D.R. Horton, Inc. (NYSE:DHI), this morning, Tuesday (November 20, 2007), reported a net loss for its fourth fiscal quarter ended September 30,2007 of $50.1 million ($0.16 per diluted share), including pre-tax charges to cost of sales of $278.3 million of inventory impairments and $40.3 million of write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue. Additionally, the company took a $48.5 million pre-tax goodwill impairment charge.

Fourth-quarter revenue fell 35.4% from last year to $3.1 billion. Home building revenue for the fourth quarter of fiscal 2007 totaled $3.1 billion, compared to $4.8 billion in the same quarter of fiscal 2006. Homes closed totaled11,733 homes, down 32% from 17,261 homes in the year-ago quarter.

Backlog of homes under contract at September 30, 2007 was 10,442 homes ($2.7 billion), compared to 18,125 homes($5.2 billion) at September 30, 2006. As previously reported, net sales orders for the fourth quarter ended September 30, 2007 totaled6,374 homes ($1.3 billion), compared to 10,430 homes ($2.5 billion) for the same quarter of fiscal 2006.

For the fiscal year ended September 30, 2007, the Company reported a net loss totaling $712.5 million ($2.27 per diluted share), including pre-tax charges to cost of sales of $1.2 billion of inventory impairments and $107.3 million of write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue. Additionally, the results included a pre-tax goodwill impairment charge of $474.1 million.

Net income for fiscal 2006 was $1.2 billion ($3.90 per diluted share). Home building revenue for fiscal 2007 totaled $11.1 billion, compared to $14.8 billion for fiscal 2006. Homes closed in fiscal 2007 totaled 41,370 homes, compared to 53,099 homes in fiscal 2006. Net sales orders for fiscal 2007 totaled 33,687 homes ($8.2 billion), compared to 51,980 homes ($13.9billion) for fiscal 2006.

Donald R. Horton, chairman of Horton, said in a prepared statement, "Market conditions continued to decline in our September quarter as inventory levels of both new and existing homes remained high while pricing remained very competitive. We also experienced reduced mortgage availability due to tighter lending standards, and buyers continued to approach the home buying decision cautiously. We expect the housing environment to remain challenging.

"Despite these challenging conditions, we exceeded our goal of generating $1 billion of cash flow from operations for the fiscal year, and all of our regions generated profits before impairments and land option cost write-offs for both the quarter and the fiscal year," said Horton. "We reduced our homes in inventory by more than 7,000 homes during the quarter to fewer than 20,000 homes at September 30, 2007. Cash flow from operations totaled over $800 million for the quarter and more than $1.3 billion for fiscal 2007. We used the fourth quarter cash flow from operations primarily to reduce the outstanding balance on our revolving credit facility from $750 million at June 30, 2007 to $150 million at September 30, 2007, and we ended the year with $228 million in homebuilding cash. Our debt reduction and cash position resulted in an improvement in our homebuilding net debt to total capitalization ratio to 40.2%."

The company announced that it will no longer report its quarterly net new sales orders in advance of earnings. It also said it had realigned its regional structure, with the creation of a new Midwest region, including operations in Colorado, Illinois, Minnesota and Wisconsin.Colorado was previously in the Southwest region and Illinois, Minnesota and Wisconsin were previously reported in the Northeast.

The results were far better than Wall Street expected, as was the level of write downs. However, Micheal Rehaut, home building analyst at J.P. Morgan Securities, said in a research note to investors, "We believe 4Q's gross margins included benefits from prior impairments, and also note land sale gains represented $0.12/shr of upside. Positively, we note DHI's cash flow from operations [CFO] of $1.3 bil. for FY07 strongly hit its target of over $1 billion (announced last month), while it also issued FY08 guidance to generate at least another $1 billion in CFO. While we believe this is a positive, given our view for a continued deterioration in the housing market through 2008, this guidance could be discounted by investors, in our view."