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SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 1-14122

D.R. Horton, Inc.

(817) 390-8200

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ         No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

         Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes þ         No o

         As of March 31, 2004, the aggregate market value of the outstanding shares held by non-affiliates of the registrant was approximately $7,532,556,000. Solely for purposes of this calculation, all directors and executive officers were excluded as affiliates of the registrant.

         As of December 2, 2004, there were 236,185,469 shares of Common Stock, par value $.01 per share, issued and 233,532,669 shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the registrant’s definitive Proxy Statement for the 2005 Annual Meeting of Stockholders are incorporated herein by reference in Part III.

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PART 1

      D.R. Horton, Inc. is a national homebuilder. We construct and sell high quality single-family homes, designed principally for first-time and move-up homebuyers, through our operating divisions in 21 states and 63 metropolitan markets of the United States, primarily under the name of D.R. Horton, America’s Builder. D.R. Horton, Inc. is a Fortune 500 company listed on the New York Stock Exchange under the ticker symbol “DHI.” Unless the context otherwise requires, the terms “D.R. Horton,” the “Company,” “we” and “our” used herein refer to D.R. Horton, Inc., a Delaware corporation, and its predecessors and subsidiaries.

      Donald R. Horton began our homebuilding business in 1978. In 1991, we were incorporated in Delaware to acquire the assets and businesses of our predecessor companies, which were residential home construction and development companies owned or controlled by Mr. Horton. In 1992, we completed our initial public offering of our common stock. From inception, we have consistently grown the size of our company by investing our available capital into our existing homebuilding markets and into start-up operations in new markets. Additionally, from July 1993 to February 2002, we acquired 17 other homebuilding companies, which strengthened our market position in existing markets and expanded our geographic presence and product offerings in other markets. We are now the largest homebuilding company in the United States, based on domestic homebuilding revenues, homes sold and homes closed during the year ended September 30, 2004. Our homes generally range in size from 1,000 to 5,000 square feet and range in price from $80,000 to $900,000. For the year ended September 30, 2004, we closed 43,567 homes with an average closing sales price approximating $240,800.

      Through our financial services operations, we provide mortgage banking and title agency services to homebuyers in many of our homebuilding markets. DHI Mortgage, our wholly owned subsidiary, provides mortgage financing services, principally to purchasers of homes we build and sell. Our subsidiary title companies serve as title insurance agents by providing title insurance policies, examination and closing services, primarily to purchasers of homes we build and sell.

      Our financial reporting segments consist of homebuilding and financial services. Our homebuilding operations are a substantial part of our business, comprising approximately 98% of consolidated revenues and approximately 95% of consolidated income before income taxes in fiscal year 2004. Our homebuilding segment generates the majority of its revenues from the sale of completed homes with a lesser amount from the sale of land and lots. In addition to building traditional single family detached homes, the homebuilding segment also builds attached homes, such as town homes, condominiums, duplexes, and triplexes, which share common walls and roofs. Approximately 84%, 91%, and 92% of home sales revenues in fiscal 2004, 2003 and 2002, respectively, were generated from the sale of detached homes. Our financial services segment generates its revenues from originating and selling mortgages and collecting fees for title insurance and closing services. Financial information, including revenue, pre-tax income and identifiable assets, for both of our reporting segments is included in our consolidated financial statements.

      We make available, as soon as reasonably practicable, on our Internet website all of our reports required to be filed with the Securities and Exchange Commission. These reports include our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, changes in beneficial ownership reports on Forms 3, 4, and 5, proxy statements and amendments to such reports. These reports may be accessed by going to our website at www.drhorton.com and clicking on the “Investor Relations” link. We will also provide these reports in electronic or paper format to our stockholders free of charge upon request made to our Investor Relations department. Information on our Internet website is not part of this annual report on Form 10-K.

      Our principal executive offices are located at 301 Commerce Street, Fort Worth, Texas 76102. Our telephone number is (817) 390-8200, and our Internet website address is www.drhorton.com.

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Operating Strategy

      We believe that the following operating strategies have enabled us to achieve consistent growth and profitability:

      From 1978 to late 1987, our homebuilding activities were conducted in the Dallas/ Fort Worth area. We then began diversifying geographically by entering additional markets, both through startup operations and acquisitions.

      We believe our diversification strategy mitigates the effects of local and regional economic cycles and enhances our growth potential. Typically, we do not invest material amounts of capital in real estate, including raw land, developed lots, models and speculative homes, or overhead in start-up operations in new markets, until such markets demonstrate significant growth potential and acceptance of our products. While we believe there are significant growth opportunities in our existing markets, we also intend to continue our diversification strategy by seeking to enter new markets. We continually monitor the sales, margins and returns achieved in each of our markets as part of our evaluation of the use of our capital.

      We decentralize our homebuilding activities to give more operating flexibility to our local division presidents. We have 42 separate operating divisions, some of which are in the same market area and some of which operate in more than one market area. Generally, each operating division consists of a division president, land acquisition and development personnel, a sales manager and sales personnel, a construction manager and construction superintendents, a controller, a purchasing manager and office staff. We believe that division presidents and their management teams, who are intimately familiar with local conditions, make better decisions regarding local operations. Our division presidents receive performance bonuses based upon achieving targeted financial measures in their operating divisions.

      Each operating division is responsible for:

	•	Site selection, which involves

        — A feasibility study;

        — Soil and environmental reviews;

        — Review of existing zoning and other governmental requirements; and

        — Review of the need for and extent of offsite work required to meet local building codes;

	•	Negotiating lot option or similar contracts;
	•	Overseeing land development;
	•	Selecting building plans and architectural schemes;
	•	Obtaining all necessary building approvals;
	•	Selecting and managing construction subcontractors and suppliers;
	•	Planning and managing homebuilding schedules; and
	•	Developing and implementing marketing plans.

      We centralize the key risk elements of our homebuilding business through our regional and corporate offices. We have six separate homebuilding operating regions, each of which generally consists of a region

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      Our corporate office departments are responsible for establishing our operational policies and internal control standards and monitoring compliance with established policies and controls throughout our operations. The corporate office also has primary responsibility for direct management of certain key risk elements and initiatives through the following centralized functions:

	•	Financing;
	•	Cash management;
	•	Risk and litigation management;
	•	Capital allocation;
	•	Oversight of inventory levels;
	•	Environmental assessments of land and lot acquisitions;
	•	Approval and funding of land and lot acquisitions;
	•	Accounting and management reporting;
	•	Internal audit;
	•	Information technology systems;
	•	Administration of payroll and employee benefits;
	•	Negotiation of national purchasing contracts; and
	•	Monitoring and analysis of margins, returns and expenses.

      We control our overhead costs by centralizing certain administrative and accounting functions and by closely monitoring the number of administrative personnel and management positions in our operating divisions and our corporate office. We also minimize advertising costs by actively participating in promotional activities sponsored by local real estate brokers and trade associations.

      We control construction costs by striving to efficiently design our homes, by obtaining competitive bids for construction materials and labor and by negotiating favorable pricing from our primary subcontractors and suppliers based on the volume of services and products we purchase from them on a local, regional and national basis. We monitor our construction costs on each house through our purchasing and construction budgeting systems, and we monitor our inventory levels, margins, returns and expenses through our management information systems.

      We have recently focused on internal growth. However, as an integral component of our operational strategy, we continue to evaluate opportunities for strategic acquisitions. We believe that expanding our operations through the acquisition of existing homebuilding companies affords us several benefits not found in start-up operations. Such benefits include:

	•	Established land positions and inventories;
	•	Existing relationships with land owners, developers, subcontractors and suppliers; and
	•	Proven product acceptance by homebuyers and local brand name recognition in new markets.

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      In evaluating potential acquisition candidates, we seek homebuilding companies that have excellent reputations, track records of profitability and strong management teams. We limit the risks associated with acquiring a going concern by conducting extensive operational, financial and legal due diligence on each acquisition and by only acquiring homebuilding companies that we believe will have a positive impact on our earnings within one year. We believe that our acquisition evaluation and due diligence processes and our decentralized operating approach with centralized controls have contributed to the successful integration of our prior acquisitions. In the future, we will continue to evaluate potential acquisition opportunities that satisfy our acquisition criteria in existing or new markets.

Markets

      We conduct our homebuilding operations in all of the geographic regions, states and markets listed below, and we conduct our mortgage and title operations in many of these markets as indicated in the following table:

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      When evaluating the viability of new or existing homebuilding markets, we consider the following factors, among others:

	•	Regional economic conditions;
	•	Job growth;
	•	Land availability;
	•	Local land development process;
	•	New home sales activity;
	•	Competition;
	•	Secondary home sales activity; and
	•	Local housing products, features and pricing.

      Our homebuilding revenues from home sales by geographic region are:

      Our homebuilding revenues from land and lot sales by geographic region are:

      The majority of our homebuilding inventories are concentrated in six states: Arizona, California, Colorado, Florida, Nevada and Texas.

Land Policies

      Typically, we acquire land only after we have completed appropriate due diligence and after we have obtained the rights (“entitlements”) to begin development or construction work. Before we acquire lots or tracts of land, we will, among other things, complete a feasibility study, which includes soil tests, independent environmental studies and other engineering work, and determine that all necessary zoning and other governmental entitlements required to develop and use the property for home construction have been obtained. Although we purchase and develop land primarily to support our homebuilding activities, occasionally we sell lots and land to other developers and homebuilders.

      We also enter into land/lot option contracts, in which we purchase the right, but generally not the obligation, to buy land or lots at predetermined prices on a defined schedule commensurate with

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      We limit our exposure to real estate inventory risks by:

	•	Maintaining approximately a three to four year supply of land/lots controlled (owned and optioned);
	•	Closely monitoring local market and demographic trends, housing preferences and related economic developments, such as new job opportunities, local growth initiatives and personal income trends;
	•	Utilizing land/lot option contracts, where possible;
	•	Limiting the size of acquired land parcels to smaller tracts, where possible;
	•	Generally commencing construction of homes under contract only after receipt of a satisfactory down payment and, where applicable, the buyer’s receipt of mortgage approval; and
	•	Closely monitoring the number of speculative homes (homes started without an executed sales contract) built in each subdivision.

Construction

      Our home designs are prepared by architects in each of our markets to appeal to local tastes and preferences of homebuyers in each community. We also offer optional interior and exterior features to allow homebuyers to enhance the basic home design and to allow us to generate additional revenues from each home sold.

      Substantially all of our construction work is performed by subcontractors. Our construction supervisors monitor the construction of each home, participate in important design and building decisions, coordinate the activities of subcontractors and suppliers, review the work of subcontractors for quality and cost controls and monitor compliance with zoning and building codes. Subcontractors typically are retained for a specific subdivision pursuant to a contract that obligates the subcontractor to complete construction at a fixed price. Agreements with our subcontractors and suppliers generally are negotiated for each subdivision. We compete with other homebuilders for qualified subcontractors, raw materials and lots in the markets where we operate.

      Construction time for our homes depends on the weather, availability of labor, materials and supplies, size of the home, and other factors. We typically complete the construction of a home within four to six months.

      We do not maintain significant inventories of construction materials, except for work in progress materials for homes under construction. Typically, the construction materials used in our operations are readily available from numerous sources. We have contracts exceeding one year with certain suppliers of our building materials that are cancelable at our option with a 30 day notice. In recent years, we have not experienced any significant delays in construction due to shortages of materials or labor.

Marketing and Sales

      We market and sell our homes through commissioned employees and independent real estate brokers. We typically conduct home sales from sales offices located in furnished model homes in each subdivision. We generally do not offer our model homes for sale until the completion of a subdivision. Our sales personnel assist prospective homebuyers by providing them with floor plans, price information, tours of model homes and the selection of options and other custom features. We train and inform our sales personnel as to the availability of financing, construction schedules, and marketing and advertising plans.

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      We advertise in our local markets as necessary. We advertise in newspapers and trade publications (i.e. real estate broker, mortgage company and utility publications), as well as with marketing brochures and newsletters. We also use billboards, radio and television advertising and our Internet website to market the location, price range and availability of our homes. To minimize advertising costs, we also attempt to operate in subdivisions in conspicuous locations that permit us to take advantage of local traffic patterns. We also believe that model homes play a significant role in our marketing efforts, so we expend significant effort to create an attractive atmosphere in our model homes.

      In addition to using model homes, we typically build a limited number of speculative homes in each subdivision to enhance our marketing and sales efforts to prospective homebuyers who are relocating to our markets and to independent brokers, who often represent homebuyers requiring a completed home within 60 days. We sell a majority of these speculative homes while they are under construction or immediately following completion. We determine the number of speculative homes to build in each market based on local market factors, such as new job growth, the number of job relocations, housing demand, seasonality and our past experience in the market.

      Our sales contracts require an earnest money deposit of at least $500. The amount of earnest money required varies between markets and subdivisions, and may significantly exceed $500. Additionally, customers are generally required to pay additional deposits when they select options or upgrade features for their homes. Most of our sales contracts stipulate that when customers cancel their contracts with us, we have the right to retain their earnest money and option deposits; however, our operating divisions occasionally choose to refund such deposits. Our sales contracts also include a financing contingency which permits customers to cancel and receive a refund of their deposits if they cannot obtain mortgage financing at prevailing or specified interest rates within a specified period, and our contracts may include other contingencies, such as the sale of an existing home. Generally, the length of time between the signing of a sales contract for a home and delivery of the home to the buyer (closing) is three to six months.

Customer Service and Quality Control

      Our operating divisions are responsible for pre-closing quality control inspections and responding to customers’ post-closing needs. We believe that prompt and courteous response to homebuyers’ needs during and after construction reduces post-closing repair costs, enhances our reputation for quality and service, and ultimately leads to significant repeat and referral business from the real estate community and homebuyers. We provide our homebuyers with a limited one-year warranty on workmanship and building materials. The subcontractors who perform most of the actual construction also provide us with warranties on workmanship and are generally prepared to respond to us and the homeowner promptly upon request. In addition, we provide a supplemental ten-year limited warranty that covers major construction defects.

Customer Mortgage Financing

      We provide mortgage financing services principally to purchasers of homes we build and sell in the majority of our homebuilding markets through our wholly-owned subsidiary, DHI Mortgage. DHI Mortgage coordinates and expedites the entire sales transaction for both our homebuyers and our homebuilding operations by ensuring that mortgage commitments are received and that closings take place on a timely and efficient basis. During the year ended September 30, 2004, 92% of DHI Mortgage’s loan volume related to homes closed by our homebuilding operations, and DHI Mortgage provided mortgage financing services for approximately 61% of our total homes closed.

      DHI Mortgage originates mortgage loans, and then packages and sells substantially all of the loans and their servicing rights to third-party investors shortly after origination on a non-recourse or limited recourse basis. In markets where we currently do not provide mortgage financing, we work with a variety of mortgage lenders that make available to homebuyers a range of mortgage financing programs.

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Title Services

      We serve as a title insurance agent in selected markets by providing title insurance policies, examination and closing services to purchasers of homes we build and sell, through our subsidiary title companies. We assume little or no underwriting risk associated with these title policies.

Employees

      At September 30, 2004, we employed 7,466 persons, of whom 1,420 were sales and marketing personnel, 2,571 were executive, administrative and clerical personnel, 2,170 were involved in construction, and 1,305 worked in mortgage and title operations. The Company had fewer than 20 employees covered by collective bargaining agreements. Employees of some of the subcontractors which we use are represented by labor unions or are subject to collective bargaining agreements. We believe that our relations with our employees and subcontractors are good.

Competition

      The homebuilding industry is highly competitive. We compete in each of our markets with numerous other national, regional and local homebuilders for homebuyers, desirable properties, raw materials, skilled labor and financing. Our homes compete on the basis of quality, price, design, mortgage financing terms and location.

Governmental Regulation and Environmental Matters

      The homebuilding industry is subject to extensive and complex regulations. We and our subcontractors must comply with various federal, state and local laws and regulations, including zoning, density and development requirements, building, environmental, advertising and real estate sales rules and regulations. These requirements affect the development process, as well as building materials to be used, building designs and minimum elevation of properties. Our homes are inspected by local authorities where required, and homes eligible for insurance or guarantees provided by the FHA and VA are subject to inspection by them. These regulations often provide broad discretion to the administering governmental authorities. This can delay or increase the cost of development or homebuilding.

      Our new housing developments may be subject to various assessments for schools, parks, streets and other public improvements. These assessments increase our development and homebuilding costs and can cause increases in the prices of our homes.

      Our homebuilding operations are also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning protection of health and the environment. The particular environmental laws for each site vary greatly according to location, environmental condition and the present and former uses of the site and adjoining properties. These environmental laws may result in delays, may cause us to incur substantial compliance and other costs, and may prohibit or severely restrict development and homebuilding activity in certain environmentally sensitive regions or areas.

      Our mortgage company and title insurance agencies must also comply with various federal and state laws, consumer credit rules and regulations and other rules and regulations unique to such activities. Additionally, mortgage loans and title activities originated under the FHA, VA, GNMA, Fannie Mae and Freddie Mac are subject to rules and regulations imposed by those agencies.

      We own a 52,000 square foot office complex, consisting of three single-story buildings of steel and brick construction, located in Arlington, Texas, that served as our principal executive and administrative offices from September 1992 through November 2004. In December 2004, we began leasing approximately 160,000 square feet of office space in downtown Fort Worth, Texas that serves as our principal executive and corporate administrative offices.

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      We also own several office buildings totaling approximately 128,000 square feet and we lease approximately 994,000 square feet of office space under leases expiring through October 2011, in our various operating markets to house our homebuilding and financial services operating division and region offices.

      We are involved in lawsuits and other contingencies in the ordinary course of business. Management believes that, while the ultimate outcome of the contingencies cannot be predicted with certainty, the ultimate liability, if any, will not have a material adverse effect on our financial position or operations.

      None.

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PART II

      Our common stock (the “Common Stock”) is listed on the New York Stock Exchange under the symbol “DHI”. The following table shows the high and low sales prices for the Common Stock for the periods indicated, as reported by the NYSE, adjusted for the three-for-two stock split (effected as a 50% stock dividend) of January 12, 2004 and dividends declared per share (split-adjusted).

      As of December 2, 2004, the closing price was $35.29, and there were approximately 682 holders of record.

      The declaration of cash dividends is at the discretion of our Board of Directors and will depend upon, among other things, future earnings, cash flows, capital requirements, our general financial condition and general business conditions. We are required to comply with certain covenants contained in the bank agreements and many of our senior note and senior subordinated note indentures. The most restrictive of these requirements allows us to pay cash dividends on Common Stock in an amount, on a cumulative basis, not to exceed 50% of consolidated net income, as defined, subject to certain other adjustments. Pursuant to the most restrictive of these requirements, at September 30, 2004, we had approximately $789.9 million available for the payment of dividends, the acquisition of our common stock and other restricted payments.

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      The following selected consolidated financial data are derived from our Consolidated Financial Statements. The data should be read in conjunction with the Consolidated Financial Statements, related Notes thereto and other financial data elsewhere herein. These historical results are not necessarily indicative of the results to be expected in the future.