Tuesday, February 15, 2005

More Inventory At DHI - Updated

Home builder DR Horton Inc. has reported for the final quarter of 2004. I am just getting into the financials, but one item jumps out, and that is inventory. Here you can see in the current assets that number has grown $1.6 Billion in the past year and $3 Billion since September 2002.

Update: In response to questions about what makes up this inventory, I downloaded the annual report dated September 30, 2004. Keep in mind the inventory was up almost a billion dollars more just 3 months later.

Sales Contract Backlog:
Number of Homes:
9/30/04 17,184
9/30/03 15,488
9/30/02 12,697
9/30/01 9,263
9/30/00 7,388

It says "We state inventories at the lower of historical cost or fair value in
accordance with Statement of Financial Accounting Standards (""SFAS'') No. 144. In addition to the costs of direct land acquisition, land development and home construction, inventory costs include interest, real estate taxes and direct overhead costs incurred during development and home construction. Applicable direct overhead costs that we incur after development 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 construction superintendents, sales personnel and division and region management, advertising and builder's risk insurance are charged to SG&A expense as incurred".


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