

我们主要通过委托员工营销和销售我们的房屋，我们的大多数房屋关闭也涉及独立房地产经纪人。我们通常从位于每个细分区带家具的样板房的销售办事处进行房屋销售，并且在细分区完工之前，我们通常不会提供样板房出售。我们的销售人员通过提供楼层平面图和定价信息、展示我们房屋的功能和布局并协助选择选项（如果有的话）来帮助潜在购房者。我们培训并告知销售人员有关施工时间表以及营销和广告计划的信息。根据市场条件允许，我们可能会为潜在购房者提供各种激励措施，以在特定市场中具有竞争力或实现我们的目标销售速度。

我们通过电子邮件、搜索引擎营销、社交媒体和我们的公司网站和其他房地产网站以数字方式向潜在购房者和房地产经纪人推销我们的房屋和社区。我们还根据需要在当地使用广告牌、广播、电视和印刷媒体以及广告。我们试图将我们的分部定位在潜在购房者想要的、方便或从当地交通模式可见的地点。模范住宅在我们的营销工作中发挥着重要作用，我们努力在模范住宅中创造有吸引力的氛围。

我们还在几乎所有社区建造投机性住宅，这使我们能够与市场上现有的住宅进行有效竞争并提高我们的回报。这些房屋加强了我们对租房者或搬迁到这些市场并需要在短时间内获得住房的潜在购房者以及代表这些购房者的独立经纪人的营销和销售工作。我们根据当地市场因素，例如新就业增长和搬迁、住房需求和供应、季节性、当前销售合同取消趋势以及我们过去的市场经验，确定每个市场的投机性住房策略。我们试图根据当前和计划的销售速度，在每个社区保持一定的投机性房屋库存水平，并持续监控和调整投机性房屋库存。

销售合同和积压

我们的销售合同需要保证金，其金额因我们的市场和社区而异。此外，如果客户选择房屋选项或升级功能，通常需要支付额外押金。我们的销售合同包括融资意外情况，如果客户无法在规定期限内以现行或指定利率获得抵押贷款融资，则允许客户取消并获得押金退款。我们的合同可能包括其他意外情况，例如出售客户现有房屋。根据合同的适用条款或其他情况，我们保留或退还取消销售合同的客户押金。

积压销售订单代表合同已签订但期末尚未关闭的房屋。截至2024年9月30日，我们积压的销售订单价值为48亿美元（12，180套房屋），比2023年9月30日的59亿美元（15，197套房屋）下降了19%。截至2024年9月30日，积压房屋的平均销售价格为391，700美元，高于2023年9月30日的平均销售价格389，800美元。我们积压的销售订单中的许多合同都受到意外情况的影响，例如上述情况，这可能会导致取消。2024财年，销售合同的取消占总销售订单的比例为18%，而2023财年为20%。

从签署房屋销售合同到将房屋交付给买家（成交）之间的时间通常为一到四个月;因此，截至2024年9月30日，我们销售积压中的几乎所有房屋都计划在2025财年关闭。

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客户服务和质量控制

我们的住宅建筑运营部门负责关门前的质量控制检查并响应客户关门后的需求。我们相信，在施工期间和施工后对购房者的需求做出及时、礼貌的回应可以降低关闭后的维修成本，提高我们的质量和服务声誉，并最终导致房地产界和购房者的重复和推荐业务。我们通常为购房者提供框架部件和基础系统等结构元件的重大缺陷的十年有限保修、主要机械系统的两年有限保修以及其他建筑部件的一年有限保修。执行实际施工的分包商还为我们提供工艺保证，并希望及时回复我们和房主。此外，我们的一些供应商还为家庭安装的特定产品提供制造商保修。

出租物业

我们的单户租赁业务在社区内建造和租赁单户住宅，然后一般向每个社区推销大量租赁房屋。2024财年，我们售出了3，970套单户租赁房屋，而2023财年为6，175套。我们的多户租赁业务开发、建造、租赁和销售住宅租赁物业。我们主要专注于在高增长的郊区市场建设花园式公寓社区。2024财年，我们售出了2，202套多户租赁单元，而2023财年为2，112套。

福星住宅地块开发运营

我们拥有Forestar约62%的流通股，Forestar是一家上市住宅地块开发公司，截至2024年9月30日在24个州的59个市场开展业务。Forestar是我们房屋建设战略的关键部分，以保持与土地开发商的关系，并通过土地购买合同控制我们的大部分土地和地块位置。Forestar正在投资土地收购和开发，以扩大其住宅地块开发业务，跨越一个地理多元化的国家平台，并巩固在支离破碎的美国地块开发行业的市场份额。我们的房屋建筑业务根据两家公司之间的主供应协议从Forestar获得成品地块。根据共享服务协议，我们为Forestar提供某些行政、合规、运营和采购服务。作为控股股东，我们在指导Forestar的战略方向和运营方面具有重大影响力。

客户抵押贷款融资

我们通过我们的全资子公司DHI Mortgage主要向大多数房屋建筑市场的房屋买家提供抵押贷款融资服务。DHI Mortgage通过协调抵押贷款申请、抵押贷款承诺和房屋关闭流程来协助销售交易，为我们的购房者提供及时有效的体验。截至2024年9月30日的一年里，DHI Mortgage为我们的房屋建筑业务关闭的78%房屋提供抵押贷款融资服务，这些贷款几乎占DHI Mortgage总贷款量的全部。我们的房屋建筑部门还可能与其他抵押贷款机构合作，为我们的购房者提供一系列抵押贷款融资计划。

为了限制与我们抵押贷款业务相关的风险，DHI Mortgage推出了我们认为可以出售给抵押贷款第三方购买者的贷款产品，其中大多数有资格出售给联邦国民抵押协会（Fannie Mae）、联邦住房贷款抵押公司（Freddie Mac）或政府国民抵押协会（Ginnie Mae）。DHI Mortgage在发放后将几乎所有贷款和相关服务权出售给第三方买家，并附有有限追索权条款。DHI Mortgage集中了其大部分控制和监督职能，包括与贷款承保、质量控制、监管合规、贷款二级营销、对冲活动、会计和财务报告相关的职能。

所有权服务

通过我们的子公司所有权公司，我们主要向我们的房屋建筑客户提供所有权保险单、检查、承保和结案服务，在许多房屋建筑市场担任所有权保险代理人。
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人力资本资源

人与文化

截至2024年9月30日，我们拥有14，766名员工，其中10，071人在我们的房屋建筑业务工作，3，149人在我们的金融服务业务工作，596人在我们的公司办公室工作，505人在我们的租赁业务，393人在我们的Forestar子公司工作，52人在我们的其他业务。在我们的房屋建筑员工中，3，897人从事建筑工作，2，779人为销售和营销人员，3，395人为办公室人员。

我们相信为我们公司工作的人员是我们最重要的资源，对于我们的持续成功至关重要。我们非常注重吸引和留住才华横溢且经验丰富的人才来管理和支持我们的运营。我们的员工应在工作场所表现和促进诚实、道德和尊重的行为。我们的所有员工必须每年证明他们理解并遵守行为准则，该准则为适当的行为设定了标准，并包括预防、识别、报告和制止任何类型歧视所需的内部培训。

招聘、发展和保留

我们致力于招聘、发展和支持一支充满活力、多样化的劳动力队伍，并保持一个富有成效、积极和包容的工作场所。我们相信，工作场所的多样性会产生独特的视角和新鲜的想法，并帮助我们更好地为客户服务。我们有一支积极的招聘团队，与大学校园和外部组织合作，寻找有实力的新员工和经验丰富的专业人士。我们的带薪实习计划为大学生和应届毕业生提供了与住宅建筑行业中一些最有经验的专业人士一起工作的机会。我们的管理团队还支持从现有员工中培养未来领导者的文化，使我们能够从内部提拔许多领导职位。我们相信，这为我们的运营提供了长期的重点和连续性，同时也为我们员工的成长和晋升提供了机会。在2024财年，我们为我们房屋建筑业务的关键业务职能部门的员工举办了专门的培训，如采购、建筑、销售和财务管理，以及我们的领导力发展计划，该计划为我们所有业务的未来领导者提供内部培训。在本财年，17名员工被安排到一个新的住宅建筑市场领导职位，其中100%是从组织内部晋升的。

员工的长期保留为我们提供了一支经验丰富、有凝聚力的员工队伍，这对于实现我们的目标至关重要。我们对保留的关注在我们的高管、区域和部门管理团队的服务期限中显而易见。我们的高管团队的平均任期为27年，我们的住宅建筑区域总裁和副总裁为20年，我们的住宅建筑部门总裁和城市经理为13年。我们的董事会（Board）积极参与我们公司的高管领导继任规划，并同样致力于我们从内部提拔人才的文化。

薪酬和福利

我们相信，我们的薪酬方案和福利与我们行业的其他公司相比具有竞争力。除了基本工资外，符合条件的员工还可以参加我们的激励奖金和股票薪酬计划，这些计划使他们的薪酬与我们股东的利益保持一致。我们的高管和高级运营领导层的总薪酬中有很大一部分是根据我们公司的业绩而浮动的、风险薪酬。我们还为员工提供广泛的福利，包括带薪假期、假期、病假和育儿假；医疗、牙科和视力保健保险；以及人寿保险和残疾保险。提供的其他福利包括401(K)储蓄计划、员工股票购买计划和获得专业资源，以支持员工的身心健康、财务规划、身份盗窃保护和法律需求。我们承诺支持我们的员工实现他们的健康、健康和财务规划目标。我们举办虚拟和面对面的活动和挑战，以鼓励员工保持积极和健康。有关我们的薪酬和员工福利计划的更多信息包括在所附财务报表的附注k中。
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工作场所安全与健康

员工的安全和福祉是我们的首要任务。我们认真对待建筑工地和办公室的工作场所安全。我们为现场人员提供第三方培训，以获得职业安全与健康管理局的认证。我们还为我们的团队提供许多安全资源，包括安全检查表、政策、程序和最佳实践，我们通过每月安全通讯与所有员工沟通，以告知和强化我们对他们福祉的承诺和关注。此外，由于我们几乎所有的土地开发和房屋建设工作都由分包商执行，因此我们要求我们的分包商也维持安全计划。

有关人力资本的更多信息请参阅我们投资者关系网站investor.drhorton.com的“ESG”部分。

环境、社会与治理（ESG）

我们每年发布一致且相关的ESG信息。我们于2024年1月发布的最新ESG报告包括与可持续发展会计准则委员会（现为国际可持续发展准则委员会的一部分）编制的房屋建筑商行业报告标准一致的数据。我们的ESG报告不被视为本年度报告的一部分，也不以引用方式纳入本年度报告。 该报告还涵盖了对我们公司和利益相关者非常重要的主题，包括但不限于：
•风险管理;
•董事会监督、道德、多元化和独立性;
•住房负担能力和社区影响;
•家庭能源效率、质量和安全;
•工作场所健康与安全;
•人才保留和员工福祉;
•多样性、公平和包容性;
•负责任的土地开发;
•水管理和效率;以及
•温室气体排放。

业务收购

我们经常评估有利可图地扩大业务的机会，包括对其他住宅建筑或相关业务的潜在收购。收购房屋建筑及相关业务通常为我们提供即时的土地和房屋库存，并通过购买合同控制额外的土地和地块头寸。此外，被收购企业的员工通常对当地市场状况有专门的了解，包括与市政当局、土地所有者、开发商、分包商和供应商的现有关系。这些库存头寸以及当地市场知识和关系可能需要我们几年的时间才能通过自己的努力发展起来。我们寻求通过对每笔收购进行广泛的运营、财务和法律尽职调查，并进行财务分析，以确定每笔收购预计将对我们的收益、回报和战略地位产生积极影响，从而限制与收购其他公司相关的风险。

竞争

我们是竞争激烈的待售和租赁市场的住宅供应商。我们不仅争夺购房者和租房者，还争夺理想的房产、原材料、熟练劳动力和融资。我们与当地、区域和国家的房屋建筑和租赁公司以及现有房屋销售和租赁物业竞争。我们根据房屋的价格、地点、质量和设计以及抵押贷款融资条款进行竞争。


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我们金融服务业务的竞争对手包括其他抵押贷款机构和所有权公司，包括国家、地区和地方抵押银行以及其他金融机构。其中一些竞争对手受到的政府监管较少，获得资本的机会比我们更多，可能以不同的贷款标准运营和/或可能为潜在客户提供更广泛或更有吸引力的融资和其他产品和服务。我们努力在适用法规的范围内提供灵活、定价公平的融资替代方案。

我们的企业与所有行业的其他公司竞争，以吸引和留住高技能和经验丰富的员工、经理和高管。随着我们经营的行业和整体经济商业条件的改善，对这些个人服务的竞争也会加剧。

政府法规和环境事务

我们经营的行业受到广泛而复杂的监管。我们和我们使用的分包商必须遵守许多联邦、州和地方法律法规。这些措施包括分区、密度和开发要求，以及建筑、环境、广告、劳动力和房地产销售规则和法规。这些法规和要求在不同程度上影响了我们市场的土地开发和住宅设计、建造和销售过程的方方面面。我们的住房由地方当局根据需要进行检查，有资格获得联邦住房管理局(FHA)和美国退伍军人事务部(VA)提供保险或担保的住房也要接受他们的检查。这些条例往往赋予管理政府当局广泛的自由裁量权。此外，我们的新房屋发展项目可能会接受学校、公园、街道、公用事业和其他公共改善工程的各种评估。

我们的建筑和土地开发活动还受到一系列关于保护健康、安全和环境的地方、州和联邦法规、条例、规则和法规的约束。每个地点的具体合规要求因地点、环境条件以及该地点和毗邻物业的现在和以前的用途而有很大差异。我们相信，我们在所有实质性方面都遵守适用于我们业务的现有环境法规。此外，我们对这些法规的遵守没有，也不会对我们的综合财务状况、经营业绩或现金流产生实质性的不利影响。然而，法规的变化，例如美国住房和城市发展部和美国农业部最近通过的最低能源标准，加利福尼亚州最近颁布的与气候有关的披露立法，以及美国证券交易委员会通过的与气候有关的披露规则，目前正在进行司法审查，可能会增加我们遵守此类法规的成本，如“项目1A”中所讨论的那样。风险因素。

我们的抵押贷款公司必须遵守广泛的州和联邦法律法规，这些法律法规由众多机构管理，包括消费者金融保护局、联邦住房金融局、美国住房和城市发展部、联邦住房管理局、弗吉尼亚州、美国农业部、房利美、房地美和金妮梅。这些法律和法规包括许多合规要求，包括许可、消费者披露、公平贷款和房地产结算程序。因此，我们的运营需要接受相关机构的定期、广泛的检查。

季节性

尽管市场状况的重大变化过去影响了我们的季节性模式，并且未来可能再次影响，但我们通常会关闭房屋建筑业务中的更多房屋，并在本财年的第三和第四季度产生更多收入和税前收入。我们业务的季节性也可能导致我们运营的营运资金需求发生显着变化。由于季节性活动，我们的季度运营结果和特定财年末的财务状况不一定代表我们财年的余额。
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项目1A.评估各种风险因素

本年度报告中包含的10-k表格中对我们业务和运营的讨论应与下文列出的风险因素一起阅读。它们描述了我们面临或可能面临的各种风险和不确定性，其中许多难以预测或超出我们的控制范围。尽管风险是单独组织和描述的，但许多风险是相互关联的。这些风险和不确定性，加上本报告其他地方描述的其他因素，有可能对我们的业务、财务状况、经营业绩、现金流、战略或前景产生重大不利的影响。

与我们的业务运营相关的风险

我们的房屋建筑、租赁和土地开发业务是周期性的，并受到经济、房地产或其他条件变化的影响，这些变化可能对我们的业务和财务业绩产生不利影响。

我们的房屋建筑、租赁和土地开发业务是周期性的，并受到总体和当地经济和房地产状况变化的显着影响，例如：
•就业水平;
•消费者信心和支出;
•住房需求;
•购房者的融资可用性;
•为购买我们租赁物业的公司提供融资;
•利率；
•通货膨胀；
•待售新房和现房的供应情况和价格以及租赁房产的供应情况和市场价值;以及
•人口趋势。

这些总体和地方经济状况的不利变化或更广泛经济的恶化可能会对我们的业务和财务业绩产生负面影响，并增加资产减损和核销的风险。这些经济状况的变化可能会对我们的一些地区或市场产生比其他地区或市场更大的影响。如果不利条件影响我们更大的市场，那么它们对我们的影响可能会比对其他一些公司的影响更大。

联邦政府的财政政策和美联储的货币政策可能会对金融市场和消费者信心产生负面影响，并可能损害美国经济以及住房和租赁市场，进而可能对我们企业的经营业绩产生不利影响。为了应对通胀上升，美联储近年来大幅提高利率，尽管最近有所降息，但仍导致抵押贷款利率上升。抵押贷款利率的上升降低了我们住房的负担能力，并要求我们利用定价调整和激励措施来适应当前的市场条件。抵押贷款利率长期上升或抵押贷款利率进一步上升可能会对我们的业务和财务业绩产生不利影响。

美国军事人员部署到外国地区、恐怖袭击、其他暴力行为或对国家安全的威胁以及美国或其他国家的任何相应反应、国内或国际不稳定或社会或政治动荡可能会导致我们经营的市场经济放缓，这可能会对我们的业务产生不利影响。

如果我们遇到上述任何情况，潜在客户可能不太愿意或无法购买我们的房屋或租赁物业。此外，如果购房者因上述任何因素而不履行合同，积压房屋销售合同的取消可能会增加。我们的定价和产品策略也可能受到市场条件的限制。我们可能无法改变房屋或租赁产品的定价或组合，降低我们建造的房屋或房产的成本，提供更经济实惠的房屋或租赁房产，或者以其他方式令人满意地应对不断变化的市场条件，而不会对我们的利润和回报产生不利影响。
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我们的金融服务业务与我们的房屋建筑业务密切相关，因为它主要是向我们建造的房屋的购买者发放抵押贷款。由于上述问题，对我们房屋的需求减少也将对我们这部分业务的财务业绩产生不利影响。我们发起的抵押贷款违约率的增加可能会对我们出售抵押贷款的能力或我们在出售抵押贷款时获得的定价产生不利影响，或者可能增加我们对以前发起的抵押贷款的追索权义务。我们可能对发放和销售给第三方购买者的抵押贷款相关的损失负责，如果与某些陈述和担保有关的错误或遗漏发生，保证出售的贷款符合某些要求，包括与贷款相关的承保标准、抵押品类型、主要抵押保险的存在和某些借款人陈述的有效性，我们可能会被要求回购某些抵押贷款或提供赔偿。回购的按揭贷款和/或与该等贷款相关的索赔和解可能会对我们的业务和财务业绩产生不利影响。我们为我们出售的抵押贷款建立了估计损失和未来回购义务的准备金；然而，与这些抵押贷款相关的实际未来义务可能与我们目前的估计金额有很大不同。此外，我们可能会保留对我们的原始抵押贷款服务的权利。作为这些贷款的服务商，我们可能会因不得不提前向抵押贷款支持证券(MBS)债券持有人支付款项而蒙受损失，前提是没有足够的收款来满足基础MBS所需的本金和利息汇款。

影响资本市场和金融机构的不利事态发展可能会限制我们获得资本的能力，增加我们的资本成本并影响我们的流动性和资本资源。

在过去的经济和房地产低迷期间，信贷市场紧缩并减少了我们以前可用的一些流动性来源。因此，我们主要依赖手头现金来满足我们的流动资金需求并偿还那段时期的未偿债务。影响资本市场和金融机构的不利事态发展，或者对此类事件的担忧或谣言，可能会限制我们进入公共债务市场或获得银行融资的能力，或者可能会增加我们的资金成本。银行倒闭或影响我们拥有现金余额的金融机构的其他不利条件可能会对我们的流动性和资本资源产生不利影响。

我们的房屋建筑业务利用21.9亿美元的高级无担保循环信贷安排，具有未承诺的手风琴功能，该安排的规模可能会增加至30亿美元，但须遵守某些条件和额外银行承诺的可用性。我们的房屋建筑循环信贷机制还提供发放信用证，其子限额等于循环信贷承诺总额的100%。该融资的到期日为2027年10月28日。我们的房屋建筑循环信贷机制和房屋建筑高级无担保票据由DR担保霍顿公司'其重要的全资住宅建筑子公司。

Forestar拥有一项价值41，000万美元的高级无担保循环信贷安排，具有未承诺的手风琴功能，该安排的规模可能会增加至60，000万美元，但须遵守某些条件和额外银行承诺的可用性。Forestar循环信贷机制还规定签发信用证，其子限额等于10000万美元和循环信贷承诺总额的50%中较高者。该融资的到期日为2026年10月28日。Forestar循环信贷融资由Forestar的全资子公司提供担保，这些子公司不是非重要子公司，也未被指定为非限制子公司。Forestar循环信贷安排不由DR担保霍顿公司或为我们的房屋建筑、租赁或金融服务业务的债务提供担保的任何子公司。

我们的租赁子公司DRH Rental拥有10.5亿美元的优先无担保循环信贷安排，具有未承诺的手风琴功能，根据某些条件和额外的银行承诺，该安排的规模可能会增加到20亿美元。租赁循环信贷安排下的可获得性必须根据DRH Rental的房地产资产的账面价值和不受限制的现金进行借款基数计算。租赁循环信贷安排还规定签发升华金额等于1亿美元和循环信贷承诺总额50%的信用证。该贷款的到期日为2027年10月10日。租赁循环信贷安排由DRH Rental的全资附属公司担保，该等附属公司并非非实质附属公司，亦未被指定为不受限制的附属公司。租赁循环信贷安排不由D.R.Horton，Inc.或为我们的房屋建筑、Forestar或金融服务业务的债务提供担保的任何子公司提供担保。

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我们的抵押贷款子公司DHI Mortgage利用16亿美元的承诺抵押贷款回购机制为其发放的大部分贷款提供融资。市场状况的不利变化可能会使该设施的更新变得更加困难，或者可能导致该设施成本增加或承诺金额减少。这些影响我们抵押贷款回购机制的变化也可能使我们出售抵押贷款变得更加困难或成本更高。承诺抵押回购工具的到期日为2025年5月9日。DHI Mortgage还利用未承诺的抵押贷款回购机制，截至2024年9月30日，该机制的容量为50000万美元。抵押贷款回购设施不由DR担保霍顿公司或为我们的房屋建筑、租赁或Forestar业务的债务提供担保的任何子公司。

我们定期评估为业务增长提供资金的预期资本需求，偿还债务，支付股息，根据40美元的亿股票回购授权回购普通股，并支持其他一般公司和运营需求，并定期评估筹集额外资本的机会。D.R.Horton，Inc.于2024年7月向美国证券交易委员会提交了自动生效的通用货架登记声明，登记了可能不时发行的债务和股权证券，金额待定。Forestar还拥有2024年9月提交给美国证券交易委员会的有效搁置登记声明，登记了75000美元的万股权证券。如果市场条件允许，我们可能会通过资本市场发行新的债务或股权证券，或获得额外的银行融资，以满足我们预计的资本需求或提供额外的流动资金。我们相信，我们现有的现金资源，加上房屋建设、租赁和Forestar循环信贷安排、抵押回购安排以及进入资本市场或获得额外融资的能力，将提供足够的流动性来满足我们的短期营运资金需求和债务义务。经济、住房建设或资本市场状况的不利变化可能会对我们的业务、流动性和财务业绩产生负面影响，限制我们获得额外资本的能力或增加我们的资本成本。

政府机构提供的抵押贷款融资的可用性减少、政府融资计划的变化、我们以有吸引力的条款出售抵押贷款的能力下降或抵押贷款利率的上升可能会降低我们买家获得融资的能力并对我们的业务和财务业绩产生不利影响。

由我们的金融服务业务发起的抵押贷款主要有资格出售给Fannie Mae、Freddie Mac或Ginnie Mae，通常出售给第三方购买者。抵押贷款的二级市场仍然主要希望得到房利美、房地美或金利美支持的证券，我们相信这些机构向抵押贷款行业提供的流动性对房地产市场非常重要。有关房利美和房地美的长期结构和生存能力的任何重大变化都可能导致调整其贷款组合的规模和贷款产品的指导方针。此外，这些机构提供的融资减少可能会对利率、抵押贷款供应以及新房和抵押贷款的销售产生不利影响。在2024财年，我们大约73%的抵押贷款直接出售给了Fannie Mae、Freddie Mac或由Ginnie Mae支持的证券，26%出售给了另一家主要金融实体。在持续的基础上，我们寻求与更多的金融实体建立贷款购买安排。如果我们无法以有吸引力的条件向购房者出售按揭贷款，我们以有竞争力的价格发放和销售按揭贷款的能力可能会受到限制，这将对我们的盈利能力产生负面影响。

FHA为通常信用要求较低的抵押贷款提供保险，并且是销售房屋融资的重要来源。未来FHA计划的变化、限制或保费大幅增加可能会对FHA融资的可用性或负担能力产生负面影响，从而对我们销售房屋的能力产生不利影响。

我们的一些客户可能有资格通过VA和USDA以及某些其他住房金融机构提供的计划获得100%融资。这些计划可能会受到法规、贷款标准和政府资金水平的变化的影响。无法保证这些计划或其他计划将继续在我们的房屋建筑市场上提供，或者它们将像目前提供的计划一样对我们的客户具有吸引力，这可能会对我们的销售产生负面影响。

近年来抵押贷款利率大幅上升，市场状况和政府行为可能导致抵押贷款利率未来进一步上升。当利率上升时，拥有房屋的成本就会增加，从而减少了可以获得抵押贷款融资的潜在购房者的数量，并可能导致对房屋的需求下降。


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与我们的土地、地块和租赁库存相关的风险可能会对我们的业务和财务业绩产生不利影响。

我们的房屋建筑、租赁和Forestar业务的库存风险很大。控制、拥有和开发土地存在固有的风险。如果住房需求下降，我们可能无法在一些社区出售房屋或租赁房产盈利，而且我们可能无法完全收回我们拥有的一些土地和地块的成本。此外，我们拥有的未开发土地、地块和库存的价值可能会因市场状况的变化而大幅波动。因此，我们通过购买合同控制的地块的押金可能会面临风险，我们可能不得不出售房屋、租赁物业或土地以获得较低的利润率，或者对我们的土地和地块记录库存减损费用。经济或住宅建筑行业状况的显着恶化可能会导致大量库存减损费用。

我们无法保证我们的增长战略、收购、投资或其他战略举措将会成功，也不会让我们面临额外风险或其他负面后果。

近年来，我们主要通过增加对现有住宅建筑市场的土地、地块和房屋库存的投资来发展业务。我们还通过投资新产品、新的地理市场和租赁物业业务的增长进行了扩张。如果住房条件恶化或我们未能成功实施增长战略，对土地、地块、房屋库存和租赁物业的投资可能会使我们面临经济损失和资产受损的风险。

近年来，我们已经收购了几家公司的业务，未来我们可能会对其他公司、业务或资产进行战略性收购或投资。此类收购和投资可能具有与土地、地块和房屋库存相关的风险，但它们也可能使我们面临额外的风险或其他负面后果。这些交易或我们的其他战略举措可能不会推进我们的业务战略、提供令人满意的投资回报或提供我们预期的其他好处。此外，这些业务的整合可能不会成功，可能需要大量的时间和资源，这可能会分散管理层对其他业务的注意力。收购和投资还可能带来新的合规相关义务，或者使我们面临在尽职调查过程中没有发现的重大债务，这可能会导致诉讼。如果这些交易低于我们的预期或不成功，我们可能会产生巨额费用或注销库存、其他资产或商誉等无形资产。如果我们发行普通股作为对价，收购和投资可能会导致现有股东的稀释，如果我们用现金购买，可能会增加我们的债务水平或减少我们的流动性。未来任何收购或投资的规模、时机和性质将取决于许多因素，包括我们寻找合适的额外市场或收购候选者的能力、可接受条款的谈判、我们的财务状况以及总体经济和商业状况。我们也可能寻求剥离一项投资或业务，并可能难以以可接受的条件及时出售此类投资或业务。

我们的业务和财务业绩可能会受到严重通货膨胀、利率上升或通货紧缩的不利影响。

过去三年，经济经历了巨大的通胀压力。通货膨胀可能会增加土地、材料、劳动力和资本成本，对我们产生不利影响。为了降低通货膨胀率，美联储大幅提高利率，导致抵押贷款利率上升。抵押贷款利率的上升降低了我们住房的负担能力，并要求我们利用定价调整和激励措施来适应当前的市场条件，从而导致毛利率下降。如果通胀和抵押贷款利率居高不下或上升，住房负担能力可能会受到进一步影响，这可能会降低我们的利润率，并对我们的业务和财务业绩产生不利影响。

或者，一段相当长的通货紧缩可能会导致总体支出和借贷水平下降。这可能导致经济状况恶化，包括失业率上升。通货紧缩还可能导致我们的库存价值下降或将现房价值降至相关抵押贷款余额以下，这可能会增加现房的供应。这些或其他与通货紧缩相关的因素可能会对我们的业务和财务业绩产生负面影响。
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供应短缺以及与获取土地、建筑材料和熟练劳动力以及获得监管批准相关的其他风险可能会增加我们的成本并推迟交付。

住宅建筑和地块开发行业不时遇到可能影响施工成本或时间的重大困难，包括：
•难以在我们的潜在客户想要居住的地点以负担得起的价格获得适合住宅建设的土地;
•延迟获得市政府或其他政府机构的必要批准;
•合格分包商短缺;
•依赖资本不足的当地分包商、制造商、分销商和土地开发商;
•材料短缺;和
•材料成本显着增加，特别是木材、石膏板和水泥价格的增加，这些都是房屋建筑成本的重要组成部分。

在过去的几年里，我们的供应链经历了多次中断，导致某些建筑材料短缺和劳动力市场紧张。这导致我们的施工周期延长，建筑材料成本增加。2023财年，我们开始看到施工周期时间有所改善，而且施工周期时间最近已正常化;然而，如果建筑材料短缺和成本增加以及劳动力市场紧张加剧，我们的施工周期时间和利润率可能会受到不利影响。

此外，对用于建造和交付房屋的进口材料和货物（包括钢铁、铝和木材）征收或增加的关税、关税和/或贸易限制可能会增加我们这些物品或用它们制造的产品的成本。 这些因素可能会导致施工延误或导致我们在建造房屋时承担更多成本。

重大流行病或大流行等公共卫生问题可能会对我们的业务和财务业绩产生不利影响。

美国和其他国家已经经历过、未来可能经历过传染病的爆发，影响公共卫生和公众对健康风险的看法。如果任何传染病（例如COVID-19）大范围、长期、实际或感知到的爆发，我们的运营可能会受到负面影响。此类事件已经并可能在未来对我们的运营产生影响，包括客户流量减少、供应链中断、劳动力市场紧张或其他因素，所有这些都可能减少对我们房屋的需求。影响全球经济的公共卫生危机的这些或其他影响可能会对我们的运营业绩和财务状况产生不利影响。

我们的业务和财务业绩可能会受到天气状况和自然灾害的不利影响。

物理风险，包括天气条件和自然灾害，如飓风、龙卷风、地震、火山活动、干旱、洪水、冰雹、强降水或长时间降水、野火等，都可能损害我们的业务。此外，气候变化的实际影响可能会导致这些事件的发生频率、严重性和持续时间增加。任何此类事件都可能暂时推迟我们的开发工作、房屋建设和房屋关闭，对材料或劳动力的成本或可用性产生不利影响，损坏在建房屋，导致消费者偏好改变和/或对受影响地区的新房需求产生负面影响。近年来，我们经历了生产的暂时延误以及天气事件对我们的销售和关闭活动的短期影响。这些事件对我们的业务没有重大的持久影响，也没有造成重大的永久性运营挑战，但它们可能会对我们未来的业务产生不利影响。我们开展业务的许多州的气候和地质情况，包括加利福尼亚州、佛罗里达州、得克萨斯州和其他沿海地区，在这些地区我们有一些规模较大的业务，最近经历了自然灾害，这增加了不利天气或自然灾害的风险。

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房屋建筑在正常业务过程中受到房屋保修和建筑缺陷索赔的约束，这可能是重大的。

我们受到住宅建筑业务正常过程中产生的房屋保修和建筑缺陷索赔的影响。我们依靠分包商来进行房屋的实际建设，并且在许多情况下，选择和获取建筑材料。尽管我们对施工过程有详细的规范和监控，但我们的分包商在房屋建设中有时不符合足够的质量标准。当我们发现这些问题时，我们会根据我们的保修义务进行修复。我们花费大量资源来维修我们出售的房屋中的物品，以履行我们向购房者发出的保证。此外，我们还面临建筑缺陷索赔，在法律体系中辩护和解决这些索赔的成本可能很高。保修和建筑缺陷问题也可能导致负面宣传，从而损害我们的声誉并对我们销售房屋的能力产生不利影响。

基于我们多年来售出的大量房屋，我们与保修和建筑缺陷索赔相关的潜在责任是巨大的。因此，我们通常每年都会维持产品责任保险，并寻求从分包商那里获得赔偿和保险证书，以涵盖与其工艺和材料有关的索赔。我们根据我们市场的历史经验和我们对所建房屋类型相关的质量风险的判断，为我们出售的房屋建立保修和其他准备金。由于这些事项固有的不确定性，我们不能保证我们的保险范围、我们的分包商安排和我们的准备金将足以处理我们未来的所有保修和建筑缺陷索赔。合同赔偿可能难以执行，我们可能负责适用的自我保险保留，并且某些类型的索赔可能不在保险范围内或可能超过适用的承保范围。此外，建筑缺陷产品责任保险的承保范围和可获得性有限且成本高昂。近年来，我们对保险成本和承保范围限制的增加做出了回应，为我们的风险提供了自我保险，并增加了我们的自我保险扣除额和索赔准备金。不能保证覆盖范围不会受到进一步限制或变得更加昂贵。如果解决我们未来保修和建筑缺陷索赔的成本超过我们的估计，我们的财务业绩和流动性可能会受到不利影响。

与我们运营相关的健康和安全事件可能会造成潜在的责任和声誉损害。

建筑和土地开发场地本质上是危险的，在该行业运营会带来某些固有的健康和安全风险。由于健康和安全监管要求以及我们建造的房屋数量，健康和安全绩效对于我们业务的成功至关重要。健康和安全绩效方面的任何失误都可能导致不遵守相关监管要求而受到处罚，而导致重大或重大健康和安全事件的失误可能会造成高昂的代价，并可能使我们承担可能代价高昂的责任。此类事件可能会产生重大负面宣传，并对我们的声誉、我们与相关监管机构或政府当局的关系以及我们吸引客户和员工的能力产生相应影响，这反过来又可能对我们的财务业绩和流动性产生重大不利影响。

我们必须获得绩效保证金，如果无法获得绩效保证金，可能会对我们的经营业绩和现金流产生不利影响。

我们经常被要求提供保证金，以确保我们在建筑合同、开发协议和其他安排下的履行或义务。截至2024年9月30日，我们有35亿美元的未偿还担保债券。我们获得担保债券的能力主要取决于我们的信用评级、财务状况、过往表现和其他因素，包括担保市场的容量和担保债券发行人的承销实践。获得保证金的能力也可能受到保险公司为建设和开发活动发行绩效保证金的意愿的影响。如果我们无法在需要时获得担保债券，我们的经营业绩和现金流可能会受到不利影响。

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拥有房屋的成本增加可能会阻止潜在客户购买我们的房屋，并对我们的业务和财务业绩产生不利影响。

拥有房屋的大量费用，包括抵押贷款利息以及州和地方所得税和财产税，历来都是个人联邦所得税的可扣除费用，但受到各种限制。2017年的《减税和就业法案》对这些联邦税收减免规定了新的限制。联邦或州政府进一步改变所得税法以取消或大幅减少与住房拥有相关的所得税福利，可能会对新房的需求和销售价格产生不利影响。

此外，地方政府当局为应对联邦和州资金减少而提高财产税税率，这可能会对我们的潜在客户可以获得的融资金额或他们购买新房的愿望产生不利影响。

此外，旨在减少潜在气候变化影响的现有和未来监管和社会举措可能会增加购买房屋的前期成本、维护房屋及其系统的成本、能源和公用事业成本以及获得房主和各种危险和洪水保险的成本，或限制房主获得这些保险单的能力。尽管这些项目对我们的业务没有产生重大影响，但它们可能会对我们未来的业务产生不利影响。

信息技术故障、数据安全漏洞以及未能满足隐私和数据保护法律法规可能会损害我们的业务。

我们使用信息技术和其他计算机资源来开展重要的运营和营销活动，并保存我们的业务记录。这些信息技术系统依赖于全球通信提供商、网络浏览器、第三方软件和数据存储提供商以及互联网基础设施的其他方面，这些提供商在过去经历了安全漏洞、网络事件、勒索软件攻击、重大系统故障和服务中断。此外，近年来，网络钓鱼攻击显著增加，即肇事者试图欺诈性地诱使公司系统的员工、客户、供应商或其他用户披露敏感信息，以获取其数据。随着人工智能的使用，这些网络钓鱼攻击可能包含极具说服力的语言，使它们很难与合法消息区分开来。使用远程工作环境和虚拟平台可能会增加我们发生网络事件或数据安全漏洞的风险。此外，地缘政治紧张或冲突可能会增加网络事件或其他数据安全漏洞的风险。我们的正常业务活动包括收集和存储特定于我们的购房者、租房者、员工、供应商和供应商的信息，并根据需要在办公室和远程位置维护与我们业务相关的运营和财务信息。我们的信息技术系统或其他数据安全控制或与我们合作的第三方的安全受到重大破坏，可能包括窃取或发布这些信息。由于安全漏洞而导致的个人身份和机密信息的意外或未经授权的披露，可能会导致受影响的个人或业务合作伙伴或监管机构对我们提起诉讼或其他诉讼。这类诉讼的结果可能包括罚款或罚款，可能会对我们的业务产生重大负面影响。

随着法律要求的不断增加，我们还可能被要求承担巨额成本，以防止信息技术故障、安全漏洞以及未来未能满足隐私和数据保护法律法规造成的损害。欧盟和其他国际监管机构以及各州政府已经颁布或加强了数据隐私法规，如《加州隐私权法案》，其他政府正在考虑建立类似或更强有力的保护措施。这些规定规定了在我们的系统中处理特定个人信息的某些义务，包括通知个人我们从他们那里收集的信息。我们为遵守这些要求付出了代价，但如果制定新的要求并根据个人行使权利的方式，我们的成本可能会大幅增加。任何敏感信息的丢失和未能遵守这些要求或该领域的其他适用法律和法规都可能导致重大处罚、声誉损害或诉讼。


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我们经常利用信息技术安全专家来协助我们评估我们的信息技术系统的安全有效性，并定期加强我们的安全措施，其中包括多个冗余的保障措施，以保护我们的系统和数据。我们使用各种加密、令牌化和身份验证技术来缓解网络安全风险，并增强了我们的监控能力，以增强对潜在网络威胁的早期发现和快速反应。然而，由于用于获取未经授权的访问、使系统瘫痪或降级的技术经常变化，并且越来越多地利用人工智能等复杂技术，因此它们往往直到针对目标启动时才被识别。因此，我们可能无法预测这些技术，无法实施足够的预防措施，也无法识别和调查网络安全事件。我们还可能产生成本，使我们的网络安全计划适应不断变化的威胁格局，并调查和补救漏洞或其他已确定的风险。

尽管过去的网络安全事件迄今为止尚未对我们的业务或运营产生重大影响，但在未来，数据安全漏洞、我们信息技术系统功能的重大和长期中断或我们的任何数据安全控制的破坏都可能会扰乱我们的业务运营、损害我们的声誉并导致我们失去客户。此外，如果网络安全事件被确定为重大事件，我们将遵守额外的报告要求。我们无法保证未来不会发生安全漏洞、网络事件、数据盗窃或其他重大系统或安全故障，此类事件可能会对我们的综合运营业绩或财务状况产生重大不利影响。

政府法规和环境问题可能会增加成本并限制我们土地开发和住房项目的可用性，并对我们的业务和财务业绩产生不利影响。

我们受到影响土地开发和住宅建设的广泛而复杂的法规的约束，包括分区、密度限制、建筑设计和建筑标准。这些法规通常为管理政府当局提供广泛的自由裁量权，决定我们在开发或建设获得批准（如果有的话）之前必须满足的条件。我们取决于这些当局对水或污水设施、道路或其他当地服务的充足性的决定。新住房开发项目还可能接受学校、公园、街道和其他公共改善的各种评估。此外，许多市场的政府当局尚未实施任何增长或增长控制举措。其中任何一项都可能限制、推迟或增加开发或住宅建设的成本。

我们还遵守有关健康、安全、劳工标准和环境保护的大量和各种地方、州和联邦法律和法规。环境法的影响取决于建筑工地或邻近房产的先前用途，并且在供应较少、未开发土地或理想替代方案较少的地区可能会更大。这些事项可能会导致延误，可能会导致我们承担大量合规、补救、缓解和其他成本，并可能禁止或严格限制环境敏感地区的开发和住宅建设活动。政府机构还定期对我们的业务实践发起审计、审查或调查，以确保遵守这些法律和法规，这可能会导致我们产生成本或对我们的业务造成其他可能严重的干扰。

近年来，倡导团体、政府机构和公众对气候变化对环境的影响表示了越来越多的担忧。过渡风险，如政府旨在减少温室气体排放和潜在气候变化影响的限制、标准或法规正在出现，并可能在未来以限制或对某些地区的土地开发和住房建设提出额外要求的形式增加。这些限制和要求可能会增加我们的运营和合规成本，或者需要额外的技术和资本投资，这可能会对我们的运营结果产生不利影响。这在美国西部是一个特别令人担忧的问题，那里已经颁布了美国一些最广泛和最严格的环境法律和住宅建筑建设标准，我们在那里有商业运营。我们相信，我们在所有实质性方面都遵守了适用于我们业务的现有与气候相关的政府限制、标准和法规，这种遵守并未对我们的业务产生实质性影响。然而，考虑到环境法的性质和可能出现的目前未知的事项的快速变化，我们无法预测我们未来对这些事项的风险敞口，我们未来实现合规或补救潜在违规行为的成本可能会很高。


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此外，实际或预期的ESG和其他可持续发展问题以及我们对这些问题的反应可能会损害我们的业务。增加政府和社会对ESG事项的关注，包括扩大对气候变化、人力资本、劳工、网络安全和风险监督等主题的强制性和自愿性报告、尽职调查和披露，可能会扩大我们需要控制、评估和报告的事项的性质、范围和复杂性。2024年3月，美国证券交易委员会通过了气候相关披露的新规则。尽管这些规则目前正在法律诉讼中受到挑战，其有效性也被美国证券交易委员会搁置，但如果这些规则生效，将要求上市公司进行广泛的气候相关披露。同样，加利福尼亚州最近颁布了自己的立法，要求被视为在加州做生意的公司广泛披露与气候有关的信息，其他州也在考虑类似的法律。上述任何因素都可能改变我们开展业务的环境，并可能增加持续的合规成本，并对我们的运营结果和现金流产生不利影响。如果我们不能充分解决此类ESG问题，或未能遵守所有法律、法规、政策和相关解释，可能会对我们的声誉和业务业绩造成负面影响。

我们依赖来实际建造房屋的分包商也遵守大量地方、州和联邦法律和法规，包括涉及不受我们控制的事项的法律。如果建造我们房屋的分包商未能遵守所有适用法律，我们可能会遭受声誉损害，并可能承担可能的责任。

我们还受到大量法律和法规的约束，因为我们的普通股和债务证券以及Forestar子公司的普通股和债务证券在资本市场公开交易。这些法规规范我们与股东和资本市场的沟通、我们的财务报表披露和我们的法律流程，并且还影响我们独立注册会计师事务所和我们的法律顾问所需执行的工作。这些法律和法规的变化，包括管理政府当局随后实施的规则，可能需要我们承担额外的合规成本，而且此类成本可能很大。

政府对我们金融服务业务的监管可能会对我们的业务和财务业绩产生不利影响。

我们的金融服务业务受广泛的州和联邦法律和法规的约束，这些法律和法规由众多机构管理，包括但不限于消费者金融保护局、联邦住房金融局、美国住房和城市发展部、FHA、VA、美国农业部、房利美、房地美和Ginnie Mae。这些法律和法规包括许多合规要求，包括但不限于许可、消费者披露、公平贷款和房地产结算程序。因此，我们的运营需要接受相关机构的定期、广泛的检查。未来的额外法规或监管机构不断变化的规则解释和审查可能会导致更严格的合规标准，并可能对我们的运营业绩产生不利影响。

我们在竞争激烈的行业运营，竞争条件可能会对我们的业务和财务业绩产生不利影响。

我们从事竞争激烈的住宅行业。我们不仅争夺购房者和租房者，还争夺理想的房产、原材料、熟练劳动力和融资。我们与当地、区域和国家的房屋建筑和租赁公司以及现有房屋销售和租赁物业竞争。这些竞争条件可能会对我们的销量、售价、租赁入住率、租金费率和激励水平产生负面影响，降低我们的利润率，并导致我们的库存或其他资产的价值出现损害。竞争还可能影响我们以可接受的价格或条款获得合适的土地、原材料和熟练劳动力的能力，或者导致土地开发或建设的延误。

我们金融服务业务的竞争对手包括其他抵押贷款机构和所有权公司，包括国家、地区和地方抵押银行以及其他金融机构。其中一些竞争对手受到的政府监管较少，获得资本的机会比我们更多，可能以不同的贷款标准运营和/或可能为潜在客户提供更广泛或更有吸引力的融资和其他产品和服务。

我们的企业与所有行业的其他公司竞争，以吸引和留住高技能和经验丰富的员工、经理和高管。如果我们无法吸引和留住关键员工、经理或高管，我们的业务可能会受到不利影响。
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与我们的负债有关的风险

我们有大量债务，并且可能会产生额外债务，这可能会影响我们的财务健康状况以及我们筹集额外资本为我们的运营或潜在收购提供资金的能力。

截至2024年9月30日，我们的合并债务为59美元亿，其中包括与我们的住房建筑部门相关的29美元亿，与我们的金融服务部门相关的15美元亿，与我们的租赁部门相关的75100美元万，以及与我们的Forestar部门相关的70600美元万。我们房屋建筑优先票据的契约不限制我们或我们的房屋建筑子公司未来发生的无担保债务，或我们的非担保人子公司发生的有担保或无担保债务，而管理我们房屋建筑循环信贷安排的协议允许我们产生大量未来无担保债务。此外，管理我们的房屋建筑优先票据的契约和管理我们房屋建筑循环信贷安排的协议对我们的能力以及我们的房屋建筑优先票据和我们的房屋建筑循环信贷安排下的担保人产生以某些资产担保的债务的能力施加了限制，但仍允许我们和我们的房屋建筑子公司产生大量额外的担保债务。租赁循环信贷安排对DRH Rental及其受限制子公司产生有担保和无担保债务的能力施加了限制，但仍允许DRH Rental及其受限制子公司产生大量未来有担保和无担保债务，并且不限制DRH Rental的无限制子公司产生未来有担保和无担保债务。Forestar循环信贷安排和管理Forestar优先票据的契约对Forestar及其受限子公司产生担保和无担保债务的能力施加了限制，但仍允许Forestar及其受限子公司产生大量未来的担保和无担保债务，并且不限制Forestar的非限制性子公司产生未来的担保和无担保债务。按揭回购安排对DHI Mortgage及其受限制附属公司产生有担保及无抵押债务的能力施加限制，但仍允许DHI Mortgage及其受限制附属公司产生大量未来有担保及无抵押债务，且不限制DHI Mortgage的无限制附属公司产生未来有担保及无抵押债务。

我们和子公司债务的金额和期限可能会产生重要后果。例如，我们的房屋建筑、租赁、Forestar和金融服务业务各自的个人债务义务可能会产生以下后果：
•要求将运营中的大部分现金流用于偿还债务，并降低将现金流用于其他运营或投资目的的能力;
•限制适应商业或经济状况变化的灵活性;以及
•限制未来获得流动资金、资本支出、收购、偿债要求或其他要求融资的能力。

偿还我们的债务需要大量现金，而我们或我们的子公司可能没有足够的现金流来自各自的业务来偿还我们的巨额债务。

我们和子公司履行各自债务偿还义务的能力将部分取决于我们和子公司未来的财务表现。未来的结果受到本报告中描述的风险和不确定性的影响。我们的收入和盈利因我们所服务市场的一般经济活动水平而异。我们的业务还受到金融和政治事件以及其他因素的影响，其中许多因素超出了我们的控制范围。影响我们产生现金能力的因素也会影响我们通过出售债务或股权、债务再融资或出售资产为这些目的筹集额外资金的能力。现行利率的变化可能会影响我们的债务偿还义务的成本，因为房屋建筑、租赁和Forestar循环信贷设施以及抵押回购设施下的借款按浮动利率支付利息。

管理我们和子公司债务的工具对我们和子公司的业务施加了某些限制，我们和子公司遵守相关契约、限制或限制的能力可能会对我们和子公司的财务状况或运营灵活性产生不利影响。

我们和我们的某些子公司的债务施加的限制可能会限制我们或我们的子公司规划或应对市场或经济状况或满足资本需求的能力，或以其他方式限制我们的活动或业务计划，并对我们或我们的子公司为我们的运营、收购、融资的能力产生不利影响。投资或战略联盟或其他资本需求或从事符合我们利益的其他商业活动。

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管理我们负债的协议包含对我们和我们的担保子公司进行某些资产的出售和回租交易、产生担保债务、设立留置权、支付股息和对股权证券进行其他分配或赎回或回购证券、出售某些资产以及对我们所有或几乎所有资产进行合并、合并或出售的能力的限制。管理DRH Rental及Forestar各自债务的适用工具载有对DRH Rental及Forestar及其若干附属公司产生额外债务、设立留置权、派发股息及对权益证券作出其他分派或赎回或回购权益证券、出售若干资产、订立联属交易及进行合并、合并或出售DRH Rental或Forestar全部或几乎全部资产(视何者适用而定)的能力的限制。

此外，管辖我们及其子公司某些债务工具的协议包含以下财务契约：

房屋建筑循环信贷机制。 我们的房屋建筑循环信贷工具包含财务契约，要求维持最大允许杠杆率，并在杠杆率超过一定水平时限制借款基础。未能遵守这些财务契约可能会导致贷款银行终止循环信贷安排下的资金供应，或导致任何未偿借款在到期前到期并应支付。

租赁和Forestar循环信贷设施。 Rental和Forestar循环信贷额度均包含财务契约，要求DRH Rental或Forestar（如适用）维持最低水平的有形净值、最低水平的流动性、最高允许杠杆率和基于DRH Rental或Forestar房地产资产和不受限制现金的净价值的借款基础限制。未能遵守这些财务契约可能会导致贷款银行终止适用循环信贷安排下的资金可用性，或导致任何未偿借款在到期前到期并应支付。

抵押回购便利和其他限制。 我们的抵押子公司的抵押回购设施要求我们的抵押子公司维持最低水平的有形净值、最高允许负债与有形净值比率以及最低水平的流动性。如果不遵守这些要求，贷款银行可能会终止向我们的抵押贷款子公司提供资金，或导致任何未偿借款在到期前到期并支付。遵守这些契约时遇到的任何困难都可能使设施的更新变得更加困难或成本高昂。

此外，尽管我们的金融服务业务是通过子公司进行的，但这些子公司不受管理Our和Forestar优先无担保票据的契约或管理建房、租赁和Forestar循环信贷安排的协议的限制，但如果此类分配会导致抵押贷款回购安排下的违约事件或在这些安排下发生违约事件，我们金融服务子公司向我们的住房建设业务分配资金的能力将受到限制。此外，我们在金融服务子公司清算或资本重组时从其获得资产的权利受制于这些子公司的债权人的优先债权。我们对我们金融服务子公司资金的任何债权都将从属于附属债务，只要此类债务的任何担保，以及任何以其他方式被确认为优先于我们债权的债务。

我们获得资本的机会和获得额外融资的能力可能会受到债务评级下调的影响。

我们的房屋建筑高级无担保债务目前被所有三大评级机构评为投资级;然而，无法保证我们能够维持这些评级。我们债务评级的任何降低都可能会使进入公共资本市场或从银行获得额外信贷变得更加困难和/或更加昂贵。Forestar债务评级的任何降低也可能使Forestar进入公共资本市场或从银行获得额外信贷的能力变得更加困难和/或更加昂贵。

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管理我们债务的工具包含可能影响还款时间的控制条款变更。

我们的房屋建筑优先票据下的控制权变更购买选择权和我们的房屋建筑循环信贷安排下的控制权变更违约。一旦发生控制权变更和评级下调事件，如管理我们房屋建筑优先票据的契约所定义，我们将被要求以本金的101%回购此类票据，以及所有应计和未付利息(如果有)。此外，控制权的变更(如我们的房屋建筑循环信贷安排所定义)将构成我们的房屋建筑循环信贷安排下的违约事件，这可能导致该贷款下任何未偿还借款的偿还速度加快，要求将所有未偿还信用证作为现金抵押，并终止其下的承诺。如果我们的房屋建筑循环信贷安排下超过5,000美元的未偿还万被加速偿还，而这种加速没有被撤销或该债务没有在30天内得到偿还，则在管理我们的房屋建筑优先票据的契约项下，违约事件将会发生，该票据的受托人或当时未偿还的相关系列票据本金至少25%的持有人有权宣布所有该等票据立即到期和支付。如果我们的房屋建筑优先票据的契约要求购买要约，我们的房屋建筑循环信贷安排下的借款必须得到偿还，或者如果优先票据被加速，我们不能保证我们有足够的资金支付所需的金额。

Forestar票据项下控制权购买选择权的变更和Forestar循环信贷安排项下控制权违约的变更。一旦发生控制权变更触发事件(根据管理Forestar票据的契约中的定义)，Forestar将被要求以本金的101%以及所有应计和未付利息(如果有)的价格回购Forestar票据。关于Forestar的控制权变更(定义见Forestar循环信贷安排)将构成Forestar循环信贷安排下的违约事件，这可能导致Forestar循环信贷安排下任何未偿还借款的偿还速度加快，要求将其下所有未偿还信用证作为现金抵押，并终止其下的承诺。如果Forestar循环信贷安排及/或Forestar及其受限制附属公司的其他未偿还本金总额达4,000万或以上的债务加速到期，则根据Forestar票据的契约，将会发生违约事件，从而使Forestar票据的受托人或当时未偿还Forestar票据本金总额至少25%的持有人有权宣布所有该等Forestar票据立即到期及应付。如果Forestar的票据契约要求购买要约，则需要偿还Forestar的循环信贷安排下的借款，或者如果Forestar的票据被加速，我们不能保证Forestar将有足够的资金支付所需的金额。

租金循环信贷安排下控制权违约变更. DRH Rental的控制权变更（定义见租赁循环信贷融资协议）将构成租赁循环信贷融资项下的违约事件，这可能导致租赁循环信贷融资项下任何未偿还借款的加速偿还、要求对其项下所有未偿还信用证进行现金抵押以及终止其项下的承诺。如果需要偿还租金循环信贷安排下的借款，我们无法保证DRH Rental将有足够的资金支付所需金额。

抵押回购机制下控制权违约变更. DHI Mortgage的控制权变更（定义见抵押贷款回购机制协议）将构成抵押贷款回购机制下的违约事件，这可能会导致该机制下任何未偿还贷款的回购加速，并导致此类贷款的回购价格上涨。如果需要偿还DHI Mortgage的抵押回购机制下的贷款，我们无法保证DHI Mortgage有足够的资金来支付所需金额。

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一般风险因素

负面宣传对我们的企业声誉或品牌造成的损害可能会对我们的业务、财务业绩和/或股价产生不利影响。

与我们的公司、行业、人员、运营或业务表现相关的负面宣传可能会损害我们的公司声誉或品牌，并可能产生负面情绪，无论其准确性或不准确性，都可能影响我们的业务表现或我们的股票价格。我们的声誉可能会受到与道德、合规、产品质量和安全、环境问题、隐私、多样性和包容性、人权、薪酬和福利以及公司治理等相关的实际或预期的失败或担忧的不利影响。负面宣传可以通过数字平台迅速传播，包括社交媒体、网站、博客和时事通讯。客户和其他相关方重视随时可用的信息，并经常在没有进一步调查的情况下根据这些信息采取行动，也不考虑其准确性。在没有给我们一个补救或纠正的机会的情况下，损害可能是立竿见影的，我们能否成功维护我们的品牌形象，取决于我们在快速变化的环境中识别、应对和有效管理负面宣传的能力。来自任何来源的负面宣传或不利评论都可能损害我们的声誉，减少对我们房屋的需求，或者对我们员工的士气和表现产生负面影响，这可能会对我们的业务产生不利影响。

我们的业务可能会因关键人员的流失而受到不利影响。

我们依靠我们的关键人员来有效地运营和管理我们的业务。具体地说，我们的成功在很大程度上取决于我们的住宅建设部门和地区总裁及其管理团队、我们的租赁住房管理团队、我们的金融服务管理团队、我们的公司办公室管理团队、我们的Forestar管理团队和我们的高管的表现。这些关键人员拥有丰富的经验和技能，以及对我们的成功至关重要的领导和管理能力。我们吸引和留住关键人员的能力可能会受到涉及声誉、文化、多样性和包容性、薪酬和福利以及我们对高管继任的管理等问题的影响。我们寻求留住我们的关键人员，制定继任和过渡计划，以应对关键人员的潜在流失，并管理因退休、晋升、调动和其他情况而发生的人员过渡。然而，如果我们的留任、继任和过渡执行工作不成功，关键人员的流失可能会对我们的业务产生不利影响。

我们的业务可能会因激进股东或其他人的行为而受到负面影响。

我们可能会受到激进股东或其他人的行动或建议的影响，这些行动或建议可能与我们的业务战略或其他股东的利益不一致。对此类行动的回应可能既昂贵又耗时，扰乱我们的业务和运营，和/或转移我们董事会和高级管理层对我们业务战略追求的注意力。维权股东可能会对我们未来的业务或战略方向造成明显的不确定性，包括我们的ESG努力，这可能会被我们的竞争对手利用，可能会使吸引和留住合格人员、潜在购房者和商业合作伙伴变得更加困难，并可能影响我们与现有购房者、分包商、投资者和其他第三方的关系。此外，维权股东的行动可能会基于临时或投机性的市场看法或其他不一定反映我们业务的潜在基本面和前景的因素，导致我们的股价出现波动。


项目1B：处理未解决的工作人员意见

没有。

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ITEm 1C。 网络安全

风险管理与战略

我们制定了评估、识别和管理网络安全威胁的风险的流程，这些风险可能会对我们系统、运营和数据的机密性、完整性和可用性造成重大不利影响。这些流程是我们整体风险评估流程的一部分。网络安全威胁的风险包括未经授权的访问、数据盗窃、计算机病毒、勒索软件、恶意软件和其他中断。我们采用多层、积极主动的方法实施了系统和流程来识别、评估、缓解和预防潜在的网络安全威胁。这些层中的每一层都包含多个级别的保护并利用行业标准框架，包括美国国家标准与技术研究所（NIH）网络安全框架。在管理层面，这些系统和流程主要由我们的首席信息官（CIO）和网络安全风险官（CSRO）监督。

我们已实施流程来评估、识别和管理网络安全威胁的风险，包括以下流程：
•多因素身份验证： 我们通过多因素身份验证来确保对网络和系统的访问。
•分层电子邮件保护：我们采用了分层的电子邮件保护方法。
•零信任安全模型：我们正在努力实现零信任安全模型，利用基于组的访问控制来管理网络资源。
•连续监测：我们持续监控系统的安全异常，以帮助早期检测问题并促进快速响应。
•定期扫描：我们每周和每月都会进行扫描，以识别最关键漏洞的缓解并优先考虑。
•季度渗透测试：我们聘请第三方顾问进行季度渗透测试，从各个角度（包括最终用户和员工用例）检查我们的环境，以彻底评估系统漏洞。
•协作评估和补救：我们与第三方顾问合作，评估测试结果，解决和修复任何已识别的问题，然后重新测试环境以确认缓解措施已有效解决漏洞。
•定期评估和差距分析：我们的网络安全团队定期与第三方顾问会面，评估总体风险并进行差距分析，确保我们当前网络安全措施的有效性。
•全面风险评估：我们的全面风险评估包括评估与使用外部服务提供商相关的潜在安全风险。
•事件响应准备：我们维护一个有记录的事件响应准备流程，详细介绍了发生安全事件时应遵循的程序。
•数据备份：我们维护所有系统文件的全面备份，以促进安全事件期间的数据恢复。

除了上述技术控制之外，我们还实施了强制性培训和意识计划，旨在教育我们的员工了解网络安全风险。其中包括定期练习，帮助员工识别网络钓鱼计划和其他社会工程策略，我们为他们提供各种方法来报告可能引发网络安全事件的可疑活动。

迄今为止，我们尚未发现已知网络安全威胁的任何风险，包括之前任何网络安全事件造成的风险，这些风险对我们的业务战略、运营业绩或财务状况产生重大影响。然而，由于随着克服安全措施的技术的迅速发展，网络安全威胁的复杂性不断增加，我们已经采取并将继续采取的预防措施来降低风险，可能无法成功保护我们的系统免受未来网络安全事件的影响。有关网络安全风险如何对我们业务产生重大影响的更多信息，请参阅第1A项“风险因素”。
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治理

我们的董事会将网络安全和其他信息技术风险视为其风险监督职能的一部分。我们的董事会成员至少每年从我们的首席信息官和CRO那里收到有关我们网络安全风险和风险管理的报告。这些报告包括审查用于减轻网络安全威胁风险的当前趋势、流程和系统。我们的内部审计部门还进行网络安全审查，作为其审计程序的一部分，并向董事会提交任何调查结果。我们制定了协议，可在公司内部升级某些网络安全事件，并在适当的情况下及时向董事会报告。

我们在培训、工具和其他资源上投入了大量资源来管理网络安全威胁的风险。我们的网络安全计划由一支经验丰富的团队领导，该团队制定网络安全政策和程序，并拥有与网络安全相关的控制和保障措施相关的专业知识。我们的网络安全团队在首席信息官的领导下，负责评估和管理网络安全威胁的风险。首席信息官持续收到网络安全团队关于网络安全威胁的报告，并与CRO一起定期审查公司实施的风险管理措施，以识别和减轻数据保护和网络安全风险。我们的首席信息官和CRO与我们的法律团队密切合作，监督法律、监管和合同安全要求的合规性。

Our CIO has more than 35 years of experience working in information technology including roles in the commercial software development, healthcare, industrial and professional services sectors. While in those roles, our CIO has led governance, risk, and compliance technology programs and information security programs. The CIO currently reports to the CFO.

Our CSRO has more than 23 years of experience working in information technology and cybersecurity roles including software development, identity and access management projects, privilege account management and multi-factor authentication implementations. While in those roles, our CSRO has led projects and implementations for a variety of organizations that assess and create solutions for security concerns. The CSRO currently reports to the CIO.

Supporting the CIO and CSRO is a dedicated cybersecurity team that designs and monitors our cybersecurity control framework as well as implements cybersecurity control systems and solutions. Our cybersecurity team collectively holds the following degrees and certifications: Master’s in Cybersecurity, Certified Information Systems Security Professional, Security+, Network+, AQS Certified Cloud Practitioner and Certified Information Systems Auditor.

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ITEM 2.    PROPERTIES

Our homebuilding and lot development operations own inventories of land, lots and homes, and our rental operations own rental properties that are both completed and under construction as part of the ordinary course of our business. We also own office buildings totaling approximately 1.8 million square feet, and we lease approximately 750,000 square feet of office space under leases expiring through August 2032. These properties are located in our various operating markets to house our homebuilding, rental, Forestar and financial services operating divisions and our regional and corporate offices.

We own ranch land and improvements totaling 94,200 acres, most of which has been owned for over 20 years. We use this land to conduct ranching and agricultural activities and to host company meetings and events.


ITEM 3.    LEGAL PROCEEDINGS

We are involved in lawsuits and other contingencies in the ordinary course of business. While the outcome of such contingencies cannot be predicted with certainty, we believe that the liabilities arising from these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, to the extent the liability arising from the ultimate resolution of any matter exceeds our estimates reflected in the recorded reserves relating to such matter, we could incur additional charges that could be significant.

With respect to administrative or judicial proceedings involving the environment, we have determined that we will disclose any such proceeding if we reasonably believe such proceeding will result in monetary sanctions, exclusive of interest and costs, at or in excess of $1 million.

In fiscal 2014, we received Notices of Violation from the United States Environmental Protection Agency (EPA), the Alabama Department of Environmental Management and the State of South Carolina Department of Health and Environmental Control related to stormwater compliance at certain of our sites in the southeastern United States within EPA Region 4. Since 2014, we have enhanced our practices and procedures related to stormwater compliance, and this matter has been resolved with each of these governmental entities through a consent decree issued in April 2024 (Consent Decree) and entered by the court in August 2024. In addition to a stipulated monetary penalty, we agreed to complete a supplemental environmental project intended to provide a tangible environmental benefit. Collectively, the cost of the penalty and the project is not expected to exceed $1 million. The Consent Decree also provides for ongoing reporting obligations and stipulated penalties for any future noncompliance with the Consent Decree in EPA Region 4. We do not believe it is reasonably possible that any future obligations related to this matter would result in a loss that would have a material effect on our consolidated financial position, results of operations or cash flows.



ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.
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PART II


ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the NYSE under the symbol “DHI.” As of November 14, 2024, the closing price of our common stock on the NYSE was $163.74, and there were approximately 240 holders of record.

In October 2024, our Board of Directors approved a quarterly cash dividend of $0.40 per common share, payable on November 19, 2024 to stockholders of record on November 12, 2024. The declaration of future cash dividends is at the discretion of our Board and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.

We may repurchase shares of our common stock from time to time pursuant to our $4.0 billion common stock repurchase authorization, which was approved by our Board effective July 18, 2024 and replaced our prior $1.5 billion common stock repurchase authorization that was effective as of October 31, 2023. The authorization has no expiration date. During fiscal 2024, we purchased 12.5 million shares of our 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 following table sets forth information concerning our common stock repurchases during the three months ended September 30, 2024.

Period
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs
(In millions)
July 2024 (1)
1,985,844 $151.73 1,985,844 $3,896.6 
August 20241,155,312 178.73 1,155,312 3,690.1 
September 2024281,800 189.71 281,800 3,636.7 
Total3,422,956 $163.97 3,422,956 $3,636.7 
_________________________
(1)Our $4.0 billion common stock repurchase authorization was in effect for much of the quarter; however, share repurchases in July 2024 included 1,404,544 shares purchased for $197.9 million under the previous authorization.

The share repurchases may be effected through Rule 10b5-1 plans or open market purchases, each in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (Exchange Act). Shares repurchased in July 2024 included 1,404,544 shares purchased pursuant to a trading plan under Rule 10b5-1 of the Exchange Act.

During fiscal years 2024, 2023 and 2022, we did not sell any equity securities that were not registered under the Securities Act of 1933, as amended (Securities Act).

The information required by this item with respect to equity compensation plans is set forth under Item 12 of this annual report on Form 10-K and is incorporated herein by reference.
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Stock Performance Graph

The following graph illustrates the cumulative total stockholder return on D.R. Horton common stock for the last five fiscal years through September 30, 2024, compared to the S&P 500 Index and the S&P 1500 Homebuilding Index. The comparison assumes a hypothetical investment in D.R. Horton common stock and in each of the foregoing indices of $100 at September 30, 2019 and assumes that all dividends were reinvested. Shareholder returns over the indicated period are based on historical data and should not be considered indicative of future shareholder returns. The graph and related disclosure in no way reflect our forecast of future financial performance.

2855
 September 30,
 201920202021202220232024
D.R. Horton, Inc. $100.00 $145.26 $162.81 $132.03 $212.75 $380.76 
S&P 500 Index100.00 115.15 149.70 126.54 153.89 209.83 
S&P 1500 Homebuilding Index100.00 133.20 149.58 118.48 193.38 342.07 

This performance graph shall not be deemed to be incorporated by reference into our SEC filings and should not constitute soliciting material or otherwise be considered filed under the Securities Act or the Exchange Act.


ITEM 6.    [Reserved]

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote an understanding of our financial condition, results of operations, liquidity and certain other factors that may affect future results. MD&A is provided as a supplement to, and should be read in conjunction with our consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-K. This section discusses the results of operations for fiscal 2024 compared to 2023. For similar operating and financial data and discussion of our fiscal 2023 results compared to our fiscal 2022 results, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of our annual report on Form 10-K for the fiscal year ended September 30, 2023, which was filed with the SEC on November 17, 2023.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption “Forward-Looking Statements” and under Item 1A, “Risk Factors.”

Results of Operations — Overview

Fiscal 2024 Operating Results

In fiscal 2024, our number of homes closed and home sales revenues increased 8% and 7%, respectively, compared to the prior year, and our consolidated revenues increased 4% to $36.8 billion compared to $35.5 billion in the prior year. Our pre-tax income was $6.3 billion in both fiscal 2024 and 2023, and our pre-tax operating margin was 17.1% compared to 17.8%. Net income was $4.8 billion in both years, and our diluted earnings per share was $14.34 compared to $13.82.

Consolidated net cash provided by operating activities was $2.2 billion in fiscal 2024 and $4.3 billion in fiscal 2023, and cash provided by our homebuilding operations was $2.2 billion in fiscal 2024 compared to $3.1 billion in fiscal 2023. In fiscal 2024, our return on equity (ROE) was 19.9% compared to 22.7% in fiscal 2023, our homebuilding pre-tax return on inventory (ROI) was 27.8% compared to 29.7%, and our return on assets (ROA) was 13.9% compared to 15.1%. ROE is calculated as net income attributable to D.R. Horton for the year divided by average stockholders’ equity, where average stockholders’ equity is the sum of ending stockholders’ equity balances for the trailing five quarters divided by five. Homebuilding ROI is calculated as homebuilding pre-tax income for the year divided by average inventory, where average inventory is the sum of ending homebuilding inventory balances for the trailing five quarters divided by five. ROA is calculated as net income attributable to D.R. Horton for the year divided by average consolidated assets, where average consolidated assets is the sum of total asset balances for the trailing five quarters divided by five.

Despite elevated mortgage interest rates and inflationary pressures during fiscal 2024, demand for new homes remained solid, and our net sales orders increased 10% compared to fiscal 2023. The disruptions in the supply chain for certain building materials and tightness in the labor market we experienced in recent years have largely subsided, and our average construction cycle time has returned to historical norms. The supply of both new and existing homes at affordable price points is still limited, and demographics supporting housing demand remain favorable; however, we are continuing to use incentives and pricing adjustments to adapt to current market conditions. We believe we are well-positioned to meet changing market conditions with our affordable product offerings and lot supply and will manage our home pricing, sales incentives and number of homes in inventory based on the level of homebuyer demand. We expect our incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates.

We remain focused on our relationships with land developers across the country in order to maximize our returns and capital efficiency. Within our homebuilding land and lot portfolio, our lots controlled through purchase contracts represent 76% of the lots owned and controlled at September 30, 2024 compared to 75% at September 30, 2023. We are prioritizing the purchase of finished lots from Forestar and other land developers when possible. During fiscal 2024, 63% of the homes we closed were on lots developed by either Forestar or a third party.

We believe our strong balance sheet and liquidity provide us with the flexibility to operate effectively through changing economic conditions. We plan to generate strong cash flows from our operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.
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Strategy

Our operating strategy focuses on consistently enhancing long-term value to our shareholders by leveraging our financial and competitive position to maximize the returns on our inventory investments and generate consistent, sustainable profitability and cash flows, while managing risk and maintaining financial flexibility to navigate changing economic conditions. Our strategy includes the following initiatives:
•Developing and retaining highly experienced and productive teams of personnel throughout our company that are aligned and focused on continuous improvement in our operational execution and financial performance.
•Maintaining a significant cash balance and strong overall liquidity position while controlling our level of debt.
•Allocating and actively managing our inventory investments across our operating markets to diversify our geographic risk.
•Offering new home communities that appeal to a broad range of entry-level, move-up, active adult and luxury homebuyers based on consumer demand in each market.
•Modifying product offerings, sales pace, home prices and incentives as necessary in each of our markets to meet consumer demand and maintain affordability.
•Delivering high quality homes and a positive experience to our customers both during and after the sale.
•Managing our inventory of homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory.
•Investing in lots, land and land development in desirable markets, while controlling the level of land and lots we own in each market relative to the local new home demand.
•Controlling a significant portion of our land and finished lot position through purchase contracts and prioritizing the purchase of finished lots from Forestar and other land developers when possible.
•Controlling the cost of labor and goods provided by subcontractors and vendors.
•Improving the efficiency of our land development, construction, sales and other key operational activities.
•Controlling our selling, general and administrative (SG&A) expense infrastructure to match production levels.
•Ensuring that our financial services business provides high quality mortgage and title services to homebuyers efficiently and effectively.
•Investing in the construction and leasing of single-family and multi-family rental properties to meet rental demand in high growth suburban markets and selling these properties profitably.
•Opportunistically evaluating potential acquisitions to enhance our operating platform.

We believe our operating strategy, which has produced positive results in recent years, will allow us to successfully operate through changing economic conditions and maintain our strong financial performance and competitive position. However, we cannot provide any assurances that the initiatives listed above will continue to be successful, and we may need to adjust parts of our strategy to meet future market conditions.
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Key Results

Key financial results as of and for our fiscal year ended September 30, 2024, as compared to fiscal 2023, were as follows:

Consolidated Results:
•Consolidated revenues increased 4% to $36.8 billion compared to $35.5 billion.
•Consolidated pre-tax income was $6.3 billion in both years.
•Consolidated pre-tax income was 17.1% of consolidated revenues compared to 17.8%.
•Income tax expense was $1.5 billion in both years, and our effective tax rate was 23.5% compared to 24.1%.
•Net income attributable to D.R. Horton was $4.8 billion compared to $4.7 billion.
•Diluted net income per common share attributable to D.R. Horton increased 4% to $14.34 compared to $13.82.
•Net cash provided by operations was $2.2 billion compared to $4.3 billion.
•Stockholders’ equity was $25.3 billion compared to $22.7 billion.
•Book value per common share increased to $78.12 compared to $67.78.
•Debt to total capital was 18.9% compared to 18.3%, and net debt to total capital was 5.2% compared to 5.1%.

Homebuilding:
•Homebuilding revenues increased 7% to $34.0 billion compared to $31.7 billion.
•Homes closed increased 8% to 89,690 homes, while the average closing price of those homes decreased 1% to $378,000.
•Net sales orders increased 10% to 86,561 homes, and the value of net sales orders increased 11% to $32.7 billion.
•Sales order backlog decreased 20% to 12,180 homes, and the value of sales order backlog decreased 19% to $4.8 billion.
•Home sales gross margin was 23.5% in both years.
•Homebuilding SG&A expense was 7.5% of homebuilding revenues compared to 7.1%.
•Homebuilding pre-tax income was $5.5 billion compared to $5.3 billion.
•Homebuilding pre-tax income was 16.1% of homebuilding revenues compared to 16.6%.
•Homebuilding pre-tax return on inventory was 27.8% compared to 29.7%.
•Net cash provided by homebuilding operations was $2.2 billion compared to $3.1 billion.
•Homebuilding cash and cash equivalents totaled $3.6 billion compared to $2.9 billion.
•Homebuilding inventories totaled $20.0 billion compared to $18.2 billion.
•Homes in inventory totaled 37,400 compared to 42,000.
•Owned lots totaled 152,500 compared to 141,100, and lots controlled through purchase contracts totaled 480,400 compared to 427,300.
•Homebuilding debt was $2.9 billion compared to $2.3 billion.
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Rental:
•Rental revenues were $1.7 billion compared to $2.6 billion.
•Rental pre-tax income was $228.7 million compared to $524.2 million.
•Rental inventory totaled $2.9 billion compared to $2.7 billion.
•Single-family rental homes closed totaled 3,970 compared to 6,175.
•Multi-family rental units closed totaled 2,202 compared to 2,112.
Forestar:
•Forestar’s revenues increased 5% to $1.5 billion compared to $1.4 billion. Revenues in fiscal 2024 and 2023 included $1.3 billion and $1.2 billion, respectively, of revenue from land and lot sales to our homebuilding segment.
•Forestar’s lots sold increased 7% to 15,068 compared to 14,040. Lots sold to D.R. Horton totaled 13,267 compared to 12,249.
•Forestar’s pre-tax income was $270.1 million compared to $221.6 million.
•Forestar’s pre-tax income was 17.9% of revenues compared to 15.4%.
•Forestar’s cash and cash equivalents totaled $481.2 million compared to $616.0 million.
•Forestar’s inventories totaled $2.3 billion compared to $1.8 billion.
•Forestar’s owned and controlled lots totaled 95,100 compared to 79,200. Of these lots, 37,700 were under contract to sell to or subject to a right of first offer with D.R. Horton compared to 31,400.
•Forestar’s debt was $706.4 million compared to $695.0 million.
•Forestar’s debt to total capital was 30.7% compared to 33.7%, and Forestar’s net debt to total capital was 12.4% compared to 5.5%.

Financial Services:
•Financial services revenues increased 10% to $882.5 million compared to $801.5 million.
•Financial services pre-tax income increased 10% to $311.2 million compared to $283.3 million.
•Financial services pre-tax income was 35.3% of financial services revenues in both years.
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Results of Operations — Homebuilding

Our operating segments are our 88 homebuilding divisions, our rental operations, our majority-owned Forestar residential lot development operations, our financial services operations and our other business activities. The homebuilding operating segments are aggregated into six reporting segments. These reporting segments, which we also refer to as reporting regions, have homebuilding operations located in the following states:

Northwest:Colorado, Oregon, Utah and Washington
Southwest:Arizona, California, Hawaii, Nevada and New Mexico
South Central:Arkansas, Oklahoma and Texas
Southeast:Alabama, Florida, Louisiana and Mississippi
East:Georgia, North Carolina, South Carolina and Tennessee
North:Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, New Jersey, Ohio, Pennsylvania, Virginia, West Virginia and Wisconsin

The following tables and related discussion set forth key operating and financial data for our homebuilding operations by reporting segment as of and for the fiscal years ended September 30, 2024 and 2023.

Net Sales Orders (1)
Year Ended September 30,
 Net Homes SoldValue (In millions)Average Selling Price
 20242023%
Change		20242023%
Change		20242023%
Change
Northwest5,3914,62217 %$2,750.8 $2,425.1 13 %$510,300 $524,700 (3)%
Southwest9,9428,47017 %4,855.6 4,023.1 21 %488,400 475,000 3 %
South Central22,54920,7169 %7,285.5 6,735.9 8 %323,100 325,200 (1)%
Southeast22,98221,6836 %8,115.2 7,812.0 4 %353,100 360,300 (2)%
East16,42515,0139 %5,830.8 5,361.4 9 %355,000 357,100 (1)%
North9,2727,83818 %3,876.1 3,170.4 22 %418,000 404,500 3 %
86,56178,34210 %$32,714.0 $29,527.9 11 %$377,900 $376,900 — %
_____________
(1)Net sales orders represent the number and dollar value of new sales contracts executed with customers (gross sales orders), net of cancelled sales orders.

Sales Order Cancellations
Year Ended September 30,
Cancelled Sales OrdersValue (In millions)Cancellation Rate (1)
 202420232024202320242023
Northwest852949$456.2 $514.5 14 %17 %
Southwest1,7261,961827.7 975.7 15 %19 %
South Central4,8055,9011,608.6 2,029.7 18 %22 %
Southeast5,5705,8401,997.0 2,132.8 20 %21 %
East3,8503,3791,363.7 1,226.4 19 %18 %
North2,2081,763912.5 715.8 19 %18 %
 19,01119,793$7,165.7 $7,594.9 18 %20 %
_____________
(1)Cancellation rate represents the number of cancelled sales orders divided by gross sales orders.
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Net Sales Orders

The number of net sales orders increased 10% during 2024 compared to 2023, and the value of net sales orders increased 11% to $32.7 billion (86,561 homes) in 2024 from $29.5 billion (78,342 homes) in 2023. The average selling price of net sales orders during 2024 was $377,900, up slightly from the prior year.

During fiscal 2024, the markets contributing most to the increase in sales order volume were the Portland and Salt Lake City markets in the Northwest, the Nevada markets in the Southwest, the Dallas market in the South Central, the Tampa market in the Southeast, the North Carolina markets in the East and the suburban Washington, D.C. market in the North.

Despite elevated mortgage interest rates and inflationary pressures during fiscal 2024, demand for new homes remained solid, and our net sales orders increased 10% compared to fiscal 2023. The disruptions in the supply chain for certain building materials and tightness in the labor market we experienced in recent years have largely subsided, and our average construction cycle time has returned to historical norms. The supply of both new and existing homes at affordable price points is still limited, and demographics supporting housing demand remain favorable; however, we are continuing to use incentives and pricing adjustments to adapt to current market conditions. We believe we are well-positioned to meet changing market conditions with our affordable product offerings and lot supply and will manage our home pricing, sales incentives and number of homes in inventory based on the level of homebuyer demand. We expect our incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates.

Our sales order cancellation rate (cancelled sales orders divided by gross sales orders for the period) was 18% in 2024 compared to 20% in 2023.

Sales Order Backlog
As of September 30,
 Homes in BacklogValue (In millions)Average Selling Price
 20242023%
Change		20242023%
Change		20242023%
Change
Northwest535547(2)%$284.2 $278.1 2 %$531,200 $508,400 4 %
Southwest1,2141,407(14)%623.6 681.3 (8)%513,700 484,200 6 %
South Central2,7093,588(24)%872.4 1,220.1 (28)%322,000 340,100 (5)%
Southeast3,0954,816(36)%1,135.5 1,873.7 (39)%366,900 389,100 (6)%
East2,7443,381(19)%1,012.3 1,252.4 (19)%368,900 370,400 — %
North1,8831,45829 %842.3 617.7 36 %447,300 423,700 6 %
12,18015,197(20)%$4,770.3 $5,923.3 (19)%$391,700 $389,800 — %

Sales Order Backlog

Sales order backlog represents homes under contract but not yet closed at the end of the period. Many of the contracts in our sales order backlog are subject to contingencies, including mortgage loan approval and buyers selling their existing homes, which can result in cancellations. A portion of the contracts in backlog will not result in closings due to cancellations.
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Homes Closed and Revenue
Year Ended September 30,
 Homes ClosedHome Sales Revenue (In millions)Average Selling Price
 20242023%
Change		20242023%
Change		20242023%
Change
Northwest5,4034,79913 %$2,744.6 $2,574.1 7 %$508,000 $536,400 (5)%
Southwest10,1358,82315 %4,913.3 4,246.7 16 %484,800 481,300 1 %
South Central23,46722,9232 %7,639.6 7,598.1 1 %325,500 331,500 (2)%
Southeast24,70323,9053 %8,853.4 8,756.5 1 %358,400 366,300 (2)%
East17,06214,71816 %6,070.9 5,323.9 14 %355,800 361,700 (2)%
North8,9207,74915 %3,681.8 3,141.7 17 %412,800 405,400 2 %
89,69082,9178 %$33,903.6 $31,641.0 7 %$378,000 $381,600 (1)%

Home Sales Revenue

Revenues from home sales increased 7% to $33.9 billion (89,690 homes closed) in 2024 from $31.6 billion (82,917 homes closed) in 2023. The number of homes closed increased 8% compared to the prior year. The average selling price of homes closed during 2024 was $378,000, down 1% from the prior year.

The markets contributing most to the increase in closings volume were the Portland and Salt Lake City markets in the Northwest, the California and Nevada markets in the Southwest, the North Carolina markets in the East and the suburban Washington, D.C. market in the North.

Homebuilding Operating Margin Analysis
Percentages of Related Revenues
Year Ended September 30,
 20242023
Gross profit — home sales23.5 %23.5 %
Gross profit — land/lot sales and other31.3 %47.4 %
Inventory and land option charges(0.2)%(0.2)%
Gross profit — total homebuilding23.3 %23.4 %
Selling, general and administrative expense7.5 %7.1 %
Other (income) expense(0.3)%(0.2)%
Homebuilding pre-tax income16.1 %16.6 %

Home Sales Gross Profit

Gross profit from home sales increased to $8.0 billion in 2024 from $7.4 billion in 2023 and was 23.5% of home sales revenues in both years. We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand. To adjust to changes in market conditions during fiscal 2023 and 2024, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers. We expect our incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates.

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Land/Lot Sales and Other Revenues

Land/lot sales and other revenues from our homebuilding operations were $58.2 million and $102.2 million in fiscal 2024 and 2023, respectively. We continually evaluate our land and lot supply, and fluctuations in revenues and profitability from land sales occur based on how we manage our inventory levels in various markets. We generally purchase land and lots with the intent to build and sell homes on them. However, some of the land that we purchase includes commercially zoned parcels that we may sell to commercial developers. We may also sell residential lots or land parcels to manage our supply or for other strategic reasons. As of September 30, 2024, our homebuilding operations had $12.7 million of land held for sale that we expect to sell in the next twelve months.

Inventory and Land Option Charges

At the end of each quarter, we review the performance and outlook for all of our communities and land inventories for indicators of potential impairment and perform detailed impairment evaluations and analyses when necessary. As a result of this review, there were $8.3 million of impairments recorded in our homebuilding segment during the three months ended September 30, 2024. During fiscal 2024, impairment charges related to our homebuilding segment totaled $14.0 million compared to $7.7 million in fiscal 2023.

As we manage our inventory investments across our operating markets to optimize returns and cash flows, we may modify our pricing and incentives, construction and development plans or land sale strategies in individual active communities and land held for development, which could result in the affected communities being evaluated for potential impairment. If the housing market or economic conditions are adversely affected for a prolonged period, we may be required to evaluate additional communities for potential impairment. These evaluations could result in impairment charges, which could be significant.

During fiscal 2024 and 2023, earnest money and pre-acquisition cost write-offs related to our homebuilding segment’s land purchase contracts that we have terminated or expect to terminate were $54.9 million and $53.0 million, respectively.

Selling, General and Administrative (SG&A) Expense

SG&A expense from homebuilding activities increased 14% to $2.6 billion in fiscal 2024 from $2.2 billion in fiscal 2023. SG&A expense as a percentage of homebuilding revenues was 7.5% and 7.1% in fiscal 2024 and 2023, respectively.

Employee compensation and related costs were $2.1 billion and $1.9 billion in fiscal 2024 and 2023, respectively, representing 82% and 85% of SG&A costs in those years. These costs increased 10% in fiscal 2024 from the prior year. Our homebuilding operations employed 10,071 and 9,190 people at September 30, 2024 and 2023, respectively.

We attempt to control our homebuilding SG&A costs while ensuring that our infrastructure adequately supports our operations; however, we cannot make assurances that we will be able to maintain or improve upon the current SG&A expense as a percentage of revenues.

Interest Incurred

We capitalize interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. Interest incurred by our homebuilding operations decreased 27% to $50.5 million in fiscal 2024 from $68.8 million in fiscal 2023, primarily due to an 11% decrease in our average homebuilding debt. Interest charged to cost of sales was 0.4% of homebuilding cost of sales (excluding inventory and land option charges) in both years.

Other Income

Other income, net of other expenses, included in our homebuilding operations increased to $107.6 million in fiscal 2024 compared to $78.8 million in fiscal 2023, primarily due to an increase in interest income. Other income also consists of various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots. The activities that result in this ancillary income are not significant, either individually or in the aggregate.
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Homebuilding Results by Reporting Region

 Year Ended September 30,
 20242023
 Homebuilding
Revenues		Homebuilding
Pre-tax
Income (1)		% of
Revenues		Homebuilding
Revenues		Homebuilding
Pre-tax
Income (1)		% of
Revenues
 (In millions)
Northwest$2,761.7 $420.8 15.2 %$2,582.4 $391.1 15.1 %
Southwest4,914.7 703.5 14.3 %4,282.8 489.3 11.4 %
South Central7,652.1 1,331.4 17.4 %7,612.6 1,388.3 18.2 %
Southeast8,876.8 1,441.4 16.2 %8,760.8 1,711.1 19.5 %
East6,073.1 1,059.6 17.4 %5,325.3 935.7 17.6 %
North3,683.4 498.4 13.5 %3,179.3 350.8 11.0 %
$33,961.8 $5,455.1 16.1 %$31,743.2 $5,266.3 16.6 %
________
(1)Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating our corporate office. The amortization of capitalized interest and property taxes is allocated to each segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment’s inventory balances.

Northwest Region — Homebuilding revenues increased 7% in fiscal 2024 compared to fiscal 2023, due to increases in the number of homes closed in our Portland and Salt Lake City markets, partially offset by a decrease in the average selling price of homes closed in most of the region’s markets. The region generated pre-tax income of $420.8 million in 2024 compared to $391.1 million in 2023. Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) increased by 50 basis points in 2024 compared to 2023, primarily due to the average cost of homes closed decreasing by more than the average selling price of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 60 basis points in 2024 compared to 2023, primarily due to an increase in SG&A expenses.

Southwest Region — Homebuilding revenues increased 15% in fiscal 2024 compared to fiscal 2023, primarily due to increases in the number of homes closed, particularly in our California and Nevada markets. The region generated pre-tax income of $703.5 million in 2024 compared to $489.3 million in 2023. Home sales gross profit percentage increased by 270 basis points in 2024 compared to 2023, primarily due to the average selling price of homes closed increasing while the average cost of those homes decreased. As a percentage of homebuilding revenues, SG&A expenses decreased by 20 basis points in 2024 compared to 2023, primarily due to the increase in homebuilding revenues.

South Central Region — Homebuilding revenues increased 1% in fiscal 2024 compared to fiscal 2023. The region generated pre-tax income of $1.3 billion in 2024 compared to $1.4 billion in 2023. Home sales gross profit percentage decreased by 20 basis points in 2024 compared to 2023, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 70 basis points in 2024 compared to 2023, primarily due to an increase in SG&A expenses.

Southeast Region — Homebuilding revenues increased 1% in fiscal 2024 compared to fiscal 2023. The region generated pre-tax income of $1.4 billion in 2024 compared to $1.7 billion in 2023. Home sales gross profit percentage decreased by 260 basis points in 2024 compared to 2023, primarily due to the average selling price of homes closed decreasing while the average cost of those homes increased. As a percentage of homebuilding revenues, SG&A expenses increased by 60 basis points in 2024 compared to 2023, primarily due to an increase in SG&A expenses.


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East Region — Homebuilding revenues increased 14% in fiscal 2024 compared to fiscal 2023, due to increases in the number of homes closed, particularly in our North Carolina markets. The region generated pre-tax income of $1.1 billion in 2024 compared to $935.7 million in 2023. Home sales gross profit percentage increased by 30 basis points in 2024 compared to 2023, primarily due to the average cost of homes closed decreasing by more than the average selling price of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 50 basis points in 2024 compared to 2023, primarily due to an increase in SG&A expenses.

North Region — Homebuilding revenues increased 16% in fiscal 2024 compared to fiscal 2023, due to increases in the number of homes closed, particularly in our suburban Washington, D.C. market. The region generated pre-tax income of $498.4 million in 2024 compared to $350.8 million in 2023. Home sales gross profit percentage increased by 290 basis points in 2024 compared to 2023, primarily due to the average cost of homes closed decreasing while the average selling price of those homes increased. As a percentage of homebuilding revenues, SG&A expenses increased by 10 basis points in 2024 compared to 2023.
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Homebuilding Inventories, Land and Lot Position and Homes in Inventory

We routinely enter into contracts to purchase land or developed residential lots at predetermined prices on a defined schedule commensurate with planned development or anticipated new home demand. At the time of purchase, the undeveloped land is generally vested with the rights to begin development or construction work, and we plan and coordinate the development of our land into residential lots for use in our homebuilding business. We manage our inventory of owned land and lots and homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory.

Our homebuilding segment’s inventories at September 30, 2024 and 2023 are summarized as follows:
 September 30, 2024
Construction in Progress and
Finished Homes		Residential Land/Lots Developed
and Under Development		Land Held
for Development		Land Held
for Sale		Total Inventory
(In millions)
Northwest$719.6 $1,215.6 $— $— $1,935.2 
Southwest1,378.1 1,889.3 6.8 4.7 3,278.9 
South Central1,701.5 2,024.5 0.3 1.7 3,728.0 
Southeast2,146.9 2,124.3 13.1 0.2 4,284.5 
East1,626.4 2,347.3 — 4.5 3,978.2 
North1,287.6 1,262.2 — 1.4 2,551.2 
Corporate and unallocated (1)
126.0 148.5 0.3 0.2 275.0 
 $8,986.1 $11,011.7 $20.5 $12.7 $20,031.0 
 September 30, 2023
Construction in Progress and
Finished Homes		Residential Land/Lots Developed
and Under Development		Land Held
for Development		Land Held
for Sale		Total Inventory
(In millions)
Northwest$819.5 $1,087.5 $— $0.5 $1,907.5 
Southwest1,280.0 1,845.0 6.7 1.3 3,133.0 
South Central2,040.2 1,769.6 0.3 0.4 3,810.5 
Southeast2,390.5 1,549.8 13.2 5.0 3,958.5 
East1,393.5 1,630.4 — 0.8 3,024.7 
North1,083.7 993.7 — 0.6 2,078.0 
Corporate and unallocated (1)
126.9 116.3 0.3 0.1 243.6 
 $9,134.3 $8,992.3 $20.5 $8.7 $18,155.8 
_____________
(1)Corporate and unallocated inventory consists primarily of capitalized interest and property taxes.

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Our land and lot position and homes in inventory at September 30, 2024 and 2023 are summarized as follows:

 September 30, 2024
Land/Lots
Owned (1)
Lots Controlled Through
Land and Lot Purchase
Contracts (2)(3)		Total Land/Lots
Owned and
Controlled
Homes in
Inventory (4)
Northwest13,00018,60031,6002,100
Southwest22,20029,20051,4004,200
South Central39,000109,600148,6009,000
Southeast29,500134,300163,8009,700
East32,500129,300161,8007,500
North16,30059,40075,7004,900
 152,500480,400632,90037,400
 24 %76 %100 % 

 September 30, 2023
Land/Lots
Owned (1)
Lots Controlled Through
Land and Lot Purchase
Contracts (2)(3)		Total Land/Lots
Owned and
Controlled
Homes in
Inventory (4)
Northwest14,10020,30034,4002,800
Southwest22,60030,50053,1004,700
South Central36,70069,500106,20010,800
Southeast24,700132,900157,60012,100
East27,700118,400146,1007,100
North15,30055,70071,0004,500
 141,100427,300568,40042,000
 25 %75 %100 % 
_________________________
(1)Land/lots owned included approximately 64,400 and 50,300 owned lots that are fully developed and ready for home construction at September 30, 2024 and 2023, respectively.
(2)The total remaining purchase price of lots controlled through land and lot purchase contracts at September 30, 2024 and 2023 was $25.2 billion and $21.1 billion, respectively, secured by earnest money deposits of $2.2 billion and $1.8 billion, respectively. The total remaining purchase price of lots controlled through land and lot purchase contracts at September 30, 2024 and 2023 included $1.9 billion and $1.3 billion, respectively, related to lot purchase contracts with Forestar, secured by $193.3 million and $139.1 million, respectively, of earnest money.
(3)Lots controlled at September 30, 2024 included approximately 37,700 lots owned by Forestar, 20,500 of which our homebuilding divisions had under contract to purchase and 17,200 of which our homebuilding divisions had a right of first offer to purchase. Of these, approximately 10,600 lots were in our Southeast region, 7,400 lots were in our East region, 7,000 lots were in our North region, 6,900 lots were in our South Central region, 3,600 lots were in our Southwest region and 2,200 lots were in our Northwest region. Lots controlled at September 30, 2023 included approximately 31,400 lots owned by Forestar, 14,400 of which our homebuilding divisions had under contract to purchase and 17,000 of which our homebuilding divisions had a right of first offer to purchase.
(4)Approximately 25,700 and 27,000 of our homes in inventory were unsold at September 30, 2024 and 2023, respectively. At September 30, 2024, approximately 10,300 of our unsold homes were completed, of which approximately 1,100 homes had been completed for more than six months. At September 30, 2023, approximately 7,000 of our unsold homes were completed, of which approximately 620 homes had been completed for more than six months. Homes in inventory exclude approximately 2,400 and 2,100 model homes at September 30, 2024 and 2023, respectively.
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Results of Operations — Rental

Our rental segment consists of single-family and multi-family rental operations. 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, with a primary focus on constructing garden style apartment communities in high growth suburban markets. Single-family and multi-family rental property sales are recognized as revenues, and rental income is recognized as other income. The following tables provide further information regarding our rental operations as of and for the fiscal years ended September 30, 2024 and 2023.
Rental Homes/Units Closed and Revenue
Year Ended September 30,
 Homes/Units ClosedRental Revenue (In millions)Average Selling Price
 20242023%
Change		20242023%
Change		20242023%
Change
Single-family3,9706,175(36)%$1,177.4 $2,014.8 (42)%$296,600 $326,300 (9)%
Multi-family2,2022,1124 %499.7 590.7 (15)%226,900 279,700 (19)%
6,1728,287(26)%$1,677.1 $2,605.5 (36)%$271,700 $314,400 (14)%

Year Ended September 30,
20242023
(In millions)
Revenues
Single-family rental$1,177.4 $2,014.8 
Multi-family rental and other507.7 590.7 
Total revenues1,685.1 2,605.5 
Cost of sales
Single-family rental926.0 1,504.8 
Multi-family rental and other389.9 382.0 
Inventory and land option charges5.8 6.7 
Total cost of sales1,321.7 1,893.5 
Selling, general and administrative expense236.2 290.2 
Other (income) expense(101.5)(102.4)
Income before income taxes$228.7 $524.2 


Rental Operating Margin Analysis
Percentages of Related Revenues
Year Ended September 30,
 20242023
Gross profit — rental21.6 %27.3 %
Selling, general and administrative expense14.0 %11.1 %
Other (income) expense(6.0)%(3.9)%
Rental pre-tax income13.6 %20.1 %

Revenues from our rental operations decreased to $1.7 billion in fiscal 2024 from $2.6 billion in fiscal 2023, and pre-tax income decreased to $228.7 million from $524.2 million. The decline in rental revenues and pre-tax income was primarily due to a decrease in the number of single-family homes closed and a decrease in the average selling price of multi-family units closed.
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At September 30, 2024, our rental property inventory of $2.9 billion included $800.3 million of inventory related to our single-family rental operations and $2.1 billion of inventory related to our multi-family rental operations. At September 30, 2023, our rental property inventory of $2.7 billion included $1.3 billion of inventory related to our single-family rental operations and $1.4 billion of inventory related to our multi-family rental operations. Single-family rental homes and lots and multi-family rental units at September 30, 2024 and 2023 consisted of the following:
Rental Inventory
September 30,
20242023
Single-family rental homes (1)3,1405,630
Single-family rental lots (2)1,9103,380
Multi-family rental units (3)11,9609,150
________________________
(1)Single-family rental homes at September 30, 2024 consist of 340 homes under construction and 2,800 completed homes compared to 1,260 homes under construction and 4,370 completed homes at September 30, 2023.
(2)Single-family rental lots at September 30, 2024 consist of 910 undeveloped lots and 1,000 finished lots compared to 2,210 undeveloped lots and 1,170 finished lots at September 30, 2023.
(3)Multi-family rental units at September 30, 2024 consist of 7,900 units under construction and 4,060 units that were substantially complete and in the lease-up phase compared to 7,200 units under construction and 1,950 units that were substantially complete at September 30, 2023.
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Results of Operations — Forestar

At September 30, 2024, we owned 62% of the outstanding shares of Forestar. Forestar is a publicly traded residential lot development company with operations in 59 markets across 24 states as of September 30, 2024. (See Note B to the accompanying financial statements for additional Forestar segment information.)

Results of operations for the Forestar segment for the fiscal years ended September 30, 2024 and 2023 were as follows:
Year Ended September 30,
20242023
(In millions)
Total revenues$1,509.4 $1,436.9 
Cost of land/lot sales and other1,145.9 1,108.9 
Inventory and land option charges4.1 24.0 
Total cost of sales1,150.0 1,132.9 
Selling, general and administrative expense118.5 97.7 
Other (income) expense(29.2)(15.3)
Income before income taxes$270.1 $221.6 

Forestar’s revenues are primarily derived from sales of single-family residential lots to local, regional and national homebuilders and land bankers for homebuilders. The following tables provide further information regarding Forestar’s revenues and lot position as of and for the fiscal years ended September 30, 2024 and 2023.
Year Ended September 30,
Lots SoldValue (In millions)
2024202320242023
Residential single-family lots sold
Lots sold to D.R. Horton13,26712,249$1,274.3 $1,094.7 
Total lots sold15,06814,040$1,459.3 $1,275.7 
Tract acres sold to D.R. Horton32820$15.2 $114.1 
September 30,
20242023
Residential single-family lots in inventory and under contract
Lots owned57,80052,400
Lots controlled through land purchase contracts37,30026,800
Total lots owned and controlled95,10079,200
Owned lots under contract to sell to D.R. Horton20,50014,400
Owned lots under contract to customers other than D.R. Horton500600
Total owned lots under contract21,00015,000
Owned lots subject to right of first offer with D.R. Horton17,20017,000
Owned lots fully developed6,3006,400

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At September 30, 2024 and 2023, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $2.3 billion and $1.8 billion, respectively.

Forestar’s inventory and land option charges consisted of $4.1 million of earnest money and pre-acquisition cost write-offs in fiscal 2024 and $19.4 million of impairment charges and $4.6 million of earnest money and pre-acquisition cost write-offs in fiscal 2023.

SG&A expense for fiscal 2024 and 2023 included charges of $5.6 million and $3.8 million, respectively, related to the shared services agreement between Forestar and D.R. Horton whereby D.R. Horton provides Forestar with certain administrative, compliance, operational and procurement services.
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Results of Operations — Financial Services

The following tables and related discussion set forth key operating and financial data for our financial services operations, comprising DHI Mortgage and our subsidiary title companies, for the fiscal years ended September 30, 2024 and 2023.

 Year Ended September 30,
 20242023% Change
Number of first-lien loans originated or brokered by DHI Mortgage for D.R. Horton homebuyers70,30862,69912 %
Number of homes closed by D.R. Horton89,69082,9178 %
Percentage of D.R. Horton homes financed by DHI Mortgage78 %76 % 
Loans sold by DHI Mortgage to third parties70,87762,35014 %

 Year Ended September 30,
 20242023% Change
 (In millions) 
Loan origination and other fees$88.3 $71.8 23 %
Gains on sale of mortgage loans and mortgage servicing rights589.9 538.4 10 %
Servicing income3.4 6.1 (44)%
Total mortgage operations revenues681.6 616.3 11 %
Title policy premiums200.9 185.2 8 %
Total revenues882.5 801.5 10 %
General and administrative expense672.4 594.9 13 %
Other (income) expense(101.1)(76.7)32 %
Financial services pre-tax income$311.2 $283.3 10 %

Financial Services Operating Margin Analysis

Percentages of
Financial Services Revenues
 Year Ended September 30,
 20242023
General and administrative expense76.2 %74.2 %
Other (income) expense(11.5)%(9.6)%
Financial services pre-tax income35.3 %35.3 %

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Mortgage Loan Activity

DHI Mortgage’s primary focus is to originate loans for our homebuilding operations, and those loan originations account for virtually all of its total loan volume. In fiscal 2024, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers increased 12%, primarily due to the 8% increase in the number of homes closed by our homebuilding operations, as well as an increase in the percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing. The percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing was 78% in fiscal 2024, up from 76% in fiscal 2023. This increase reflects DHI Mortgage’s ongoing efforts to align their business with our homebuilding operations by offering competitive products and pricing.

The number of loans sold increased 14% in fiscal 2024 compared to the prior year. Virtually all of the mortgage loans held for sale on September 30, 2024 were eligible for sale to Fannie Mae, Freddie Mac or Ginnie Mae. During fiscal 2024, approximately 73% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 26% were sold to one other major financial entity. Changes in market conditions could result in a greater concentration of our mortgage sales in future periods to fewer financial entities and directly to Fannie Mae, Freddie Mac or Ginnie Mae, and we may need to make other adjustments to our mortgage operations.

Financial Services Revenues and Expenses

Total loan origination volume increased 12% during fiscal 2024, and revenues from our mortgage operations increased 11% to $681.6 million from $616.3 million in fiscal 2023. Revenues from our title operations increased 8% to $200.9 million in fiscal 2024 from $185.2 million in fiscal 2023.

General and administrative (G&A) expense related to our financial services operations increased 13% to $672.4 million in fiscal 2024 from $594.9 million in the prior year. G&A expenses increased in fiscal 2024 due to increased loan origination volume. As a percentage of financial services revenues, G&A expense was 76.2% in fiscal 2024 compared to 74.2% in the prior year. Fluctuations in financial services G&A expense as a percentage of revenues can occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned. Our financial services operations employed 3,149 and 2,895 people at September 30, 2024 and 2023, respectively.

Other income, net of other expense, included in our financial services operations consists primarily of the interest income of our mortgage subsidiary. Other income increased 32% to $101.1 million in fiscal 2024 from $76.7 million in the prior year, primarily due to an increase in interest income on our loan origination volume.


Results of Operations — Other Businesses

In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries. We conduct insurance-related operations, own water rights and other water-related assets and own non-residential real estate including ranch land and improvements. The pre-tax income of all of our subsidiaries engaged in other business activities was $73.4 million in fiscal 2024 compared to $32.4 million in fiscal 2023. The pre-tax income in fiscal 2024 includes other income of $27.9 million related to a sale of mineral rights.

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Results of Operations — Consolidated

Income before Income Taxes

Pre-tax income was $6.3 billion in both fiscal 2024 and 2023. In fiscal 2024, our homebuilding, rental, financial services and Forestar businesses generated pre-tax income of $5.5 billion, $228.7 million, $311.2 million and $270.1 million, respectively, compared to $5.3 billion, $524.2 million, $283.3 million and $221.6 million, respectively, in fiscal 2023.

Income Taxes

Our income tax expense was $1.5 billion in both fiscal 2024 and 2023, and our effective tax rate was 23.5% and 24.1%, respectively, in those years. The effective tax rates for both years include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.

Our deferred tax assets, net of deferred tax liabilities, were $182.4 million at September 30, 2024 compared to $202.0 million at September 30, 2023. We have 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 net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized. We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to our remaining state NOL and tax credit carryforwards. Any reversal of the valuation allowance in future periods will impact our effective tax rate.
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Capital Resources and Liquidity

We have historically funded our operations with cash flows from operating activities, borrowings under bank credit facilities and the issuance of new debt securities. Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions.

We are making investments in our homebuilding and rental inventories to expand our operations and consolidate market share. We are also returning capital to our shareholders through repurchases of our common stock and dividend payments. We are maintaining significant homebuilding cash balances and liquidity to support the increased scale and level of activity in our business and to provide flexibility to adjust to changing conditions and opportunities.

At September 30, 2024, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $5.9 billion. $2.2 billion was payable within 12 months, including $1.5 billion which is outstanding under our mortgage repurchase facilities and $500 million principal amount of 2.5% homebuilding senior notes that were repaid at maturity in October 2024. Future interest payments associated with the outstanding notes total $745.5 million, of which $251.7 million is payable within 12 months.

At September 30, 2024, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 18.9% compared to 18.3% at September 30, 2023. Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 5.2% at September 30, 2024 compared to 5.1% at September 30, 2023. Over the long term, we intend to maintain our ratio of debt to total capital around or slightly below 20%.

At September 30, 2024, we had outstanding letters of credit of $242.9 million and surety bonds of $3.5 billion, issued by third parties to secure performance under various contracts. We expect that our performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms. When we complete our performance obligations, the related letters of credit and bonds are generally released shortly thereafter, leaving us with no continuing obligations. We have no material third-party guarantees.

We regularly assess our projected capital requirements to fund growth in our business, repay debt obligations, pay dividends, repurchase our common stock and maintain sufficient cash and liquidity levels to support our other operational needs, and we regularly evaluate our opportunities to raise additional capital. D.R. Horton has an automatically effective universal shelf registration statement filed with the SEC in July 2024, registering debt and equity securities that may be issued from time to time in amounts to be determined. Forestar also has an effective shelf registration statement filed with the SEC in September 2024, registering $750 million of equity securities. As market conditions permit, we may issue new debt or equity securities through the capital markets or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity. We believe that our existing cash resources, revolving credit facilities, mortgage repurchase facilities and ability to access the capital markets or obtain additional bank financing will provide sufficient liquidity to fund our near-term working capital needs and debt obligations for the next 12 months and for the foreseeable future thereafter.

Capital Resources - Homebuilding

Cash and Cash Equivalents — At September 30, 2024, cash and cash equivalents of our homebuilding segment totaled $3.6 billion.

Bank Credit Facility — We have a $2.19 billion senior unsecured homebuilding revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $3.0 billion, subject to certain conditions and availability of additional bank commitments. The facility also provides for the issuance of letters of credit with a sublimit equal to 100% of the total revolving credit commitments. Letters of credit issued under the facility reduce the available borrowing capacity. The maturity date of the facility is October 28, 2027. 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.

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Our homebuilding revolving credit facility imposes restrictions on our operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if our leverage ratio exceeds a certain level. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. 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 imposes restrictions on the creation of secured debt and liens. At September 30, 2024, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility.

Public Unsecured Debt — At September 30, 2024, we had $2.8 billion principal amount of homebuilding senior notes outstanding that were scheduled to mature from October 2024 through October 2034. In August 2024, we 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%. In October 2024, we repaid $500 million principal amount of our 2.5% senior notes at maturity. The indenture governing our senior notes imposes restrictions on the creation of secured debt and liens. At September 30, 2024, we were in compliance with all of the limitations and restrictions associated with our public debt obligations.

Our homebuilding revolving credit facility and homebuilding senior unsecured notes are guaranteed by D.R. Horton, Inc.’s significant wholly-owned homebuilding subsidiaries.

Debt and Stock Repurchase Authorizations — In July 2024, our Board of Directors authorized the repurchase of up to $500 million of our debt securities. Effective July 18, 2024, our Board authorized the repurchase of up to $4.0 billion of our common stock, replacing the previous authorization that was effective as of October 31, 2023. During fiscal 2024, we repurchased 12.5 million shares 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, the full amount of the debt repurchase authorization was remaining, and $3.6 billion of the stock repurchase authorization was remaining. The debt and stock repurchase authorizations have no expiration date.

Capital Resources - Rental

During the past few years, we have made significant investments in our rental operations. The inventory in our rental segment totaled $2.9 billion and $2.7 billion at September 30, 2024 and 2023, respectively.

Cash and Cash Equivalents — At September 30, 2024, cash and cash equivalents of our rental segment totaled $157.6 million.

Bank Credit Facility — Our rental subsidiary, DRH Rental, has a $1.05 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $2.0 billion, subject to certain conditions and availability of additional bank commitments. Availability under the rental revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash. 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 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.

The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require DRH Rental to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. 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. At September 30, 2024, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.


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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. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, Forestar or financial services operations.

Capital Resources - Forestar

The achievement of Forestar’s long-term growth objectives will depend on its ability to obtain financing and generate sufficient cash flows from operations. As market conditions permit, Forestar may issue new debt or equity securities through the capital markets or obtain additional bank financing to provide capital for future growth and additional liquidity. At September 30, 2024, Forestar’s ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 30.7% compared to 33.7% at September 30, 2023. Forestar’s ratio of net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 12.4% compared to 5.5% at September 30, 2023.

Cash and Cash Equivalents — At September 30, 2024, Forestar had cash and cash equivalents of $481.2 million.

Bank Credit Facility — Forestar has a $410 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $600 million, subject to certain conditions and availability of additional bank commitments. 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. Borrowings under the revolving credit facility are subject to a borrowing base calculation based on the book value of Forestar’s real estate assets and unrestricted cash. Letters of credit issued under the facility reduce the available borrowing capacity. The maturity date of the facility is October 28, 2026. At September 30, 2024, there were no borrowings outstanding and $32.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $377.2 million.

The Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. 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.

Unsecured Debt — As of September 30, 2024, Forestar had $700 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, which represent unsecured obligations of Forestar. These notes include $400 million principal amount of 3.85% senior notes that mature in May 2026 and $300 million principal amount of 5.0% senior notes that mature in March 2028.

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 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. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, rental or financial services operations.

Debt Repurchase Authorization — In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities. All of the $30 million authorization was remaining at September 30, 2024, and the authorization has no expiration date.

Issuance of Common Stock — During fiscal 2024, Forestar issued 546,174 shares of common stock under its at-the-market equity offering (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 shelf 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.
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Capital Resources - Financial Services

Cash and Cash Equivalents — At September 30, 2024, cash and cash equivalents of our financial services segment totaled $242.3 million.

Mortgage Repurchase Facilities — Our mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties. 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.

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.

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.

At 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.

The facilities contain financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable indebtedness to tangible net worth ratio and its minimum required liquidity. At September 30, 2024, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

These mortgage repurchase facilities are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, rental or Forestar operations.

In the past, DHI Mortgage has been able to renew or extend its committed mortgage repurchase facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the facility during periods of higher than normal volumes of mortgages held for sale. The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility or to obtain other additional financing in sufficient capacities.

Operating Cash Flow Activities

In fiscal 2024, net cash provided by operating activities was $2.2 billion compared to $4.3 billion in fiscal 2023. Cash provided by operating activities in the current year primarily consisted of cash provided by our homebuilding segment. The most significant source of cash provided by operating activities in both years was net income.

Cash provided by a decrease in construction in progress and finished home inventory was $141.3 million in fiscal 2024 compared to $861.8 million in fiscal 2023, due to a decrease in our homes in inventory. Cash used to increase residential land and lots was $2.6 billion and $1.2 billion in fiscal 2024 and 2023, respectively.

Investing Cash Flow Activities

In fiscal 2024, net cash used in investing activities was $190.6 million compared to $310.2 million in fiscal 2023. In fiscal 2024, uses of cash included purchases of property and equipment totaling $165.3 million. In fiscal 2023, uses of cash included the acquisitions of the homebuilding operations of Riggins Custom Homes for $107 million and Truland Homes for $110 million and purchases of property and equipment totaling $148.6 million.


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Financing Cash Flow Activities

We expect the short-term financing needs of our operations will be funded with existing cash, cash generated from operations and borrowings under our credit facilities. Long-term financing needs for our operations may be funded with the issuance of senior unsecured debt securities or equity securities through the capital markets.

In fiscal 2024, net cash used in financing activities was $1.4 billion, consisting primarily of cash used to repurchase shares of our common stock of $1.8 billion, payment of cash dividends totaling $395.2 million and net payments on our mortgage repurchase facilities of $135.8 million. These uses of cash were partially offset by note proceeds from our issuance of $700 million principal amount of 5.0% homebuilding senior notes and net borrowings on our rental revolving credit facility of $345 million.

In fiscal 2023, net cash used in financing activities was $2.7 billion, consisting primarily of cash used to repurchase shares of our common stock of $1.2 billion, repayment of $300 million principal amount of our 4.75% homebuilding senior notes and $400 million principal amount of our 5.75% homebuilding senior notes, net payments on our rental revolving credit facility of $400 million and payment of cash dividends totaling $341.2 million. These uses of cash were partially offset by net advances on our mortgage repurchase facilities of $51.3 million.

Our Board of Directors approved and we 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, our 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. The declaration of future cash dividends is at the discretion of our Board and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.

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Supplemental Guarantor Financial Information

As of September 30, 2024, D.R. Horton, Inc. had $2.8 billion principal amount of homebuilding senior unsecured notes outstanding due through October 2034 and no amounts outstanding on its homebuilding revolving credit facility.

All of the homebuilding senior notes and the homebuilding revolving credit facility are fully and unconditionally guaranteed, on a joint and several basis, by certain subsidiaries of D.R. Horton, Inc. (Guarantors or Guarantor Subsidiaries). Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by D.R. Horton, Inc. Our subsidiaries associated with the single-family and multi-family rental operations, Forestar lot development operations, financial services operations and certain other subsidiaries do not guarantee the homebuilding senior notes or the homebuilding revolving credit facility (collectively, Non-Guarantor Subsidiaries). The guarantees are senior unsecured obligations of each Guarantor and rank equal with all existing and future senior debt of such Guarantor and senior to all subordinated debt of such Guarantor. The guarantees are effectively subordinated to any secured debt of such Guarantor to the extent of the value of the assets securing such debt. The guarantees will be structurally subordinated to indebtedness and other liabilities of Non-Guarantor Subsidiaries of the Guarantors.

The guarantees by a Guarantor Subsidiary will be automatically and unconditionally released and discharged upon: (1) the sale or other disposition of its common stock whereby it is no longer a subsidiary of ours; (2) the sale or other disposition of all or substantially all of its assets (other than to us or another Guarantor); (3) its merger or consolidation with an entity other than us or another Guarantor; or (4) its ceasing to guarantee any of our publicly traded debt securities and ceasing to guarantee any of our obligations under our homebuilding revolving credit facility.

The enforceability of the obligations of the Guarantor Subsidiaries under their guarantees may be subject to review under applicable federal or state laws relating to fraudulent conveyance or transfer, voidable preference and similar laws affecting the rights of creditors generally. In certain circumstances, a court could void the guarantees, subordinate amounts owing under the guarantees or order other relief detrimental to the holders of our guaranteed obligations. The indenture governing our homebuilding senior notes contains a “savings clause,” which limits the liability of each Guarantor on its guarantee to the maximum amount that such Guarantor can incur without risk that its guarantee will be subject to avoidance as a fraudulent transfer. This provision may not be effective to protect such guarantees from fraudulent transfer challenges or, if it does, it may reduce such Guarantor’s obligation such that the remaining amount due and collectible under the guarantees would not suffice, if necessary, to pay the notes in full when due.
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The following tables present summarized financial information for D.R. Horton, Inc. and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among D.R. Horton, Inc. and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.

D.R. Horton, Inc. and Guarantor Subsidiaries
Summarized Balance Sheet DataSeptember 30, 2024
 (In millions)
Assets
Cash
$3,542.4 
Inventories
20,152.9 
Amount due from Non-Guarantor Subsidiaries
1,393.2 
Total assets
28,865.7 
Liabilities & Stockholders’ Equity
Notes payable
$2,926.8 
Total liabilities
6,455.0 
Stockholders’ equity
22,410.7 
Summarized Statement of Operations DataYear Ended September 30, 2024
(In millions)
Revenues$33,756.1 
Cost of sales25,896.3 
Selling, general and administrative expense2,497.2 
Income before income taxes5,423.0 
Net income4,148.9 


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Seasonality

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and pre-tax income in the third and fourth quarters of our fiscal year. The seasonal nature of our business can also cause significant variations in the working capital requirements for our homebuilding, lot development, financial services and rental operations. As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year.

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Forward-Looking Statements

Some of the statements contained in this report, as well as in other materials we have filed or will file with the Securities and Exchange Commission, statements made by us in periodic press releases and oral statements we make to analysts, stockholders and the press in the course of presentations about us, may be construed as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management. These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “projection,” “seek,” “should,” “strategy,” “target,” “will,” “would” or other words of similar meaning. Any or all of the forward-looking statements included in this report and in any other of our reports or public statements may not approximate actual experience, and the expectations derived from them may not be realized, due to risks, uncertainties and other factors. As a result, actual results may differ materially from the expectations or results we discuss in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:
•the cyclical nature of the homebuilding, rental and lot development industries and changes in economic, real estate or other conditions;
•adverse developments affecting the capital markets and financial institutions, which could limit our ability to access capital, increase our cost of capital and impact our liquidity and capital resources;
•reductions in the availability of mortgage financing provided by government agencies, changes in government financing programs, a decrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates;
•the risks associated with our land, lot and rental inventory;
•our ability to effect our growth strategies, acquisitions, investments or other strategic initiatives successfully;
•the impact of an inflationary, deflationary or higher interest rate environment;
•risks of acquiring land, building materials and skilled labor and challenges obtaining regulatory approvals;
•the effects of public health issues such as a major epidemic or pandemic on the economy and our businesses;
•the effects of weather conditions and natural disasters on our business and financial results;
•home warranty and construction defect claims;
•the effects of health and safety incidents;
•reductions in the availability of performance bonds;
•increases in the costs of owning a home;
•the effects of information technology failures, data security breaches, and the failure to satisfy privacy and data protection laws and regulations;
•the effects of governmental regulations and environmental matters on our land development and housing operations;
•the effects of governmental regulations on our financial services operations;
•the effects of competitive conditions within the industries in which we operate;
•our ability to manage and service our debt and comply with related debt covenants, restrictions and limitations;
•the effects of negative publicity;
•the effects of the loss of key personnel; and
•the effects of actions by activist stockholders.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. Additional information about issues that could lead to material changes in performance and risk factors that have the potential to affect us is contained in Item 1A, “Risk Factors” under Part I of this annual report on Form 10-K.
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Critical Accounting Policies and Estimates

General — A comprehensive enumeration of the significant accounting policies of D.R. Horton, Inc. and subsidiaries is presented in Note A to the accompanying financial statements as of September 30, 2024 and 2023, and for the years ended September 30, 2024, 2023 and 2022. Each of our accounting policies has been chosen based upon current authoritative literature that collectively comprises U.S. generally accepted accounting principles (GAAP). In instances where alternative methods of accounting are permissible under GAAP, we have chosen the method that most appropriately reflects the nature of our business, the results of our operations and our financial condition, and have consistently applied those methods over each of the periods presented in the financial statements. The Audit Committee of our Board of Directors has reviewed and approved the accounting policies selected.

We believe the following critical accounting policies describe the more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition — We generally recognize homebuilding revenue and related profit at the time of the closing of a sale, when title to and possession of the property are transferred to the buyer. Our performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. Proceeds from home closings held for our benefit at title companies are included in homebuilding cash and cash equivalents in the consolidated balance sheets.

When we execute sales contracts with our homebuyers, or when we require advance payment from homebuyers for custom changes, upgrades or options related to their homes, we record the cash deposits received as liabilities until the homes are closed or the contracts are cancelled. We either retain or refund to the homebuyer deposits on cancelled sales contracts, depending upon the applicable provisions of the contract or other circumstances.

Revenues associated with our mortgage operations primarily include net gains on the sale of mortgage loans and servicing rights. We typically elect the fair value option for our mortgage loan originations whereby mortgage loans held for sale are recorded at fair value based on either sale commitments or current market quotes and loan values are adjusted through revenues for subsequent changes in fair value until the loans are sold. Expected gains and losses from the sale of servicing rights are included in the measurement of all written loan commitments that are accounted for at fair value through revenues at the time of commitment. We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers. Interest income is earned from the date a mortgage loan is originated until the loan is sold.

Mortgage loans are sold with limited recourse provisions, which can result in repurchases of loans previously sold to investors or payments to reimburse investors for loan losses. Based on historical experience, analysis of the volume of mortgages we originated, discussions with our mortgage purchasers and current housing and credit market conditions, we estimate and record a loss reserve for mortgage loans held in portfolio and mortgage loans held for sale, as well as known and projected mortgage loan repurchase requests.

Inventories and Cost of Sales — Inventory includes the costs of direct land acquisition, land development and construction, capitalized interest, real estate taxes and direct overhead costs incurred during development and construction. Costs that we incur after projects or homes are substantially complete, such as utilities, maintenance, and cleaning, are charged to SG&A expense as incurred. All indirect overhead costs, such as compensation of sales personnel, division and region management, and the costs of advertising and builder’s risk insurance are charged to SG&A expense as incurred.

Land and development costs are typically allocated to individual residential lots on a pro-rata basis, and the costs of residential lots are transferred to construction in progress when home construction begins. Home construction costs are specifically identified and recorded to individual homes. Cost of sales for homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) allocated to each residential lot based upon the total number of homes expected to be closed in each community. Cost of sales for lots sold includes all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) allocated to each residential lot in the community. Any changes to the estimated total development costs subsequent to the initial home or lot closings in a community are generally allocated on a pro-rata basis to the remaining homes or lots in the community associated with the relevant development activity.

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When a home is closed, we generally have not paid all incurred costs necessary to complete the home. We record a liability and a corresponding charge to cost of sales for the amount estimated to ultimately be paid related to completed homes that have been closed. We compare our home construction budgets to actual recorded costs to determine the additional costs remaining to be paid on each closed home. We monitor the accrual by comparing actual costs incurred on closed homes in subsequent months to the amounts previously accrued. Although actual costs to be paid in the future on previously closed homes could differ from our current accruals, such differences have not been significant.

At the end of each quarter, we review the performance and outlook for all of our communities and land inventories for indicators of potential impairment. We generally review our inventory for impairment indicators at the community level, and the inventory within each community is categorized as land held for development, residential land and lots developed and under development, land held for sale, rental properties and construction in progress and finished homes, based on the stage of production or plans for future development or sale. A particular community often includes inventory in more than one category. In certain situations, inventory may be analyzed separately for impairment purposes based on its product type or future plans. In reviewing each of our communities, we determine if impairment indicators exist on inventory held and used by analyzing a variety of factors including, but not limited to, the following:
•gross margins on homes closed in recent months;
•projected gross margins on homes sold but not closed;
•projected gross margins based on community budgets;
•projected gross margins of rental property sales;
•trends in gross margins, average selling prices or cost of sales;
•sales absorption rates; and
•performance of other communities in nearby locations.

If indicators of impairment are present for a community, we perform an impairment evaluation of the community, which includes an analysis to determine if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If so, impairment charges are recorded to cost of sales if the fair value of such assets is less than their carrying amounts. These estimates of cash flows are significantly impacted by community specific factors including estimates of the amounts and timing of future revenues and estimates of the amount of land development, materials and labor costs which, in turn, may be impacted by the following local market conditions:
•supply and availability of new and existing homes;
•location and desirability of our communities;
•variety of product types offered in the area;
•pricing and use of incentives by us and our competitors;
•alternative uses for our land or communities such as the sale of land, finished lots or home sites to third parties;
•amount of land and lots we own or control in a particular market or sub-market; and
•local economic and demographic trends.

For those assets deemed to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Our determination of fair value is primarily based on discounting the estimated cash flows at a rate commensurate with the inherent risks associated with the assets and related estimated cash flow streams. When an impairment charge for a community is determined, the charge is then allocated to each lot in the community in the same manner as land and development costs are allocated to each lot. Impairment charges are also recorded on finished homes in substantially completed communities and completed rental properties when events or circumstances indicate that the carrying values are greater than the fair values less estimated costs to sell these homes.


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We rarely purchase land for resale. However, when we own land or communities under development that do not fit into our development and construction plans, and we determine that we will sell the asset, the project is accounted for as land held for sale if certain criteria are met. We record land held for sale at the lesser of its carrying value or fair value less estimated costs to sell. In performing the impairment evaluation for land held for sale, we consider several factors including, but not limited to, recent offers received to purchase the property, prices for land in recent comparable sales transactions and market analysis studies, which include the estimated price a willing buyer would pay for the land. If the estimated fair value less costs to sell an asset is less than the current carrying value, the asset is written down to its estimated fair value less costs to sell.

The key assumptions relating to inventory valuations are impacted by local market and economic conditions, and are inherently uncertain. Although our quarterly assessments reflect management’s best estimates, due to uncertainties in the estimation process, actual results could differ from such estimates.

Warranty Claims — We typically provide our homebuyers with a ten-year limited warranty for major defects in structural elements such as framing components and foundation systems, a two-year limited warranty on major mechanical systems and a one-year limited warranty on other construction components. Since we subcontract our construction work to subcontractors who typically provide us with an indemnity and a certificate of insurance prior to receiving payments for their work, claims relating to workmanship and materials are generally the primary responsibility of the subcontractors. Warranty liabilities have been established by charging cost of sales for each home delivered. The amounts charged are based on management’s estimate of expected warranty-related costs under all unexpired warranty obligation periods. Our warranty liability is based upon historical warranty cost experience in each market in which we operate. Actual future warranty costs could differ from our currently estimated amounts. A 10% change in the historical warranty rates used to estimate our warranty accrual would not result in a material change in our accrual. For additional information regarding our warranty liability, see Note L, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this report.

Legal Claims and Insurance — We are named as a defendant in various claims, complaints and other legal actions in the ordinary course of business. At any point in time, we are managing several hundred individual claims related to construction defect matters, personal injury claims, employment matters, land development issues, contract disputes and other matters. We have established reserves for these contingencies based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes. Approximately 97% of these reserves related to construction defect matters at both September 30, 2024 and 2023.

Our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims. At September 30, 2024 and 2023, we had reserves for approximately 825 and 600 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During fiscal 2024, we were notified of approximately 600 new construction defect claims and resolved 375 construction defect claims for a total cost of $55.0 million. We have closed a significant number of homes during recent years, and we may be subject to future construction defect claims on these homes. Although regulations vary from state to state, construction defect issues can generally be reported for up to ten years after the home has closed in many states in which we operate. Historical data and trends regarding the frequency of claims incurred and the costs to resolve claims relative to the types of products and markets where we operate are used to estimate the construction defect liabilities for both existing and anticipated future claims. These estimates are subject to ongoing revision as the circumstances of individual pending claims and historical data and trends change. Adjustments to estimated reserves are recorded in the accounting period in which the change in estimate occurs.

Historical trends in construction defect claims have been inconsistent, and we believe they may continue to fluctuate. We also believe that fluctuations in housing market conditions can affect the frequency and cost of construction defect claims. If the ultimate resolution of construction defect claims resulting from our home closings in prior years varies from current expectations, it could significantly change our estimates regarding the frequency and timing of claims incurred and the costs to resolve existing and anticipated future claims, which would impact the construction defect reserves in the future. If the frequency of claims incurred or costs of existing and future legal claims significantly exceed our current estimates, they will have a significant negative impact on our future earnings and liquidity.


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We estimate and record receivables under the applicable insurance policies related to our estimated contingencies for known claims and anticipated future construction defect claims on previously closed homes and other legal claims and lawsuits incurred in the ordinary course of business when recovery is probable. However, because the self-insured retentions under these policies are significant, we anticipate we will largely be self-insured. Additionally, we may have the ability to recover a portion of our losses from our subcontractors and their insurance carriers when we have been named as an additional insured on their insurance policies.

The estimation of losses related to these reserves and the related estimates of recoveries from insurance policies are subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to our markets and the types of products built, claim frequency, claim settlement costs and patterns, insurance industry practices and legal interpretations, among others. Due to the high degree of judgment required in establishing reserves for these contingencies, actual future costs and recoveries from insurance could differ significantly from current estimated amounts. A 10% increase in the claim frequency and the average cost per claim used to estimate the reserves would result in an increase of approximately $172.3 million in our reserves and a $43.3 million increase in our insurance receivable, resulting in additional expense of $129.0 million. A 10% decrease in the claim frequency and the average cost per claim would result in a decrease of approximately $154.6 million in our reserves and a $41.5 million decrease in our insurance receivable, resulting in a reduction in expense of $113.1 million. For additional information regarding our legal claims reserves, see Note L, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this report.

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 our 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 our disclosures but will not impact our 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 us beginning October 1, 2025, with early adoption permitted. We are currently evaluating the impact of this standard on our 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 our annual periods beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029, with early adoption permitted. We are currently evaluating the impact this standard will have on our disclosures.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to interest rate risk on our long-term debt. We monitor our exposure to changes in interest rates and utilize both fixed and variable rate debt. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our 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 our future earnings and cash flows. Except in very limited circumstances, we do 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 our cash flows related to our fixed-rate debt until such time as we are required to refinance, repurchase or repay such debt.

We are exposed to interest rate risk associated with our mortgage loan origination services. We manage interest rate risk through the use of forward sales of MBS, which are referred to as “hedging instruments” in the following discussion. We do not enter into or hold derivatives for trading or speculative purposes.

Interest rate lock commitments (IRLCs) are extended to borrowers who have applied for loan funding and who meet defined credit and underwriting criteria. Typically, the IRLCs have a duration of less than six months. Some IRLCs are committed immediately to a specific purchaser through the use of best-efforts whole loan delivery commitments, while other IRLCs are funded prior to being committed to third-party purchasers. The hedging instruments related to IRLCs are classified and accounted for as derivative instruments in an economic hedge, with gains and losses recognized in revenues in the consolidated statements of operations. Hedging instruments related to funded, uncommitted loans are accounted for at fair value, with changes recognized in revenues in the consolidated statements of operations, along with changes in the fair value of the funded, uncommitted loans. The fair value change related to the hedging instruments generally offsets the fair value change in the uncommitted loans. The net fair value change, which for the years ended September 30, 2024 and 2023 was not significant, is recognized in current earnings. At September 30, 2024, hedging instruments used to mitigate interest rate risk related to uncommitted mortgage loans held for sale and uncommitted IRLCs totaled a notional amount of $3.8 billion. Uncommitted IRLCs totaled a notional amount of approximately $2.0 billion and uncommitted mortgage loans held for sale totaled a notional amount of approximately $1.9 billion at September 30, 2024.

We also use hedging instruments as part of a program to offer below market interest rate financing to our homebuyers. At September 30, 2024 and 2023, we had MBS totaling $637.9 million and $1.1 billion, respectively, that did not yet have 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.

The following table sets forth principal cash flows by scheduled maturity, effective weighted average interest rates and estimated fair value of our debt obligations as of September 30, 2024. Because the mortgage repurchase facilities are effectively secured by certain mortgage loans held for sale that are typically sold within 60 days, the outstanding balances related to those facilities are included in the most current period presented. The interest rate for our variable rate debt represents the weighted average interest rate in effect at September 30, 2024.

 Fiscal Year Ending September 30,Fair Value at September 30, 2024
 20252026202720282029ThereafterTotal
 ($ in millions)
Debt:
Fixed rate$633.6 $910.3 $600.4 $800.0 $17.5 $700.0 $3,661.8 $3,575.5 
Average interest rate3.1 %3.4 %1.5 %3.0 %6.0 %5.3 %3.3 %
Variable rate$1,533.8 $— $— $745.0 $— $— $2,278.8 $2,278.8 
Average interest rate6.4 %— %— %6.9 %— %— %6.6 %

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of D.R. Horton, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of D.R. Horton, Inc. and subsidiaries (the Company) as of September 30, 2024 and 2023, the related consolidated statements of operations, total equity and cash flows for each of the three years in the period ended September 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 19, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
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Estimation of reserves for construction defect matters
Description of the Matter
At September 30, 2024, the Company’s reserve for legal claims related to construction defect matters was $926 million. As explained in Note L to the consolidated financial statements, the Company has established reserves for construction defect matters based on the estimated costs of pending legal claims and the estimated costs of anticipated future legal claims related to previously closed homes, and this liability is included within the accrued expenses and other liabilities account in the consolidated balance sheet. This reserve estimate is subject to a high degree of variability and ongoing revision as the circumstances of individual pending claims and historical data and trends change. Management applies judgment in determining the key assumptions used in calculating the reserve for construction defect matters.
Auditing the reserve for construction defect matters is complex and especially challenging due to the judgmental nature of the key assumptions related to projections of the frequency of future claims and the costs to resolve claims in consideration of historical claims information. These assumptions are developed by management, are subjective in nature and have a significant effect on the determined amount of the reserve for construction defect matters.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating the reserve for construction defect matters. We tested the Company’s controls that address the risk of material misstatement related to the measurement and valuation of the reserve for construction defect matters, including the key assumptions related to the projections of the frequency and costs of future claims, and the completeness and accuracy of data used in the model developed by management.
To test the reserve for construction defect matters, our audit procedures included, among others, evaluating the methodology used, the key assumptions and the underlying data used by the Company in developing the reserve estimate. As management utilizes historical trends of frequency of claims incurred and the average cost to resolve claims relative to the types of products and markets where the Company operates in measuring the reserve estimate, we evaluated management’s methodology for determining the frequency and cost of future claims assumptions by comparing these key assumptions to trends observed in historical Company claims data and other available information. In addition, we involved an actuarial specialist to assist with our procedures. Our specialist developed a range of values for the reserve estimate based on independently selected assumptions, which we compared to management’s recorded amount to evaluate management’s estimate. We also performed sensitivity analyses to determine the effect of changes in assumptions, where appropriate. We also tested completeness and accuracy of underlying claims data used in management’s estimation calculations and performed recalculations to evaluate the accuracy of the model used by management to determine the estimate.

/s/ Ernst & Young LLP

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

Fort Worth, Texas
November 19, 2024
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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of D.R. Horton, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited D.R. Horton, Inc. and subsidiaries’ internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, D.R. Horton, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2024 and 2023, the related consolidated statements of operations, total equity and cash flows for each of the three years in the period ended September 30, 2024, and the related notes and our report dated November 19, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Fort Worth, Texas
November 19, 2024
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D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

 September 30,
 20242023
 (In millions)
ASSETS
Cash and cash equivalents$4,516.4 $3,873.6 
Restricted cash27.6 26.5 
Total cash, cash equivalents and restricted cash4,544.0 3,900.1 
Inventories:
Construction in progress and finished homes8,875.8 9,001.4 
Residential land and lots — developed and under development12,948.1 10,621.9 
Land held for development160.6 50.0 
Land held for sale12.7 8.7 
Rental properties2,906.0 2,691.3 
Total inventory24,903.2 22,373.3 
Mortgage loans held for sale2,477.5 2,519.9 
Deferred income taxes, net of valuation allowance of $14.9 million
     and $14.8 million at September 30, 2024 and 2023, respectively
167.5 187.2 
Property and equipment, net531.0 445.4 
Other assets3,317.6 2,993.0 
Goodwill163.5 163.5 
Total assets$36,104.3 $32,582.4 
LIABILITIES
Accounts payable$1,345.5 $1,246.2 
Accrued expenses and other liabilities3,016.7 3,103.8 
Notes payable5,917.7 5,094.5 
Total liabilities10,279.9 9,444.5 
Commitments and contingencies (Note L)
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,
     402,848,342 shares issued and 324,027,360 shares outstanding at September 30, 2024 and
     401,202,253 shares issued and 334,848,565 shares outstanding at September 30, 2023
4.0 4.0 
Additional paid-in capital3,490.7 3,432.2 
Retained earnings27,951.0 23,589.8 
Treasury stock, 78,820,982 shares and 66,353,688 shares
     at September 30, 2024 and 2023, respectively, at cost
(6,132.9)(4,329.8)
Stockholders’ equity25,312.8 22,696.2 
Noncontrolling interests511.6 441.7 
Total equity25,824.4 23,137.9 
Total liabilities and equity$36,104.3 $32,582.4 
See accompanying notes to consolidated financial statements.
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D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

 Year Ended September 30,
 202420232022
 (In millions, except per share data)
Revenues$36,801.4 $35,460.4 $33,480.0 
Cost of sales27,266.0 26,110.0 22,975.9 
Selling, general and administrative expense3,599.5 3,248.8 2,933.7 
Other (income) expense(348.8)(213.1)(59.3)
Income before income taxes6,284.7 6,314.7 7,629.7 
Income tax expense1,478.7 1,519.5 1,734.1 
Net income4,806.0 4,795.2 5,895.6 
Net income attributable to noncontrolling interests49.6 49.5 38.1 
Net income attributable to D.R. Horton, Inc.$4,756.4 $4,745.7 $5,857.5 
Basic net income per common share attributable to D.R. Horton, Inc.$14.44 $13.93 $16.65 
Weighted average number of common shares329.5 340.7 351.7 
Diluted net income per common share attributable to D.R. Horton, Inc.$14.34 $13.82 $16.51 
Adjusted weighted average number of common shares331.6 343.3 354.8 
See accompanying notes to consolidated financial statements.
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D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF TOTAL EQUITY

Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Treasury
Stock		Non-controlling
Interests		Total
Equity
 (In millions, except common stock share data)
Balances at September 30, 2021 (356,015,843 shares)
$4.0 $3,274.8 $13,644.3 $(2,036.6)$329.7 $15,216.2 
Net income— — 5,857.5 — 38.1 5,895.6 
Exercise of stock options (292,290 shares)
— 7.0 — — — 7.0 
Stock issued under employee benefit plans (1,690,547 shares)
— 26.2 — — — 26.2 
Cash paid for shares withheld for taxes— (62.0)— — — (62.0)
Stock-based compensation expense— 105.1 — — — 105.1 
Cash dividends declared ($0.90 per share)
— — (316.5)— — (316.5)
Repurchases of common stock (14,045,657 shares)
— — — (1,105.9)— (1,105.9)
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)
$4.0 $3,349.5 $19,185.3 $(3,142.5)$389.3 $19,785.6 
Net income— — 4,745.7 — 49.5 4,795.2 
Exercise of stock options (603,823 shares)
— 14.4 — — — 14.4 
Stock issued under employee benefit plans (1,425,493 shares)
— 16.0 — — — 16.0 
Cash paid for shares withheld for taxes— (56.1)— — — (56.1)
Stock-based compensation expense— 111.2 — — — 111.2 
Cash dividends declared ($1.00 per share)
— — (341.2)— — (341.2)
Repurchases of common stock (11,133,774 shares)
— — — (1,187.3)— (1,187.3)
Change of ownership interest in Forestar— (2.8)— — 2.9 0.1 
Balances at September 30, 2023 (334,848,565 shares)
$4.0 $3,432.2 $23,589.8 $(4,329.8)$441.7 $23,137.9 
Net income— — 4,756.4 — 49.6 4,806.0 
Exercise of stock options (219,663 shares)
— 5.2 — — — 5.2 
Stock issued under employee benefit plans (1,426,426 shares)
— 20.4 — — — 20.4 
Cash paid for shares withheld for taxes— (83.9)— — — (83.9)
Stock-based compensation expense— 118.1 — — — 118.1 
Cash dividends declared ($1.20 per share)
— — (395.2)— — (395.2)
Repurchases of common stock (12,467,294 shares)
— — — (1,803.1)— (1,803.1)
Change of ownership interest in Forestar— (1.3)— — 20.3 19.0 
Balances at September 30, 2024 (324,027,360 shares)
$4.0 $3,490.7 $27,951.0 $(6,132.9)$511.6 $25,824.4 
See accompanying notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS



 Year Ended September 30,
 202420232022
 (In millions)
OPERATING ACTIVITIES   
Net income$4,806.0 $4,795.2 $5,895.6 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization87.1 91.6 81.4 
Stock-based compensation expense118.1 111.2 105.1 
Deferred income taxes19.0 (45.9)29.1 
Inventory and land option charges78.8 80.3 70.4 
Changes in operating assets and liabilities:   
Decrease (increase) in construction in progress and finished homes141.3 861.8 (2,059.0)
Increase in residential land and lots —
developed, under development, held for development and held for sale
(2,576.5)(1,226.4)(1,402.8)
Increase in rental properties(214.6)(151.8)(1,723.2)
(Increase) decrease in other assets(331.4)23.8 (1,111.5)
Decrease (increase) in mortgage loans held for sale42.4 (133.9)(358.8)
Increase (decrease) in accounts payable, accrued expenses and other liabilities19.6 (101.8)1,035.5 
Net cash provided by operating activities2,189.8 4,304.1 561.8 
INVESTING ACTIVITIES   
Expenditures for property and equipment(165.3)(148.6)(148.2)
Proceeds from sale of assets19.4 52.0 — 
Payments related to business acquisitions, net of cash acquired(40.4)(212.9)(271.5)
Other investing activities(4.3)(0.7)4.8 
Net cash used in investing activities(190.6)(310.2)(414.9)
FINANCING ACTIVITIES   
Proceeds from notes payable2,086.3 711.0 4,250.0 
Repayment of notes payable(1,055.8)(1,823.9)(3,801.2)
(Repayment) borrowings on mortgage repurchase facilities, net(135.8)51.3 123.7 
Proceeds from stock associated with certain employee benefit plans20.6 25.5 33.2 
Cash paid for shares withheld for taxes(83.9)(56.1)(62.0)
Cash dividends paid(395.2)(341.2)(316.5)
Repurchases of common stock(1,787.5)(1,178.5)(1,131.5)
Net proceeds from issuance of Forestar common stock19.7 — 1.7 
Net other financing activities(23.7)(54.8)91.4 
Net cash used in financing activities(1,355.3)(2,666.7)(811.2)
Net increase (decrease) in cash, cash equivalents and restricted cash643.9 1,327.2 (664.3)
Cash, cash equivalents and restricted cash at beginning of year3,900.1 2,572.9 3,237.2 
Cash, cash equivalents and restricted cash at end of year$4,544.0 $3,900.1 $2,572.9 
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D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Year Ended September 30,
202420232022
(In millions)
SUPPLEMENTAL CASH FLOW INFORMATION   
Income taxes paid, net$1,669.7 $1,442.0 $1,701.1 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES   
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 
See accompanying notes to consolidated financial statements.
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D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include the accounts of D.R. Horton, Inc. and all of its wholly-owned, majority-owned and controlled subsidiaries, which are collectively referred to as the Company, unless the context otherwise requires. Noncontrolling interests represent the proportionate equity interests in consolidated entities that are not 100% owned by the Company. As of September 30, 2024, the Company owns a 62% controlling interest in Forestar Group Inc. (Forestar) and therefore is required to consolidate 100% of Forestar within its consolidated financial statements, and the 38% interest the Company does not own is accounted for as noncontrolling interests. All intercompany accounts, transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Revenue Recognition

Homebuilding revenue and related profit are generally recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the buyer. The Company’s performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. Proceeds from home closings held for the Company’s benefit at title companies are included in homebuilding cash and cash equivalents in the consolidated balance sheets.

When the Company executes sales contracts with its homebuyers, or when it requires advance payment from homebuyers for custom changes, upgrades or options related to their homes, the cash deposits received are recorded as liabilities until the homes are closed or the contracts are cancelled. The Company either retains or refunds to the homebuyer deposits on cancelled sales contracts, depending upon the applicable provisions of the contract or other circumstances.

Forestar’s land and lot sales revenue and related profit are generally recognized at the time of the closing of a sale, when title to and possession of the property are transferred to a third-party buyer. Forestar’s revenues from land and lot sales to D.R. Horton are eliminated in the consolidated financial statements.

The Company rarely purchases unimproved land for resale, but periodically may elect to sell parcels of land that do not fit into its strategic operating plans. Revenue from land sales is typically recognized on the closing date, which is generally when performance obligations are satisfied.

The Company’s rental operations develop, construct, lease and sell residential multi-family and single-family rental properties. Revenue is recognized from the sale of these properties on the closing date, which is when performance obligations are satisfied. Rental income from these properties is recognized as other income.

Financial services revenues associated with the Company’s title operations are recognized as closing services are rendered and title insurance policies are issued, both of which generally occur simultaneously as each home is closed. Revenues associated with the Company’s mortgage operations primarily include net gains on the sale of mortgage loans and servicing rights. The Company typically elects the fair value option for its mortgage loan originations whereby mortgage loans held for sale are recorded at fair value based on either sale commitments or current market quotes and loan values are adjusted through revenues for subsequent changes in fair value until the loans are sold. Expected gains and losses from the sale of servicing rights are included in the measurement of all written loan commitments that are
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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, typically within 60 days of origination. Interest income is earned from the date a mortgage loan is originated until the loan is sold.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an initial maturity of three months or less when purchased to be cash equivalents. Proceeds from home closings held for the Company’s benefit at title companies, which totaled $304.9 million and $301.8 million at September 30, 2024 and 2023, respectively, are included in homebuilding cash and cash equivalents in the consolidated balance sheets.

Cash balances of the Company’s captive insurance subsidiary, which are expected to be used to fund the subsidiary’s operations and pay future anticipated legal claims, were $78.4 million and $70.2 million at September 30, 2024 and 2023, respectively, and are included in cash and cash equivalents in the consolidated balance sheets.

Restricted Cash

The Company has cash that is restricted as to its use. Restricted cash related to homebuilding and land development operations includes customer deposits that are temporarily restricted in accordance with regulatory requirements. Restricted cash related to financial services is mortgagor related funds held by the Company for taxes and insurance on an interim basis until the loans are sold.

Inventories and Cost of Sales

Inventory includes the costs of direct land acquisition, land development and construction, capitalized interest, real estate taxes and direct overhead costs incurred during development and construction. Costs incurred after projects or homes are substantially complete, such as utilities, maintenance, and cleaning, are charged to selling, general and administrative (SG&A) expense as incurred. All indirect overhead costs, such as compensation of sales personnel, division and region management, and the costs of advertising and builder’s risk insurance are charged to SG&A expense as incurred.

Land and development costs are typically allocated to individual residential lots on a pro-rata basis, and the costs of residential lots are transferred to construction in progress when home construction begins. Home construction costs are specifically identified and recorded to individual homes. Cost of sales for homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) allocated to each residential lot based upon the total number of homes expected to be closed in each community. Cost of sales for lots sold includes all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) allocated to each residential lot in the community. Any changes to the estimated total development costs subsequent to the initial home or lot closings in a community are generally allocated on a pro-rata basis to the remaining homes or lots in the community associated with the relevant development activity. Development and construction costs incurred related to the rental operations are recorded as rental property inventory. Cost of sales related to the rental operations include the specific construction costs and all applicable land acquisition, land development and related costs for each rental project.

When a home is closed, the Company generally has not paid all incurred costs necessary to complete the home. A liability and a corresponding charge to cost of sales are recorded for the amount estimated to ultimately be paid related to completed homes that have been closed. Home construction budgets are compared to actual recorded costs to determine the additional costs remaining to be paid on each closed home.

The Company rarely purchases land for resale. However, when the Company owns land or communities under development that do not fit into its development and construction plans, and the Company determines that it will sell the asset, the project is accounted for as land held for sale if certain criteria are met. The Company records land held for sale at the lesser of its carrying value or fair value less estimated costs to sell.

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At the end of each quarter, the Company reviews the performance and outlook for all of its communities and land inventories for indicators of potential impairment. If indicators of impairment are present for a community, the Company performs an impairment evaluation of the community, which includes an analysis to determine if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. The Company’s estimate of undiscounted cash flows from communities analyzed may change and could result in a future need to record impairment charges to adjust the carrying value of these assets to their estimated fair value. There are several factors which could lead to changes in the estimates of undiscounted future cash flows for a given community. The most significant of these includes pricing and incentive levels actually realized by the community, the rate at which the homes are sold and the costs incurred to develop the lots and construct the homes. Pricing and incentive levels are often interrelated with sales pace in a community, such that a price reduction is typically expected to increase the sales pace. Further, both of these factors are heavily influenced by the competitive pressures facing a given community from both new and existing homes. If conditions in the broader economy, homebuilding industry or specific markets in which the Company operates worsen, and as the Company evaluates specific community pricing and incentives, construction and development plans, and its overall land sale strategies, it may be required to evaluate additional communities for potential impairment. This may result in impairment charges which could be significant.

When events or circumstances indicate that the carrying values on finished homes in substantially completed communities and completed rental properties are greater than the fair values less estimated costs to sell these homes, impairment charges are also recorded. The key assumptions relating to inventory valuations are impacted by local market and economic conditions and are inherently uncertain. Due to uncertainties in the estimation process, actual results could differ from such estimates. See Note C.

Capitalized Interest

The Company capitalizes interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred. During fiscal 2024, 2023 and 2022, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory. See Note E.

Land and Lot Purchase Contracts

The Company enters into land and lot purchase contracts to acquire land or lots for the construction of homes. Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of many of the purchase contracts, the deposits are not refundable in the event the Company elects to terminate the contract. Land purchase contract deposits and capitalized pre-acquisition costs are expensed to cost of sales when the Company believes it is probable that it will not acquire the property under contract and will not be able to recover these costs through other means. See Notes C and L.

Variable Interests

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 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. At September 30, 2024 and 2023, the deposits related to these contracts totaled $1.9 billion and $1.6 billion, respectively, and are included in other assets in the consolidated balance sheets.
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Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Repairs and maintenance costs are expensed as incurred. Depreciation generally is recorded using the straight-line method over the estimated useful life of the asset. The depreciable life of model home furniture is 2 years, depreciable lives of other furniture and equipment typically range from 2 to 5 years, and depreciable lives of buildings and improvements typically range from 5 to 30 years. See Note F.

Business Acquisitions

The Company accounts for acquisitions of businesses by allocating the purchase price of the business to the various assets acquired and liabilities assumed at their respective fair values. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets. These estimates and assumptions are based on historical experience, information obtained from the management of the acquired companies and the Company’s estimates of significant assumptions that a market participant would use when determining fair value. While the Company believes the estimates and assumptions are reasonable, they are inherently uncertain. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions. There were no material business acquisitions made in fiscal 2024.

Goodwill

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. Goodwill balances are evaluated for potential impairment on at least an annual basis by performing a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of an operating segment with goodwill is less than its carrying amount. If the qualitative assessment indicates that additional impairment testing is required, then a quantitative assessment is performed to determine the operating segment’s fair value. The estimated fair value is determined by discounting the future cash flows of the operating segment to present value. If the carrying value of the operating segment exceeds its fair value, the Company records a goodwill impairment by the amount that an operating segment’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. As a result of the qualitative assessments performed in fiscal 2024, 2023 and 2022, no impairment charges were indicated or recorded.

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

 September 30,
 20242023
 (In millions)
Northwest$2.2 $2.2 
Southwest— — 
South Central15.9 15.9 
Southeast6.0 6.0 
East60.5 60.5 
North49.7 49.7 
Forestar29.2 29.2 
Total goodwill$163.5 $163.5 


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Warranty Claims

The Company provides its homebuyers with a ten-year limited warranty for major defects in structural elements such as framing components and foundation systems, a two-year limited warranty on major mechanical systems and a one-year limited warranty on other construction components. Since the Company subcontracts its construction work to subcontractors who typically provide it with an indemnity and a certificate of insurance prior to receiving payments for their work, claims relating to workmanship and materials are generally the primary responsibility of the subcontractors. Warranty liabilities have been established by charging cost of sales for each home delivered. The amounts charged are based on management’s estimate of the warranty-related costs expected to be incurred in the future. The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates. See Note L.

Legal Claims and Insurance

The Company records expenses and liabilities for legal claims related to construction defect matters, personal injury claims, employment matters, land development issues, contract disputes and other matters. The amounts recorded for these contingencies are based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes. The Company estimates and records receivables under its applicable insurance policies for these legal claims when recovery is probable. However, because the self-insured retentions under these policies are significant, the Company anticipates it will largely be self-insured. Additionally, the Company may have the ability to recover a portion of its losses from its subcontractors and their insurance carriers when the Company has been named as an additional insured on their insurance policies. See Note L.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising expense was approximately $72.3 million, $64.7 million and $41.7 million in fiscal 2024, 2023 and 2022, respectively, and is included in SG&A expense in the consolidated statements of operations.

Income Taxes

The Company’s income tax expense is calculated using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement amounts of assets and liabilities and their respective tax bases and attributable to net operating losses and tax credit carryforwards. When assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of sufficient taxable income in future periods and in the jurisdictions in which those temporary differences become deductible. 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 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. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation of the Company’s deferred tax assets and liabilities. See Note H.

Interest and penalties related to unrecognized tax benefits are recognized in the financial statements as a component of income tax expense. Significant judgment is required to evaluate uncertain tax positions. The Company evaluates its uncertain tax positions on a quarterly basis. The evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. 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 had no unrecognized tax benefits at September 30, 2024 and $1.4 million of unrecognized tax benefits at September 30, 2023.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Earnings Per Share

Basic earnings per share is based on the weighted average number of shares of common stock outstanding during each year. Diluted earnings per share is based on the weighted average number of shares of common stock and dilutive securities outstanding during each year. See Note I.

Stock-Based Compensation

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 (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. 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. See Note K.

Fair Value Measurements

The Financial Accounting Standards Board’s authoritative guidance for fair value measurements establishes a three-level hierarchy based upon the inputs to the valuation model of an asset or liability. When available, the Company uses quoted market prices in active markets to determine fair value. The Company considers the principal market and nonperformance risk associated with the Company’s counterparties when determining the fair value measurements, if applicable. 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. See Note N.

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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE B – SEGMENT INFORMATION

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.

Homebuilding

The homebuilding operating segments are aggregated into six reporting segments. The reporting segments and the states in which the Company has homebuilding operations are as follows:
Northwest:Colorado, Oregon, Utah and Washington
Southwest:Arizona, California, Hawaii, Nevada and New Mexico
South Central:Arkansas, Oklahoma and Texas
Southeast:Alabama, Florida, Louisiana and Mississippi
East:Georgia, North Carolina, South Carolina and Tennessee
North: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. The Company’s homebuilding divisions are primarily engaged in the acquisition and development of land and the construction and sale of residential homes, with operations in 125 markets across 36 states. Most of the revenue generated by the Company’s homebuilding operations is from the sale of completed homes and to a lesser extent from the sale of land and lots.

Rental

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

Forestar

The Forestar segment is a residential lot development company with operations in 59 markets across 24 states. The Company’s homebuilding divisions acquire finished lots from Forestar in accordance with the master supply agreement between the two companies. Forestar’s segment results are presented on their historical cost basis, consistent with the manner in which management evaluates segment performance.

Financial Services

The Company’s financial services segment provides mortgage financing and title agency services to homebuyers in many of the Company’s homebuilding markets. 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, typically within 60 days of origination.

Other

In addition to its homebuilding, rental, Forestar and financial services operations, the Company engages in other business activities through its subsidiaries. The Company conducts insurance-related operations, owns water rights and other water-related assets and owns non-residential real estate including ranch land and improvements. The results of these operations are immaterial for separate reporting and therefore are grouped together and presented in the Eliminations and Other column in the tables that follow.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The accounting policies of the reporting segments are described throughout Note A. Financial information relating to the Company’s reporting segments is as follows:
September 30, 2024
HomebuildingRentalForestarFinancial ServicesEliminations and Other (1)Consolidated
(In millions)
Assets
Cash and cash equivalents
$3,623.0 $157.6 $481.2 $242.3 $12.3 $4,516.4 
Restricted cash
4.8 2.2 — 20.6 — 27.6 
Inventories:
Construction in progress and finished homes8,986.1 — — — (110.3)8,875.8 
Residential land and lots — developed and under development11,011.7 — 2,126.1 — (189.7)12,948.1 
Land held for development20.5 — 140.1 — — 160.6 
Land held for sale12.7 — — — — 12.7 
Rental properties— 2,902.4 — — 3.6 2,906.0 
20,031.0 2,902.4 2,266.2 — (296.4)24,903.2 
Mortgage loans held for sale
— — — 2,477.5 — 2,477.5 
Deferred income taxes, net
211.6 (14.7)— — (29.4)167.5 
Property and equipment, net
500.2 1.1 7.1 4.0 18.6 531.0 
Other assets
2,976.5 74.5 85.6 212.3 (31.3)3,317.6 
Goodwill
134.3 — — — 29.2 163.5 
$27,481.4 $3,123.1 $2,840.1 $2,956.7 $(297.0)$36,104.3 
Liabilities
Accounts payable
$1,046.1 $474.2 $85.9 $0.8 $(261.5)$1,345.5 
Accrued expenses and other liabilities2,552.0 67.8 452.8 234.6 (290.5)3,016.7 
Notes payable
2,926.8 750.7 706.4 1,533.8 — 5,917.7 
$6,524.9 $1,292.7 $1,245.1 $1,769.2 $(552.0)$10,279.9 
_____________
(1)Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

September 30, 2023
HomebuildingRentalForestarFinancial ServicesEliminations and Other (1)Consolidated
(In millions)
Assets
Cash and cash equivalents$2,920.2 $136.1 $616.0 $189.1 $12.2 $3,873.6 
Restricted cash6.5 3.3 — 16.7 — 26.5 
Inventories:
Construction in progress and finished homes9,134.3 — — — (132.9)9,001.4 
Residential land and lots — developed and under development8,992.3 — 1,760.8 — (131.2)10,621.9 
Land held for development20.5 — 29.5 — — 50.0 
Land held for sale8.7 — — — — 8.7 
Rental properties— 2,708.4 — — (17.1)2,691.3 
18,155.8 2,708.4 1,790.3 — (281.2)22,373.3 
Mortgage loans held for sale— — — 2,519.9 — 2,519.9 
Deferred income taxes, net229.8 (19.9)— — (22.7)187.2 
Property and equipment, net415.0 2.4 5.9 4.1 18.0 445.4 
Other assets2,838.5 29.8 58.5 250.3 (184.1)2,993.0 
Goodwill134.3 — — — 29.2 163.5 
$24,700.1 $2,860.1 $2,470.7 $2,980.1 $(428.6)$32,582.4 
Liabilities
Accounts payable$1,033.7 $698.6 $68.4 $0.1 $(554.6)$1,246.2 
Accrued expenses and other liabilities2,585.5 43.2 337.4 280.4 (142.7)3,103.8 
Notes payable2,329.9 400.0 695.0 1,669.6 — 5,094.5 
$5,949.1 $1,141.8 $1,100.8 $1,950.1 $(697.3)$9,444.5 
_____________
(1)Amounts include the balances of the Company’s other businesses, the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments.
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Year Ended September 30, 2024
HomebuildingRentalForestarFinancial ServicesEliminations and Other (1)Consolidated
(In millions)
Revenues
Home sales
$33,903.6 $— $— $— $— $33,903.6 
Land/lot sales and other
58.2 — 1,509.4 — (1,237.4)330.2 
Rental property sales— 1,685.1 — — — 1,685.1 
Financial services
— — — 882.5 — 882.5 
33,961.8 1,685.1 1,509.4 882.5 (1,237.4)36,801.4 
Cost of sales
Home sales (2)
25,952.1 — — — (262.9)25,689.2 
Land/lot sales and other
40.0 — 1,145.9 — (989.8)196.1 
Rental property sales— 1,315.9 — — (14.0)1,301.9 
Inventory and land option charges
68.9 5.8 4.1 — — 78.8 
26,061.0 1,321.7 1,150.0 — (1,266.7)27,266.0 
Selling, general and administrative expense2,553.3 236.2 118.5 672.4 19.1 3,599.5 
Other (income) expense(107.6)(101.5)(29.2)(101.1)(9.4)(348.8)
Income before income taxes$5,455.1 $228.7 $270.1 $311.2 $19.6 $6,284.7 
Summary Cash Flow Information
Depreciation and amortization
$79.4 $2.4 $3.0 $1.8 $0.5 $87.1 
Cash provided by (used in) operating activities$2,239.0 $(231.0)$(158.6)$281.6 $58.8 $2,189.8 
_____________
(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. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
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Year Ended September 30, 2023
HomebuildingRentalForestarFinancial ServicesEliminations and Other (1)Consolidated
(In millions)
Revenues
Home sales
$31,641.0 $— $— $— $— $31,641.0 
Land/lot sales and other
102.2 — 1,436.9 — (1,126.7)412.4 
Rental property sales— 2,605.5 — — — 2,605.5 
Financial services
— — — 801.5 — 801.5 
31,743.2 2,605.5 1,436.9 801.5 (1,126.7)35,460.4 
Cost of sales
Home sales (2)
24,201.3 — — — (248.5)23,952.8 
Land/lot sales and other
53.8 — 1,108.9 — (959.9)202.8 
Rental property sales— 1,886.8 — — (12.7)1,874.1 
Inventory and land option charges
60.7 6.7 24.0 — (11.1)80.3 
24,315.8 1,893.5 1,132.9 — (1,232.2)26,110.0 
Selling, general and administrative expense2,239.9 290.2 97.7 594.9 26.1 3,248.8 
Other (income) expense(78.8)(102.4)(15.3)(76.7)60.1 (213.1)
Income before income taxes$5,266.3 $524.2 $221.6 $283.3 $19.3 $6,314.7 
Summary Cash Flow Information
Depreciation and amortization
$64.0 $2.4 $3.0 $2.1 $20.1 $91.6 
Cash provided by operating activities$3,078.4 $739.2 $364.1 $13.2 $109.2 $4,304.1 
_____________
(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. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended September 30, 2022
HomebuildingRentalForestarFinancial ServicesEliminations and Other (1)Consolidated
(In millions)
Revenues
Home sales
$31,861.7 $— $— $— $— $31,861.7 
Land/lot sales and other
61.4 — 1,519.1 — (1,267.4)313.1 
Rental property sales— 510.2 — — — 510.2 
Financial services
— — — 795.0 — 795.0 
31,923.1 510.2 1,519.1 795.0 (1,267.4)33,480.0 
Cost of sales
Home sales (2)
22,715.6 — — — (197.9)22,517.7 
Land/lot sales and other
39.1 — 1,182.7 — (1,072.3)149.5 
Rental property sales— 243.4 — — (5.1)238.3 
Inventory and land option charges
57.2 0.8 12.4 — — 70.4 
22,811.9 244.2 1,195.1 — (1,275.3)22,975.9 
Selling, general and administrative expense2,186.7 91.1 93.6 547.6 14.7 2,933.7 
Other (income) expense(16.4)(27.1)(5.4)(43.2)32.8 (59.3)
Income before income taxes$6,940.9 $202.0 $235.8 $290.6 $(39.6)$7,629.7 
Summary Cash Flow Information
Depreciation and amortization
$62.5 $1.0 $2.7 $1.9 $13.3 $81.4 
Cash provided by (used in) operating activities$1,916.7 $(1,391.0)$108.7 $(10.5)$(62.1)$561.8 
_____________
(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. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Homebuilding Inventories by Reporting Segment (1)
September 30,
20242023
 (In millions)
Northwest$1,935.2 $1,907.5 
Southwest3,278.9 3,133.0 
South Central3,728.0 3,810.5 
Southeast4,284.5 3,958.5 
East3,978.2 3,024.7 
North2,551.2 2,078.0 
Corporate and unallocated (2)
275.0 243.6 
$20,031.0 $18,155.8 
______________________________________________
(1)Homebuilding inventories are the only assets included in the measure of homebuilding segment assets used by the Company’s chief operating decision makers.
(2)Corporate and unallocated consists primarily of homebuilding capitalized interest and property taxes.

Homebuilding Results by Reporting SegmentYear Ended September 30,
202420232022
 (In millions)
Revenues   
Northwest$2,761.7 $2,582.4 $2,658.4 
Southwest4,914.7 4,282.8 4,840.7 
South Central7,652.1 7,612.6 8,192.3 
Southeast8,876.8 8,760.8 7,951.2 
East6,073.1 5,325.3 5,318.1 
North3,683.4 3,179.3 2,962.4 
$33,961.8 $31,743.2 $31,923.1 
Inventory and Land Option Charges   
Northwest$4.4 $6.6 $7.0 
Southwest12.7 11.3 6.3 
South Central11.4 7.6 9.9 
Southeast18.4 14.6 13.5 
East11.9 8.4 12.1 
North10.1 12.2 8.4 
$68.9 $60.7 $57.2 
Income before Income Taxes (1)
   
Northwest$420.8 $391.1 $560.8 
Southwest703.5 489.3 968.3 
South Central1,331.4 1,388.3 1,910.7 
Southeast1,441.4 1,711.1 1,918.5 
East1,059.6 935.7 1,126.3 
North498.4 350.8 456.3 
$5,455.1 $5,266.3 $6,940.9 
______________________________________________
(1)Expenses maintained at the corporate level consist primarily of homebuilding interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating the Company’s corporate office. The amortization of capitalized interest and property taxes is allocated to each homebuilding segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each homebuilding segment based on the segment’s inventory balances.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE C – INVENTORIES

At the end of each quarter, the Company reviews the performance and outlook for all of its communities and land inventories for indicators of potential impairment and performs detailed impairment evaluations and analyses when necessary. As of September 30, 2024, the Company performed detailed impairment evaluations of communities and land inventories and determined that communities with a combined carrying value of $76.4 million were impaired. As a result, impairment charges of $8.3 million were recorded during the three months ended September 30, 2024 to reduce the carrying value of the related inventory to fair value. During fiscal 2024, impairment charges totaled $14.0 million compared to $19.0 million and $3.8 million in fiscal 2023 and 2022, respectively.

During fiscal 2024, 2023 and 2022, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $64.8 million, $61.3 million and $66.6 million, respectively. Inventory impairments and land option charges are included in cost of sales in the consolidated statements of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE D – NOTES PAYABLE

The Company’s notes payable at their carrying amounts consist of the following:

 September 30,
 20242023
 (In millions)
Homebuilding  
Revolving credit facility$— $— 
2.5% senior notes due 2024 (1)
500.0 499.0 
2.6% senior notes due 2025 (1)
499.0 498.0 
1.3% senior notes due 2026 (1)
597.7 596.6 
1.4% senior notes due 2027 (1)
497.4 496.5 
5.0% senior notes due 2034 (1)
686.5 — 
Other notes
146.2 239.8 
2,926.8 2,329.9 
Rental
Revolving credit facility745.0 400.0 
Other notes5.7 — 
750.7 400.0 
Forestar  
Revolving credit facility— — 
3.85% senior notes due 2026 (2)
398.4 397.4 
5.0% senior notes due 2028 (2)
298.1 297.6 
Other notes9.9 — 
706.4 695.0 
Financial Services
Mortgage repurchase facilities:
Committed facility1,229.3 1,373.3 
Uncommitted facility304.5 296.3 
1,533.8 1,669.6 
Total notes payable$5,917.7 $5,094.5 
_____________

(1)Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $11.7 million and $8.4 million at September 30, 2024 and 2023, respectively.
(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, 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Homebuilding

The Company has a $2.19 billion senior unsecured homebuilding revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $3.0 billion, subject to certain conditions and availability of additional bank commitments. The facility also provides for the issuance of letters of credit with a sublimit equal to 100% of the total revolving credit commitments. Letters of credit issued under the facility reduce the available borrowing capacity. The maturity date of the facility is October 28, 2027. 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.

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. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. 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 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.

D.R. 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.

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 PayablePrincipal AmountDate IssuedDate DueRedeemable
Prior to
Maturity (1)		Effective
Interest Rate (2)
 (In millions)    
2.5% senior notes$500October 2019October 15, 2024Yes2.7%
2.6% senior notes$500May 2020October 15, 2025Yes2.8%
1.3% senior notes$600August 2021October 15, 2026Yes1.5%
1.4% senior notes$500October 2020October 15, 2027Yes1.6%
5.0% senior notes$700August 2024October 15, 2034Yes5.2%
___________
(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 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. The annual effective interest rate is calculated after giving effect to the amortization of debt issuance costs and the discount, if applicable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 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. The authorization has no expiration date. All of the $500 million authorization was remaining at September 30, 2024.

Rental

The Company’s rental subsidiary, DRH Rental, has a $1.05 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $2.0 billion, subject to certain conditions and availability of additional bank commitments. Availability under the rental revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash. 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 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.

The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require DRH Rental to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. 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. 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 and have not been designated as unrestricted subsidiaries. The rental revolving credit facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, Forestar or financial services operations.

Forestar

Forestar has a $410 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $600 million, subject to certain conditions and availability of additional bank commitments. 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. Borrowings under the revolving credit facility are subject to a borrowing base calculation based on the book value of Forestar’s real estate assets and unrestricted cash. Letters of credit issued under the facility reduce the available borrowing capacity. The maturity date of the facility is October 28, 2026. At September 30, 2024, there were no borrowings outstanding and $32.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $377.2 million.

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As of September 30, 2024, Forestar had $700 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, which represent unsecured obligations of Forestar. These notes include $400 million principal amount of 3.85% senior notes that mature May 15, 2026 and $300 million principal amount of 5.0% senior notes that mature March 1, 2028. The annual effective interest rate of the notes after giving effect to the amortization of financing costs is 4.1% and 5.2%, respectively. Forestar’s senior notes may be redeemed prior to maturity, subject to certain limitations and premiums defined in the indenture agreements.

The Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. 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. 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 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. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, rental or financial services operations.

In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities. The authorization has no expiration date. All of the $30 million authorization was remaining at September 30, 2024.

Financial Services

The Company’s mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties. 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.

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.

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.

The facilities contain financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable indebtedness to tangible net worth ratio and its minimum required liquidity. At September 30, 2024, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

These mortgage repurchase facilities are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, rental or Forestar operations.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE E – CAPITALIZED INTEREST

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the years ended September 30, 2024, 2023 and 2022.

 Year Ended September 30,
 202420232022
 (In millions)
Capitalized interest, beginning of year$286.4 $237.4 $217.7 
Interest incurred (1)
203.7 203.5 162.5 
Interest charged to cost of sales(135.0)(154.5)(142.8)
Capitalized interest, end of year$355.1 $286.4 $237.4 
_________________________
(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

The Company’s property and equipment balances and the related accumulated depreciation at September 30, 2024 and 2023 are summarized below.

 September 30,
 20242023
 (In millions)
Homebuilding
Buildings and improvements$483.2 $414.6 
Model home furniture171.2 147.0 
Office furniture and equipment111.1 113.5 
Land57.7 39.1 
Accumulated depreciation(323.0)(299.2)
 Total homebuilding500.2 415.0 
Rental, net1.1 2.4 
Forestar, net7.1 5.9 
Financial services, net4.0 4.1 
Other businesses and eliminations, net18.6 18.0 
 Property and equipment, net$531.0 $445.4 

Depreciation expense was $78.5 million, $82.9 million and $72.0 million in fiscal 2024, 2023 and 2022, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE G – MORTGAGE LOANS

Mortgage Loans Held for Sale and Related Derivatives

Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property. The Company typically sells the servicing rights for the majority of loans when the loans are sold. Servicing rights retained are typically sold within six months of loan origination. At September 30, 2024, mortgage loans held for sale of $2.5 billion had an aggregate outstanding principal balance of $2.5 billion. At September 30, 2023, mortgage loans held for sale of $2.5 billion had an aggregate outstanding principal balance of $2.6 billion. During the years ended September 30, 2024, 2023 and 2022, mortgage loans originated totaled $24.0 billion, $21.2 billion and $19.5 billion, respectively, and mortgage loans sold totaled $24.0 billion, $21.0 billion and $18.9 billion, respectively. The Company had gains on sales of loans and servicing rights of $589.9 million, $538.4 million and $561.7 million during the years ended September 30, 2024, 2023 and 2022, respectively. Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations. During fiscal 2024, approximately 73% of the Company’s mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 26% were sold to one other major financial entity.

To manage the interest rate risk inherent in its mortgage operations, the Company hedges its risk using derivative instruments, generally forward sales of mortgage-backed securities (MBS), which are referred to as “hedging instruments” in the following discussion. The Company does not enter into or hold derivatives for trading or speculative purposes.

Newly originated loans that have been closed but not committed to third-party purchasers are hedged to mitigate the risk of changes in their fair value. Hedged loans are committed to third-party purchasers typically within three days after origination. The notional amounts of the hedging instruments used to hedge mortgage loans held for sale may vary in relationship to the underlying loan amounts, depending on the movements in the value of each hedging instrument relative to the value of the underlying mortgage loans. The fair value change related to the hedging instruments generally offsets the fair value change in the mortgage loans held for sale. The net fair value change, which for the years ended September 30, 2024, 2023 and 2022 was not significant, is recognized in revenues in the consolidated statements of operations. At September 30, 2024 and 2023, the Company’s mortgage loans held for sale that were not committed to third-party purchasers totaled $1.9 billion and $1.7 billion, respectively.

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

The Company is party to IRLCs, which are extended to borrowers who have applied for loan funding and meet defined credit and underwriting criteria. At September 30, 2024 and 2023, the notional amount of IRLCs, which are accounted for as derivative instruments recorded at fair value, totaled $2.0 billion and $2.7 billion, respectively.

The Company manages interest rate risk related to its IRLCs through the use of best-efforts whole loan delivery commitments and hedging instruments. These instruments are considered derivatives in an economic hedge and are accounted for at fair value with gains and losses recognized in revenues in the consolidated statements of operations. At September 30, 2024 and 2023, the notional amount of best-efforts whole loan delivery commitments totaled $11.5 million and $18.9 million, respectively, and the notional amount of hedging instruments related to the remaining IRLCs totaled $1.9 billion and $2.6 billion, respectively.

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Other Mortgage Loans and Loss Reserves

Mortgage loans are sold with limited recourse provisions derived from industry-standard representations and warranties in the relevant agreements. These representations and warranties primarily involve the absence of misrepresentations by the borrower or other parties, the appropriate underwriting of the loan and in some cases, a required minimum number of payments to be made by the borrower. The Company generally does not retain any other continuing interest related to mortgage loans sold in the secondary market. The majority of other mortgage loans consists of loans repurchased due to these limited recourse obligations. Typically, these loans are impaired, and some result in real estate owned through the foreclosure process. At September 30, 2024 and 2023, the Company’s total other mortgage loans and real estate owned, before loss reserves, totaled $18.9 million and $14.9 million, respectively.

The Company has recorded reserves for estimated losses on other mortgage loans, real estate owned and future loan repurchase obligations due to the limited recourse provisions, all of which are recorded as reductions of revenue. The loss reserve for loan repurchase and settlement obligations is estimated based on historical experience, analysis of the volume of mortgages originated, discussions with mortgage purchasers and current housing and credit market conditions, as well as known and projected mortgage loan repurchase requests. The reserve balances at September 30, 2024 and 2023 totaled $12.3 million and $9.9 million, respectively.

Other mortgage loans and real estate owned net of the related loss reserves are included in other assets, while loan repurchase obligations are included in accrued expenses and other liabilities in the Company’s consolidated balance sheets.
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NOTE H – INCOME TAXES

Income Tax Expense

The components of the Company’s income tax expense are as follows:
 Year Ended September 30,
 202420232022
 (In millions)
Current tax expense:   
Federal$1,200.9 $1,293.0 $1,448.9 
State258.8 272.4 256.1 
 1,459.7 1,565.4 1,705.0 
Deferred tax expense (benefit):   
Federal15.5 (39.0)21.2 
State3.5 (6.9)7.9 
 19.0 (45.9)29.1 
Total income tax expense$1,478.7 $1,519.5 $1,734.1 

The Company’s effective tax rate was 23.5%, 24.1% and 22.7% in fiscal 2024, 2023 and 2022, respectively. The effective tax rates for all years include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.

Reconciliation of Expected Income Tax Expense

Differences between income tax expense and tax computed by applying the federal statutory rate of 21% to income before income taxes during each year is due to the following:

 Year Ended September 30,
 202420232022
 (In millions)
Income taxes at federal statutory rate$1,319.8 $1,326.1 $1,602.2 
Increase (decrease) in tax resulting from:
State income taxes, net of federal benefit205.8 208.1 210.0 
Valuation allowance0.1 (3.1)(2.1)
Tax credits(70.4)(44.4)(100.8)
Excess tax benefit from stock-based compensation(42.7)(25.6)(20.1)
Tax contingencies(1.4)(1.5)— 
Other67.5 59.9 44.9 
Total income tax expense$1,478.7 $1,519.5 $1,734.1 

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Deferred Income Taxes

Deferred tax assets and liabilities reflect the tax consequences of temporary differences between the financial statement bases of assets and liabilities and their tax bases, tax losses and credit carryforwards. Components of deferred income taxes are summarized as follows:

 September 30,
 20242023
 (In millions)
Deferred tax assets:  
Inventory costs$87.3 $67.8 
Inventory impairments8.7 5.8 
Warranty and construction defect costs316.2 281.2 
Net operating loss carryforwards38.9 42.2 
Tax credit carryforwards6.9 6.8 
Incentive compensation plans93.7 88.0 
Other14.0 7.0 
Total deferred tax assets565.7 498.8 
Valuation allowance(14.9)(14.8)
Total deferred tax assets, net of valuation allowance550.8 484.0 
Deferred tax liabilities:
Deferral of profit on home closings226.4 163.6 
Depreciation of fixed assets44.8 46.3 
Deferral of income29.3 23.4 
Undistributed earnings of subsidiary77.4 51.7 
Other5.4 11.8 
Total deferred tax liabilities383.3 296.8 
Deferred income taxes, net$167.5 $187.2 

The Company has $27.1 million of tax benefits for a federal net operating loss (NOL) carryforward. The utilization of the federal NOL is subject to IRC Section 382 limitations; however, it is expected that all of the federal NOL will be utilized within the carryforward period. D.R. Horton has $10.9 million of tax benefits for state NOL carryforwards that expire at various times depending on the tax jurisdiction. Of this amount, $5.2 million of the tax benefits expire over the next ten years and the remaining $5.7 million expire from fiscal years 2035 to 2044. Forestar has $0.9 million of tax benefits for state NOL carryforwards that expire at various times depending on the tax jurisdiction.

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. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation of the Company’s deferred tax assets.
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Valuation Allowance

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. Any reversal of the valuation allowance in future periods will impact the Company’s effective tax rate.

Unrecognized Tax Benefits

Unrecognized tax benefits are the differences between tax positions taken or expected to be taken in a tax return and the benefits recognized in the financial statements. A reconciliation of the beginning and ending amounts of unrecognized tax benefits for fiscal 2024 and 2023 is as follows:

Year Ended September 30,
 20242023
 (In millions)
Unrecognized tax benefits, beginning of year$1.4 $2.9 
Decreases for tax positions taken in the current or prior years(1.4)— 
Settlements— (1.5)
Unrecognized tax benefits, end of year$— $1.4 

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. The Company classifies interest expense and penalties on income taxes as income tax expense.

Regulations and Legislation

D.R. Horton is subject to federal income tax and state income tax in multiple jurisdictions. The statute of limitations for D.R. 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. This refund claim is currently under audit by the Internal Revenue Service. D.R. Horton is under audit by various states; however, the Company is not aware of any significant findings by the state taxing authorities.

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 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.
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NOTE I – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share.
Year Ended September 30,
 202420232022
 (In millions)
Numerator:
Net income attributable to D.R. Horton, Inc.$4,756.4 $4,745.7 $5,857.5 
Denominator:
Denominator for basic earnings per share — weighted average common shares329.5 340.7 351.7 
Effect of dilutive securities:
Employee stock awards2.1 2.6 3.1 
Denominator for diluted earnings per share — adjusted weighted average common shares331.6 343.3 354.8 
Basic net income per common share attributable to D.R. Horton, Inc.$14.44 $13.93 $16.65 
Diluted net income per common share attributable to D.R. Horton, Inc.$14.34 $13.82 $16.51 


NOTE J – STOCKHOLDERS’ EQUITY

D.R. Horton has an automatically effective universal shelf registration statement, filed with the SEC in July 2024, registering debt and equity securities that it may issue from time to time in amounts to be determined. At September 30, 2024, the Company had 402,848,342 shares of common stock issued and 324,027,360 shares outstanding. No shares of preferred stock were issued or outstanding.

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. 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.

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NOTE K – EMPLOYEE BENEFIT PLANS

The Company offers its employees a comprehensive compensation and benefits package, which includes a broad range of benefits, including medical, dental and vision healthcare insurance and paid parental leave. In addition to base pay, eligible employees may participate in the Company’s 401(k) plan, employee stock purchase plan, short-term incentive bonus program and/or its stock compensation plans as described below.

Deferred Compensation Plans

The Company has a 401(k) plan for all employees who have been with the Company for a period of six months or more. The Company matches portions of employees’ voluntary contributions. The Company recorded $43.8 million, $40.2 million and $35.4 million of expense for matching contributions in fiscal 2024, 2023 and 2022, respectively.

The Company’s Supplemental Executive Retirement Plan (SERP) is a non-qualified deferred compensation program that provides benefits payable to certain management employees upon retirement, death or termination of employment. Under the SERP, the Company accrues an unfunded benefit based on a percentage of the eligible employees’ salaries, as well as an interest factor based upon a predetermined formula. The Company’s liabilities related to the SERP were $56.8 million and $58.9 million at September 30, 2024 and 2023, respectively. The Company recorded $8.9 million, $8.3 million and $7.7 million of expense for this plan in fiscal 2024, 2023 and 2022, respectively.

The Company has a deferred compensation plan available to a select group of employees which allows participating employees to contribute compensation into the plan on a before tax basis and defer income taxation on the contributions until the funds are withdrawn from the plan. The participating employees designate investments for their contributions; however, the Company is not required to invest the contributions in the designated investments. The Company’s net liabilities related to the deferred compensation plan were $184.5 million and $148.2 million at September 30, 2024 and 2023, respectively. 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 $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

The Company’s Employee Stock Purchase Plan provides eligible employees the opportunity to purchase common stock of the Company at a discounted price of 85% of the fair market value of the stock on the designated dates of purchase. The price to eligible employees may be further discounted depending on the average fair market value of the stock during the period and certain other criteria. Under the terms of the plan, the total fair market value of common stock that an eligible employee may purchase each year is limited to the lesser of 15% of the employee’s annual compensation or $25,000. Under the plan, employees purchased 137,347 shares for $15.3 million in fiscal 2024, 143,960 shares for $11.0 million in fiscal 2023 and 164,193 shares for $10.7 million in fiscal 2022. At September 30, 2024, the Company had 2.3 million shares of common stock reserved for issuance pursuant to the Employee Stock Purchase Plan.

Incentive Bonus Plan

The Company’s Incentive Bonus Plan provides for the Compensation Committee to award short-term performance bonuses to senior management based upon the level of achievement of certain criteria. For fiscal 2024, 2023 and 2022, the Compensation Committee approved awards whereby certain executive officers could earn performance bonuses based upon percentages of the Company’s pre-tax income. Compensation expense related to these plans was $29.9 million, $35.4 million and $40.5 million in fiscal 2024, 2023 and 2022, respectively.
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Stock-Based Compensation

The Company’s Stock Incentive Plan provides for the granting of stock options and restricted stock units to executive officers, other key employees and non-management directors. Restricted stock unit (RSU) awards may be based on service over a requisite time period (time-based) or on performance (performance-based). RSU equity awards represent the contingent right to receive one share of the Company’s common stock per RSU if the vesting conditions and/or performance criteria are satisfied. 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.

Time-Based Restricted Stock Unit Equity Awards

During fiscal 2024, 2023 and 2022, time-based RSUs were granted to the Company’s executive officers, other key employees and non-management directors (collectively, approximately 1,470, 1,380 and 1,200 recipients, respectively). These awards vest annually in equal installments over periods of three to five years.

The following table provides additional information related to time-based RSU activity during fiscal 2024, 2023 and 2022. The number of RSUs vested includes shares of common stock withheld by the Company on behalf of employees to satisfy the tax withholding requirements.
Year Ended September 30,
202420232022
Number of
Restricted Stock Units		Weighted Average
Grant Date Fair Value		Number of
Restricted Stock Units		Weighted Average
Grant Date Fair Value		Number of
Restricted Stock Units		Weighted Average
Grant Date Fair Value
Outstanding at beginning of year2,966,925 $70.85 3,466,094 $57.50 3,817,265 $46.16 
Granted663,860 147.79 877,131 93.44 1,153,124 74.96 
Vested(1,233,866)65.51 (1,251,785)50.61 (1,402,642)41.44 
Cancelled(87,182)85.12 (124,515)61.95 (101,653)51.22 
Outstanding at end of year2,309,737 $95.28 2,966,925 $70.85 3,466,094 $57.50 

The total fair value of shares vested on the vesting date during fiscal 2024, 2023 and 2022 was $184.7 million, $115.2 million and $120.1 million, respectively. For fiscal 2024, 2023 and 2022, compensation expense related to time-based RSUs was $77.3 million, $65.7 million and $63.6 million, respectively. At September 30, 2024, there was $170.1 million of unrecognized compensation expense related to unvested time-based RSU awards. This expense is expected to be recognized over a weighted average period of 2.6 years.

Performance-Based Restricted Stock Unit Equity Awards

During fiscal 2024, 2023 and 2022, performance-based RSU equity awards that vest at the end of three-year performance periods were granted to the Company’s executive officers. 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 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.
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The following table provides additional information related to the performance-based RSUs outstanding at September 30, 2024.

Grant DateVesting DateTarget Number of Performance Units Grant Date Fair Value per UnitCompensation Expense
Year Ended September 30,
202420232022
(In millions)
October 2021 (1)September 2024430,000$80.58 $7.0 $14.3 $14.3 
October 2022September 2025600,00079.97 10.0 11.6 — 
October 2023 (2)September 2026277,779146.72 13.1 — — 
$30.1 $25.9 $14.3 
_________________________
(1)The performance RSUs granted in October 2021 totaled 390,000; 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.

Stock Options
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 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,
 202420232022
Stock OptionsWeighted Average
Exercise Price		Stock OptionsWeighted Average
Exercise Price		Stock OptionsWeighted Average
Exercise Price
Outstanding at beginning of year219,663 $23.86 823,486 $23.84 1,115,776 $23.84 
Exercised(219,663)23.86 (603,823)23.83 (292,290)23.83 
Cancelled or expired— — — — — — 
Outstanding at end of year— $— 219,663 $23.86 823,486 $23.84 
Exercisable at end of year— $— 219,663 $23.86 823,486 $23.84 

The aggregate intrinsic value of options exercised during fiscal 2024, 2023 and 2022 was $26.5 million, $47.2 million and $23.0 million, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the option exercise price.

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NOTE L – COMMITMENTS AND CONTINGENCIES

Warranty Claims

The Company provides its homebuyers with warranties for defects in structural elements, mechanical systems and other construction components of the home. Warranty liabilities are established by charging cost of sales for each home delivered based on management’s estimate of expected warranty-related costs and by accruing for existing warranty claims. 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 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:

 September 30,
 20242023
 (In millions)
Warranty liability, beginning of year$512.4 $454.3 
Warranties issued210.6 191.2 
Changes in liability for pre-existing warranties(36.0)(4.7)
Settlements made(120.1)(128.4)
Warranty liability, end of year$566.9 $512.4 

Legal Claims and Insurance

The Company is named as a defendant in various claims, complaints and other legal actions in the ordinary course of business. At any point in time, the Company is managing several hundred individual claims related to construction defect matters, personal injury claims, employment matters, land development issues, contract disputes and other matters. The Company has established reserves for these contingencies based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes. 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% 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.

The Company’s reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims. As of September 30, 2024, no individual existing claim was material to the Company’s financial statements. The Company has closed a significant number of homes during recent years and may be subject to future construction defect claims on these homes. Although regulations vary from state to state, construction defect issues can generally be reported for up to ten years after the home has closed in many states in which the Company operates. Historical data and trends regarding the frequency of claims incurred and the costs to resolve claims relative to the types of products and markets where the Company operates are used to estimate the construction defect liabilities for both existing and anticipated future claims. These estimates are subject to ongoing revision as the circumstances of individual pending claims and historical data and trends change. Adjustments to estimated reserves are recorded in the accounting period in which the change in estimate occurs.
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Historical trends in construction defect claims have been inconsistent, and the Company believes they may continue to fluctuate. The Company also believes that fluctuations in housing market conditions can affect the frequency and cost of construction defect claims. If the ultimate resolution of construction defect claims resulting from the Company’s home closings in prior years varies from current expectations, it could significantly change the Company’s estimates regarding the frequency and timing of claims incurred and the costs to resolve existing and anticipated future claims, which would impact the construction defect reserves in the future. If the frequency of claims incurred or costs of existing and future legal claims significantly exceed the Company’s current estimates, they will have a significant negative impact on its future earnings and liquidity.

Changes in the Company’s legal claims reserves during fiscal 2024 and 2023 were as follows:

September 30,
20242023
(In millions)
Reserves for legal claims, beginning of year$858.9 $729.1 
Increase in reserves169.7 179.9 
Payments(79.0)(50.1)
Reserves for legal claims, end of year$949.6 $858.9 

Prior to June 1, 2021, in the majority of states in which it operates, the Company has general liability insurance policies to provide risk transfer against a portion of the risk of loss from construction defect and other claims. The Company also contractually requires major subcontractors in most markets to have general liability insurance which includes construction defect coverage. The Company estimates and records receivables under these policies for known claims and anticipated future construction defect claims on previously closed homes and other legal claims and lawsuits incurred in the ordinary course of business when recovery is probable. However, because the self-insured retentions under these policies are significant and the limits of the policies are finite, the Company anticipates it may be in large part self-insured. After June 1, 2021, except for contractual risk transfer, the Company is almost exclusively self-insured for construction defect exposures. The Company’s estimated insurance receivables from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $156.8 million and $165.8 million at September 30, 2024 and 2023, respectively, and are included in other assets in the consolidated balance sheets.

In some states where the Company believes it is too difficult or expensive for its subcontractors to obtain general liability insurance, the Company has waived its normal subcontractor general liability insurance requirements to obtain lower costs from subcontractors. In these states, the Company purchases insurance policies from either third-party carriers or its wholly-owned captive insurance subsidiary and names certain subcontractors as additional insureds. The policies issued by the captive insurance subsidiary and the policies issued on or after June 1, 2020 by third-party carriers essentially represent self-insurance of these risks by the Company.

The Company is self-insured for the deductible amounts under its workers’ compensation insurance policies. The deductibles vary by policy year, but in no years exceed $0.5 million per occurrence. The deductible for the 2023, 2024 and 2025 policy years is $0.5 million per occurrence.

The estimation of losses related to these reserves and the related estimates of recoveries from insurance policies are subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to the Company’s markets and the types of products built, claim frequency, claim settlement costs and patterns, insurance industry practices and legal interpretations, among others. Due to the high degree of judgment required in establishing reserves for these contingencies, actual future costs and recoveries from insurance 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 reserves.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Land and Lot Purchase Contracts

The Company enters into land and lot purchase contracts to acquire land or lots for the construction of homes. At September 30, 2024, the Company had total deposits of $2.15 billion, consisting of cash deposits of $2.03 billion and promissory notes and surety bonds of $126.8 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $25.2 billion. The majority of land and lots under contract are currently expected to be purchased within three years. Of these amounts, $193.3 million of the deposits related to contracts with Forestar to purchase land and lots with a remaining purchase price of $1.9 billion. A limited number of the homebuilding land and lot purchase contracts at September 30, 2024, representing $226.3 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations. Of the $226.3 million remaining purchase price subject to specific performance provisions, $204.7 million related to contracts between the homebuilding segment and Forestar.

During fiscal 2024 and 2023, Forestar reimbursed the homebuilding segment $27.5 million and $10.9 million, respectively, for previously paid earnest money and $22.9 million and $21.8 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar.

Other Commitments

At September 30, 2024, the Company had outstanding surety bonds of $3.5 billion and letters of credit of $242.9 million to secure performance under various contracts. Of the total letters of credit, $210.1 million were issued under the homebuilding revolving credit facility and $32.8 million were issued under Forestar’s revolving credit facility.

The Company leases office space and equipment under non-cancelable operating leases. At September 30, 2024, the future minimum annual lease payments under these agreements are as follows (in millions):
Fiscal 2025$27.7 
Fiscal 202615.9 
Fiscal 20277.4 
Fiscal 20284.0 
Fiscal 20292.2 
Thereafter0.8 
 $58.0 

Rent expense was $44.3 million, $44.7 million and $38.1 million for fiscal 2024, 2023 and 2022, respectively.
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D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE M – OTHER ASSETS, ACCRUED EXPENSES AND OTHER LIABILITIES

The Company’s other assets at September 30, 2024 and 2023 were as follows:

 September 30,
 20242023
 (In millions)
Earnest money and refundable deposits$2,210.6 $1,859.6 
Water rights and other water-related assets319.1 319.6 
Insurance receivables156.8 165.8 
Other receivables147.1 167.2 
Prepaid assets117.9 93.0 
Contract assets - insurance agency commissions117.5 93.9 
Margin deposits related to hedging instruments71.3 — 
Lease right of use assets51.4 46.6 
Interest rate lock commitments44.5 2.3 
Mortgage servicing rights5.9 11.1 
Mortgage hedging instruments and commitments2.8 153.6 
Other72.7 80.3 
 $3,317.6 $2,993.0 


The Company’s accrued expenses and other liabilities at September 30, 2024 and 2023 were as follows:

 September 30,
 20242023
 (In millions)
Reserves for legal claims$949.6 $858.9 
Employee compensation and related liabilities569.7 531.0 
Warranty liability566.9 512.4 
Inventory related accruals451.2 353.6 
Customer deposits99.7 147.1 
Accrued property taxes77.6 69.2 
Mortgage hedging instruments and commitments63.0 15.7 
Lease liabilities53.3 48.1 
Accrued interest34.8 33.6 
Federal and state income tax liabilities27.7 233.8 
Broker deposits related to hedging instruments— 118.9 
Interest rate lock commitments— 33.9 
Other123.2 147.6 
 $3,016.7 $3,103.8 
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D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE N – FAIR VALUE MEASUREMENTS

Fair value measurements are used for the Company’s mortgage loans held for sale, mortgage servicing rights, IRLCs 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. The fair value hierarchy and its application to these Company assets and liabilities is as follows:
•Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities. The Company does not currently have any assets or liabilities measured at fair value using Level 1 inputs.
•Level 2 – Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. The Company’s assets and liabilities measured at fair value using Level 2 inputs on a recurring basis are as follows:
◦Mortgage loans held for sale - The fair value of these loans is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Closed mortgage loans are typically sold shortly after origination, which limits exposure to nonperformance by loan buyer counterparties to a short time period. In addition, the Company actively monitors the financial strength of its counterparties.
◦Loan sale commitments and hedging instruments - The fair values of best-efforts and mandatory loan sale commitments and derivative instruments such as forward sales of MBS that are utilized as hedging instruments are calculated by reference to quoted prices for similar assets. The Company mitigates exposure to nonperformance risk associated with derivative instruments by limiting the number of counterparties and actively monitoring their financial strength and creditworthiness. Further, the Company’s derivative contracts typically have short-term durations with maturities from one to four months. Accordingly, the Company’s risk of nonperformance relative to its derivative positions is not significant.

The Company’s assets measured at fair value using Level 2 inputs on a nonrecurring basis are a limited number of mortgage loans held for sale with some degree of impairment affecting their marketability and are reported at the lower of carrying value or fair value. When available, fair value is determined by reference to quoted prices in the secondary markets for such assets.
After consideration of nonperformance risk, no additional adjustments were made to the fair value measurements of mortgage loans held for sale or hedging instruments.
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D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
•Level 3 – Valuation is typically derived from model-based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability.
The Company’s assets measured at fair value using Level 3 inputs on a recurring basis are as follows:
◦Mortgage loans held for sale - For a limited number of mortgage loans held for sale with some degree of impairment affecting their marketability and for which reference to quoted prices in the secondary markets is not available, the fair value is calculated using an income approach whereby the net present value of the discounted cash flows is modeled using both a prepayment and a liquidation disposition. The cash flow is then adjusted based on the probability of each disposition.
◦Mortgage servicing rights - The fair value of mortgage servicing rights is derived utilizing a third-party model which calculates the present value of estimated future cash flows associated with the servicing asset. Key assumptions to the model include prepayment rate, discount rate and delinquency rate.
◦IRLCs - The fair value of IRLCs is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. These valuations do not contain adjustments for expirations as any expired commitments are excluded from the fair value measurement. The Company generally only issues IRLCs for products that meet specific purchaser guidelines. Should any purchaser become insolvent, the Company would not be required to close the transaction based on the terms of the commitment. Since not all IRLCs will become closed loans, the Company further adjusts its fair value measurements for the estimated amount of IRLCs that will not close.
The Company’s assets measured at fair value using Level 3 inputs that are typically reported at the lower of carrying value or fair value on a nonrecurring basis are as follows:
◦Inventory held and used - In assessing impairment indicators of its inventory held and used, the Company performs an analysis of the undiscounted cash flows estimated to be generated by those assets. The most significant factors used to estimate undiscounted future cash flows include pricing and incentive levels actually realized by the community, the rate at which the homes are sold and the costs incurred to develop the lots and construct the homes. Inventory held and used measured at fair value represents those communities for which the estimated undiscounted cash flows are less than their carrying amounts and therefore, the Company recorded impairments during the period to record the inventory at fair value calculated based on its discounted estimated future cash flows.
◦Inventory available for sale - The factors considered in determining fair values of the Company’s land held for sale primarily include actual sale contracts and recent offers received from outside third parties, and may also include prices for land in recent comparable sales transactions and other market analysis. If the estimated fair value less the costs to sell an asset is less than the asset’s current carrying value, the asset is written down to its estimated fair value less costs to sell.
◦Certain mortgage loans held for sale - A limited number of mortgage loans held for sale have some degree of impairment affecting their marketability. For some of these loans, quoted prices in the secondary market are not available and therefore, a cash flow valuation model is used to determine fair value.
◦Certain other mortgage loans and real estate owned - Other mortgage loans include performing and nonperforming mortgage loans, which often become real estate owned through the foreclosure process. The fair values of other mortgage loans and real estate owned are determined based on the Company’s assessment of the value of the underlying collateral or the value of the property, as applicable. The Company uses different methods to assess the value of the properties, which may include broker price opinions, appraisals or cash flow valuation models.

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D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2024 and 2023, and the changes in the fair value of the Level 3 assets during fiscal 2024 and 2023.

  Fair Value at September 30, 2024
 Balance Sheet LocationLevel 1Level 2Level 3Total
  (In millions)
Mortgage loans held for sale (1)Mortgage loans held for sale$— $2,421.2 $10.6 $2,431.8 
Mortgage servicing rights (2)Other assets— — 5.9 5.9 
Derivatives not designated as hedging instruments (3):    
Interest rate lock commitments (4)Other assets— — 44.5 44.5 
Mortgage hedging instruments and commitments (5)Other assets and other liabilities— (60.2)— (60.2)
  Fair Value at September 30, 2023
 Balance Sheet LocationLevel 1Level 2Level 3Total
  (In millions)
Mortgage loans held for sale (1)Mortgage loans held for sale$— $2,469.1 $11.6 $2,480.7 
Mortgage servicing rights (2)Other assets— — 11.1 11.1 
Derivatives not designated as hedging instruments (3):    
Interest rate lock commitments (4)Other assets and other liabilities— — (31.6)(31.6)
Mortgage hedging instruments and commitments (5)Other assets and other liabilities— 137.9 — 137.9 

Level 3 Assets and Liabilities at Fair Value for the Year Ended September 30, 2024
Balance at
September 30, 2023		Net realized and unrealized gains (losses)Purchases / OriginationsSales and SettlementsPrincipal ReductionsNet transfers to (out of) Level 3Balance at
September 30, 2024
(In millions)
Mortgage loans held for sale (1)
$11.6 $0.1 $— $(0.9)$— $(0.2)$10.6 
Mortgage servicing rights (2)11.1 (1.0)19.2 (23.4)— — 5.9 
Interest rate lock commitments (4)(31.6)76.1 — — — — 44.5 
Level 3 Assets and Liabilities at Fair Value for the Year Ended September 30, 2023
Balance at
September 30, 2022		Net realized and unrealized gains (losses)Purchases / OriginationsSales and SettlementsPrincipal ReductionsNet transfers to (out of) Level 3Balance at
September 30, 2023
(In millions)
Mortgage loans held for sale (1)
$14.1 $2.6 $— $(14.8)$— $9.7 $11.6 
Mortgage servicing rights (2)10.6 0.2 52.4 (52.1)— — 11.1 
Interest rate lock commitments (4)(135.8)104.2 — — — — (31.6)
______________________
(1)The Company typically elects the fair value option upon origination for mortgage loans held for sale. Interest income earned on mortgage loans held for sale is based on contractual interest rates and included in other income. 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 $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. The Company plans to sell these loans as market conditions permit.
(2)Although the majority of the Company’s mortgage loans are sold on a servicing-released basis, when the servicing rights are retained, the Company records them at fair value using third-party valuations. 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 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. Changes in the fair value of these derivatives are included in revenues in the consolidated statements of operations. The net fair value change in fiscal 2024 and 2023 recognized in revenues in the consolidated statements of operations was not significant.
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D.R. HORTON, INC. AND SUBSIDIARIES
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.
(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. The fair value of mortgage hedging instruments and commitments at September 30, 2023 reflects a $153.6 million change in fair value in other assets and a $15.7 million change in fair value in other liabilities.

The following table summarizes the Company’s assets measured at fair value on a nonrecurring basis at September 30, 2024 and 2023.
Fair Value at September 30,
 20242023
Balance Sheet LocationLevel 2Level 3Level 2Level 3
  (In millions)
Inventory held and used (1) (2)Inventories$— $68.1 $— $28.8 
Mortgage loans held for sale (1) (3)
Mortgage loans held for sale9.5 7.0 — 30.7 
Other mortgage loans (1) (4)
Other assets1.3 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, 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. When available, quoted prices in the secondary market are used to determine fair value (Level 2); otherwise, a cash flow valuation model is used to determine fair value (Level 3).
(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.
Carrying ValueFair Value at September 30, 2024
Level 1Level 2Level 3Total
(In millions)
Cash and cash equivalents (1)
$4,516.4 $4,516.4 $— $— $4,516.4 
Restricted cash (1)
27.6 27.6 — — 27.6 
Notes payable (2) (3)
5,917.7 — 3,413.7 2,440.6 5,854.3 
Carrying ValueFair Value at September 30, 2023
Level 1Level 2Level 3Total
(In millions)
Cash and cash equivalents (1)
$3,873.6 $3,873.6 $— $— $3,873.6 
Restricted cash (1)
26.5 26.5 — — 26.5 
Notes payable (2) (3)
5,094.5 — 2,532.5 2,309.4 4,841.9 
______________
(1)The fair values of cash, cash equivalents and restricted cash approximate their carrying values due to their short-term nature and are classified as Level 1 within the fair value hierarchy.
(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 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.
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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures as of September 30, 2024 were effective in providing reasonable assurance that information required to be disclosed in the reports the Company files, furnishes, submits or otherwise provides the Securities and Exchange Commission (SEC) under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed in reports filed by the Company under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and CFO, in such a manner as to allow timely decisions regarding the required disclosure.

There have been no changes in the Company’s internal controls over financial reporting during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of September 30, 2024.

Ernst & Young LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of September 30, 2024, as stated in their report included herein.


ITEM 9B.    OTHER INFORMATION

During the three months ended September 30, 2024, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).


ITEM 9C.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.
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PART III


ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is set forth under the captions “Proposal One — Election of Directors,” “Corporate Governance and Board Matters” and “Delinquent Section 16(a) Reports” in the registrant’s definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and incorporated herein by reference.


ITEM 11.    EXECUTIVE COMPENSATION

The information required by this item is set forth under the captions “Executive Compensation” and “CEO Pay Ratio” in the registrant’s definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and incorporated herein by reference.


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance under Equity Compensation Plans

The following table summarizes our equity compensation plans as of September 30, 2024.
(a)
Number of Shares to
be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(b)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
Plan Category   
Equity compensation plans approved by stockholders3,617,516 (1)$— (2)5,886,752(3)
Equity compensation plans not approved by stockholders— n/a— 
Total3,617,516 $— 5,886,752
______________
(1)Amount includes outstanding restricted stock unit awards. The number of outstanding performance-based restricted stock unit awards is based on the target number of units granted.
(2)Restricted stock units have no exercise price.
(3)Amount includes 2,269,236 shares reserved for issuance under the Company’s Employee Stock Purchase Plan. Under the Employee Stock Purchase Plan, employees purchased 137,347 shares of common stock in fiscal 2024.

The remaining information required by this item is set forth under the caption “Beneficial Ownership of Common Stock” in the registrant’s definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and incorporated herein by reference.
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ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is set forth under the captions “Certain Relationships and Related Person Transactions” and “Corporate Governance and Board Matters” in the registrant’s definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and incorporated herein by reference.


ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is set forth under the caption “Independent Registered Public Accountants” in the registrant’s definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and incorporated herein by reference.
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PART IV


ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)The following documents are filed as part of this report.
(1) Financial Statements
Our consolidated financial statements are included in Part II, Item 8 of this Annual Report on Form 10-K.
(2) Financial Statement Schedules
All financial statement schedules are omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto.
(3) Exhibits
The exhibits listed in (b) are filed or incorporated by reference as part of this Annual Report on Form 10-K.
(b)Exhibits
Exhibit
Number		Exhibit
2.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
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Exhibit
Number		Exhibit
4.8
4.9
4.10  *
10.1
10.2  †
10.3  †
10.4  †Form of Non-Qualified Stock Option Agreement under the D.R. Horton, Inc. 1991 Stock Incentive Plan (Term Vesting) (incorporated by reference from Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (Registration No. 3-81856), filed with the SEC on July 22, 1994).
10.5  †
10.6  †
10.7  †
10.8  †
10.9  †
10.10  †
10.11  †
10.12  †
10.13  †
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Exhibit
Number		Exhibit
10.14  †
10.15  †
10.16  †
10.17  †
10.18  †
10.19  †D.R. Horton, Inc. Supplemental Executive Retirement Plan No. 1 (incorporated by reference from the Company’s Transitional Report on Form 10-K for the period from January 1, 1993 to September 30, 1993, filed with the SEC on December 28, 1993 (file number 1-14122)).
10.20  †
10.21  †
10.22  †
10.23  †
10.24  †
10.25*†
10.26*†
10.27
10.28
10.29
10.30
10.31
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Exhibit
Number		Exhibit
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
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Exhibit
Number		Exhibit
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
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Exhibit
Number		Exhibit
10.60
10.61
10.62
10.63
19.1*
21.1*
22.1*
23.1*
31.1*
31.2*
32.1*
32.2*
97.1†
101.INS**XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH**Inline XBRL Taxonomy Extension Schema Document.
101.CAL**Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104**Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101).
_____________________
*Filed or furnished herewith.
**Submitted electronically herewith.
†Management contract or compensatory plan or arrangement.


ITEM 16.    10-K SUMMARY

None.
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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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:November 19, 2024By:/s/  Bill W. Wheat
Bill W. Wheat
Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SignatureTitleDate
/s/  David V. AuldExecutive Chairman and DirectorNovember 19, 2024
David V. Auld
/s/  Paul J. RomanowskiPresident and Chief Executive Officer and Director
(Principal Executive Officer)		November 19, 2024
Paul J. Romanowski
/s/  Bill W. WheatExecutive Vice President and Chief Financial Officer
(Principal Financial Officer)		November 19, 2024
Bill W. Wheat
/s/  Aron M. OdomSenior Vice President and Controller
(Principal Accounting Officer)		November 19, 2024
Aron M. Odom
/s/  Barbara K. AllenDirectorNovember 19, 2024
Barbara K. Allen
/s/  Brad S. AndersonDirectorNovember 19, 2024
Brad S. Anderson
/s/  Michael R. BuchananDirectorNovember 19, 2024
Michael R. Buchanan
/s/  Benjamin S. Carson, Sr.DirectorNovember 19, 2024
Benjamin S. Carson, Sr.
/s/  M. Chad CrowDirectorNovember 19, 2024
M. Chad Crow
/s/  Elaine D. CrowleyDirectorNovember 19, 2024
Elaine D. Crowley
/s/  Maribess L. MillerDirectorNovember 19, 2024
Maribess L. Miller
/s/  Barbara R. SmithDirectorNovember 19, 2024
Barbara R. Smith
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