This summary is based on the second quarter fiscal 2008 earnings call conducted by D.R. Horton Inc. (DHI: chart) on May 6, 2008.

Management:

- Vice-Chairman, President and CEO: Donald J. Tomnitz
- EVP and Treasurer: Stacey H. Dwyer
- Senior EVP: Samuel R. Fuller
- EVP and CFO: Bill W. Wheat

Key Investors Issues

- Homebuilding revenues were $1.6 billion compared to $2.6 billion in the year-ago quarter.
- Net loss was $1.3 billion or $4.14 per share, from net income of $51.7 million or 16 cents a share in the prior year.
- The firm declared a quarterly dividend of 7.5 cents per share.

Half Year Highlights:

- The firm reported a net loss totaling $1.4 billion or $4.55 per share, from a profit of $161.4 million or 51 cents a share in the prior year.
- Homebuilding revenue totaled $3.3 billion, compared to $5.4 billion for the same period of fiscal 2007.
- Homes closed in the six-month period totaled 13,268, compared to 19,994 homes closed in the same period of fiscal 2007.

First Quarter Highlights

Net sales orders were 7,528 homes or $1.7 billion, down 34.6% compared to 9,983 homes, $2.6 billion, in the year-ago quarter as average sales price on net sales orders in decreased 15% to $220,800.

- Homebuilding revenues were $1.6 billion compared to $2.6 billion in the year-ago quarter.
- The average closing price was down 8% to $237,800 compared to $257,500 in the prior year, reflecting the softer pricing environment compared to the prior year.
- Gross profit margin on home sales revenues before inventory impairments and land option write-offs was 9.4%, an 830 basis point decline from 17.7% in the year-ago period.
- A total of 570 basis points of the margin decline was due to core margin deterioration resulting from an increased use of sales incentives relative to last year and the lack of pricing power as reflected in the 8% decrease in average closing price.
- The majority of the remaining margin decline was due to an increase in the amortization of capitalized interest and property taxes as a percentage of home sales revenues.

The firm recorded inventory impairments of $817.1 million as a charge to cost of sales to reduce the carrying value of these impaired projects.

- Over 80% of these charges related to projects in California, Southeast, and West regions.
- Of the remaining $1.7 billion of evaluated projects, which were not impaired, the majority are located in Arizona, California, and Florida.
- The firm also recorded $17 million in write-offs of earnest money deposits and pre-acquisition costs related to land option contracts that it does not intend to pursue.

Homebuilding SG&A expenses was 12.8% of total homebuilding revenues compared to 11.3% a year ago, as the firm continues to react quickly to the market to manage its SG&A levels relative to the number of home closings.

- The firm reduced total SG&A expenses by $88 million or 30% compared to the same period in the prior year on 31% fewer closings.

- The Financial Services operations remain profitable, as the firm has proactively adjusted expense levels to lower volumes and adjusted product offerings to the current restricted mortgage environment.
- Financial Services'' pre-tax income was $11.9 million compared to $7.3 million in the year-ago quarter.
- About 92% of the mortgage company''s business was captured during the quarter, reflecting the continued focus on supporting the homebuilders’ business.
- Company-wide capture rate was 63%, the average FICO score was 708, and the average cumulative loan-to-value was 91%.

The reported net loss was $1.3 billion or $4.14 per share, from net income of $51.7 million or 16 cents a share in the prior year on declining revenues.

- The overall inventory decreased by $700 million, excluding the impairments during the quarter.
- The firm reduced the total number of homes in inventory to 15,100, down 62% from 40,000 homes of the peak in June 2006 and down 13% from 17,300 homes of December 2007.
- It also reduced the absolute number of speculative homes in inventory by 28% to 7,100 homes compared to 9,800 homes at December 2007.
- It had 3,200 completed and unsold homes in inventory at the end of the quarter, down 40% from 5,300 at December 2007.

Land and lot acquisition spending remains limited and the firm continues to restructure its land development spending in light of the current absorptions.

- The supply of land and lots was 181,000 lots owned and controlled, down 49,000 lots from the beginning of the fiscal year, with 78% of these lots owned and 22% are auctioned.
- The firm continues to actively work to reduce the owned land and lot supply through building and closing homes, as well as through opportunistic land and lot sales.
– The reduction in number of homes and lots in inventory helped generate $452 million in operating cash flows in the quarter, resulting in a $560.9 million cash balance.
- D.R. Horton declared a quarterly dividend of 7.5 cents per share.

The homebuilding leverage ratio, net of unrestricted cash, was 42.9% within the target operating range of less than 45%.