FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


(Mark One)
  x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 ---    EXCHANGE ACT OF 1934
For the Quarterly Period Ended    June  30, 2001
                               ---------------------

                                            OR

        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 ---    EXCHANGE ACT OF 1934
For the Transition Period From                     To
                               -------------------    -------------------


Commission file number   1-14122
                       -----------

                               D.R. HORTON, INC.
     -------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


                DELAWARE                             75-2386963
     -------------------------------     -------------------------------
     (State or other jurisdiction of            (I.R.S. Employer
      incorporation or organization)            Identification No.)


       1901 Ascension Blvd., Suite 100, Arlington, Texas      76006
     -------------------------------------------------------------------
          (Address of principal executive offices)          (Zip Code)


                               (817)856-8200
     -------------------------------------------------------------------
            (Registrant's telephone number, including area code)

     -------------------------------------------------------------------
            (Former name, former address and former fiscal year,
                        if changed since last report)

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 X No


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

  Common stock, $.01 par value --  76,845,107  shares as of August 7, 2001
                                 --------------

                         This Report contains 29 pages.






                                       1







                                      INDEX

                                 D.R. HORTON, INC.



                                                                                  
PART I.      FINANCIAL INFORMATION.                                                       Page
-------      ----------------------                                                       ----

ITEM 1.      Financial Statements.

             Consolidated Balance Sheets --- June 30, 2001 and September 30, 2000.           3

             Consolidated Statements of Income-- Three Months and Nine Months Ended
                  June 30, 2001 and 2000.                                                    4

             Consolidated Statement of Stockholders' Equity-- Nine Months Ended
                  June 30, 2001.                                                             5

             Consolidated Statements of Cash Flows-- Nine Months Ended
                  June 30, 2001 and 2000.                                                    6

             Notes to Consolidated Financial Statements.                                  7-17

ITEM 2.      Management's Discussion and Analysis of Results of Operations and
             Financial Condition.                                                        18-24

ITEM 3.      Quantitative and Qualitative Disclosures about Market Risk.                    25


PART II.     OTHER INFORMATION.
--------     ------------------

ITEM 2.      Changes in Securities                                                          26

ITEM 5.      Other Information                                                              27

ITEM 6.      Exhibits and Reports on Form 8-K                                               28

SIGNATURES.                                                                                 29
----------








                                       2








                       D.R. HORTON, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS



                                                              June 30,   September 30,
                                                                2001          2000
                                                            -----------  -------------
                                                                  (In thousands)
                                                             (Unaudited)
                                    ASSETS
                                                                   
Homebuilding:
Cash ....................................................... $   60,439  $   61,798
Inventories:
     Finished homes and construction in progress ...........  1,472,240   1,095,636
     Residential lots  - developed and under development ...  1,240,610   1,092,571
     Land held for development .............................      2,824       2,824
                                                             ----------  ----------
                                                              2,715,674   2,191,031
Property and equipment (net) ...............................     49,124      38,960
Earnest money deposits and other assets ....................    184,728     148,983
Excess of cost over net assets acquired (net) ..............    119,851     115,966
                                                             ----------  ----------
                                                              3,129,816   2,556,738
Financial Services:
Cash .......................................................     20,964      10,727
Mortgage loans held for sale ...............................    170,197     119,581
Other assets ...............................................     13,991       7,531
                                                             ----------  ----------
                                                                205,152     137,839
                                                             ----------  ----------
                                                             $3,334,968  $2,694,577
                                                             ==========  ==========
                                   LIABILITIES
Homebuilding:
Accounts payable and other liabilities ..................... $  400,802  $  370,389
Notes payable:
     Unsecured:
          Revolving credit facility due 2002 ...............    144,000     192,000
          8 3/8% senior notes due 2004, net ................    148,844     148,547
          10 1/2% senior notes due 2005, net ...............    199,412     199,343
          10% senior notes due 2006, net ...................    147,550     147,398
          8% senior notes due 2009, net ....................    383,214     383,089
          9 3/4% senior subordinated notes due 2010, net ...    148,899     148,821
          9 3/8% senior subordinated notes due 2011, net ...    199,683          --
          Zero coupon convertible senior notes due 2021, net    200,884          --
     Other secured .........................................     53,438      26,388
                                                             ----------  ----------
                                                              1,625,924   1,245,586
                                                             ----------  ----------
                                                              2,026,726   1,615,975
                                                             ----------  ----------
Financial Services:
Accounts payable and other liabilities .....................      4,928       4,958
Notes payable to financial institutions ....................    155,237      98,817
                                                             ----------  ----------
                                                                160,165     103,775
                                                             ----------  ----------
                                                              2,186,891   1,719,750
                                                             ----------  ----------
Minority interests .........................................      8,356       5,264
                                                             ----------  ----------
                                   STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value, 30,000,000 shares authorized,
  no shares issued .........................................         --          --
Common stock, $.01 par value, 200,000,000 shares authorized,
  75,689,624 at June 30, 2001 and 70,074,110 at September 30,
  2000, issued and outstanding .............................        757         701
Additional capital .........................................    677,248     537,145
Retained earnings ..........................................    461,716     468,664
Treasury stock, no shares at June 30, 2001 and  2,589,200
  shares at September 30, 2000, at cost. ...................         --    (36,947)
                                                             ----------  ----------
                                                              1,139,721     969,563
                                                             ----------  ----------
                                                             $3,334,968  $2,694,577
                                                             ==========  ==========

         See accompanying notes to consolidated financial statements.



                                       3






                    D.R. HORTON, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME



                                                   Three Months            Nine Months
                                                   Ended June 30,         Ended June 30,
                                             -----------------------  ----------------------
                                                 2001         2000       2001        2000
                                             -----------  ----------  ----------  ----------
                                                    (In thousands, except per share data)
                                                                (Unaudited)
Homebuilding:
Revenues
                                                                      
   Home sales ............................... $1,090,242  $  930,786  $2,799,894  $2,493,314
   Land/lot sales ...........................     11,724      15,630      68,033      38,780
                                              ----------  ----------  ----------  ----------
                                               1,101,966     946,416   2,867,927   2,532,094
                                              ----------  ----------  ----------  ----------
Cost of sales
   Home sales ...............................    872,095     755,527   2,244,754   2,028,349
   Land/lot sales ...........................     10,712      18,387      54,791      36,524
                                              ----------  ----------  ----------  ----------
                                                 882,807     773,914   2,299,545   2,064,873
                                              ----------  ----------  ----------  ----------
Gross profit
   Home sales ...............................    218,147     175,259     555,140     464,965
   Land/lot sales ...........................      1,012      (2,757)     13,242       2,256
                                              ----------  ----------  ----------  ----------
                                                 219,159     172,502     568,382     467,221

Selling, general and administrative expense .    109,085      97,243     295,084     262,073
Interest expense ............................      2,089       2,339       6,618       7,195
Other expense (income) ......................      5,040        (747)     14,038      (1,472)
                                              ----------  ----------  ----------  ----------
                                                 102,945      73,667     252,642     199,425
                                              ----------  ----------  ----------  ----------
Financial Services:
Revenues ....................................     19,015      12,800      47,553      34,926
Selling, general and administrative expense .     12,540       9,155      32,507      25,152
Interest expense ............................      1,575       1,485       3,582       4,191
Other (income) ..............................     (2,240)     (1,700)     (4,869)     (4,723)
                                              ----------  ----------  ----------  ----------
                                                   7,140       3,860      16,333      10,306
                                              ----------  ----------  ----------  ----------
   INCOME BEFORE INCOME TAXES ...............    110,085      77,527     268,975     209,731
Provision for income taxes ..................     41,282      29,460     100,866      79,698
                                              ----------  ----------  ----------  ----------
   Income before cumulative effect of change
    in accounting principle .................     68,803      48,067     168,109     130,033
   Cumulative effect of change in accounting
    principle, net of income taxes ..........       --          --         2,136        --
                                              ----------  ----------  ----------  ----------
   NET INCOME ............................... $   68,803  $   48,067  $  170,245  $  130,033
                                              ==========  ==========  ==========  ==========

Basic earnings per common share:
   Income before cumulative effect of change
    in accounting principle ................. $     0.91  $     0.64  $     2.23  $     1.73
   Cumulative effect of change in accounting
    principle, net of income taxes ..........       --          --          0.03        --
                                              ----------  ----------  ----------  ----------
   Net income ............................... $     0.91  $     0.64  $     2.26  $     1.73
                                              ==========  ==========  ==========  ==========

Diluted earnings per common share:
   Income before cumulative effect of change
    in accounting principle ................. $     0.89  $     0.64  $     2.19  $     1.72
   Cumulative effect of change in accounting
    principle, net of income taxes ..........       --          --          0.03        --
                                              ----------  ----------  ----------  ----------
   Net income ............................... $     0.89  $     0.64  $     2.22  $     1.72
                                              ==========  ==========  ==========  ==========

Cash dividends per share .................... $     0.05  $     0.04  $     0.14  $     0.11
                                              ==========  ==========  ==========  ==========


              See accompanying notes to consolidated financial statements.



                                       4





                       D.R. HORTON, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY






                                                                                                 Total
                                                Common    Additional   Retained    Treasury  Stockholders'
                                                 Stock      Capital    Earnings     Stock        Equity
                                              ----------  ----------  ----------  ----------   ----------
                                                    (In thousands, except common stock share data)
                                                                       (Unaudited)

                                                                                
Balances at September 30, 2000 ..............   $    701  $  537,145  $  468,664  $  (36,947)  $  969,563

Net income ..................................       --          --       170,245        --        170,245
Issuances under D.R. Horton, Inc. ...........
  employee benefit plans (6,540 shares) .....       --           106        --          --            106
Exercise of stock options (719,046 shares) ..          7       9,685        --          --          9,692
Cash dividends paid .........................       --          --        (9,885)       --         (9,885)
Stock dividend paid (4,889,928 shares) ......         49     130,312    (167,308)     36,947         --
                                              ----------  ----------  ----------  ----------   ----------

Balances at June 30, 2001 ...................   $    757  $  677,248  $  461,716  $     --     $1,139,721
                                              ==========  ==========  ==========  ==========   ==========






































       See accompanying notes to consolidated financial statements.



                                       5





                       D.R. HORTON, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                  Nine Months
                                                                 Ended June 30,
                                                             ----------------------
                                                                2001        2000
                                                             ----------  ----------
                                                                 (In thousands)
                                                                  (Unaudited)
OPERATING ACTIVITIES
                                                                   
  Net income ............................................... $  170,245  $  130,033
  Adjustments to reconcile net income to net cash provided by
     (used in) operating activities:
  Depreciation and amortization ............................     18,463      15,899
  Amortization of debt premiums and fees ...................      2,645       1,830
  Changes in operating assets and liabilities:
        Increase in inventories ............................   (416,639)   (305,929)
        Increase in earnest money deposits and other assets     (33,649)    (32,477)
        (Increase)/decrease in mortgage loans held for sale     (50,616)     13,857
        Increase/(decrease) in accounts payable and other
          liabilities ......................................     26,608      (2,563)
                                                             ----------  ----------

NET CASH USED IN OPERATING ACTIVITIES ......................   (282,943)   (179,350)
                                                             ----------  ----------

INVESTING ACTIVITIES
  Net purchase of property and equipment ...................    (21,807)    (14,674)
  Net investment in venture capital entities ...............     (1,970)    (18,311)
  Net cash paid for acquisitions ...........................    (49,009)     (5,016)
                                                             ----------  ----------

NET CASH USED IN INVESTING ACTIVITIES ......................    (72,786)    (38,001)
                                                             ----------  ----------

FINANCING ACTIVITIES
  Proceeds from notes payable ..............................    891,420     570,000
  Repayment of notes payable ...............................   (920,630)   (580,213)
  Issuance of senior and senior subordinated notes payable .    393,904     197,897
  Purchase of treasury stock ...............................       --       (14,543)
  Proceeds from issuance of common stock associated with
    certain employee benefit plans .........................      9,798       1,599
  Payment of cash dividends ................................     (9,885)     (6,813)
                                                             ----------  ----------

NET CASH PROVIDED BY FINANCING ACTIVITIES ..................    364,607     167,927
                                                             ----------  ----------

INCREASE / (DECREASE) IN CASH ..............................      8,878     (49,424)
        Cash at beginning of period ........................     72,525     128,568
                                                             ----------  ----------
        Cash at end of period .............................. $   81,403  $   79,144
                                                             ==========  ==========













       See accompanying notes to consolidated financial statements.



                                       6




                       D.R. HORTON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                                  June 30, 2001


NOTE A - BASIS OF PRESENTATION

The  accompanying  unaudited,  consolidated  financial  statements  include  the
accounts of D.R. Horton, Inc. and its subsidiaries (the "Company"). Intercompany
accounts and transactions have been eliminated in consolidation.  The statements
have been prepared in accordance with generally accepted  accounting  principles
for  interim  financial  information  and  the  instructions  to Form  10-Q  and
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  all adjustments considered
necessary for a fair presentation have been included.  Certain reclassifications
have  been  made  in  prior   years'   financial   statements   to   conform  to
classifications  used in the current year. Operating results for the three-month
and nine-month periods ended June 30, 2001 are not necessarily indicative of the
results that may be expected for the year ending September 30, 2001.

Business - The Company is a national  builder  that is engaged  primarily in the
construction and sale of single-family housing in the United States. The Company
designs,  builds and sells single-family houses on lots developed by the Company
and  on  finished  lots  which  it  purchases,   ready  for  home  construction.
Periodically,  the Company sells land or lots it has developed. The Company also
provides title agency and mortgage brokerage services to its home buyers.



NOTE B - CHANGES IN ACCOUNTING PRINCIPLES

Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities", was issued in June 1998, and was
later amended by SFAS 137 and 138, which were issued in June 1999 and June 2000,
respectively.  Pursuant to the implementation  requirements of SFAS No. 133, the
Company  adopted it on October 1, 2000,  the first day of the  Company's  fiscal
year ending September 30, 2001. The Company's  interest rate swaps, the terms of
which are more fully  described in Item 3, were not  designated  as hedges under
the provisions of SFAS No. 133. The Statement requires such swaps to be recorded
in the  consolidated  balance  sheet at fair value.  Changes in their fair value
must be recorded in the  consolidated  statements  of income.  Accordingly,  the
Company  recorded  a  cumulative  effect  of a change  in  accounting  principle
amounting to $2.1 million, net of income taxes of $1.3 million, as an adjustment
to net  income in the nine  months  ended June 30,  2001.  The fair value of the
Company's interest rate swaps at June 30, 2001 is recorded in homebuilding other
assets,  and the  change in their fair  value  during the three and nine  months
ended June 30, 2001 is recorded in homebuilding other expense.

SFAS No. 133 was also implemented on October 1, 2000 for the hedging  activities
of the Company's  financial  services segment.  The effects of doing so were not
significant.

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
"Business  Combinations",  and SFAS No.  142,  "Goodwill  and  Other  Intangible
Assets", effective for fiscal years beginning after December 15, 2001. Under the
new rules,  goodwill will no longer be amortized but will be subject to periodic
tests for impairment of recorded values.

In accordance with the terms of SFAS No. 142 that permit its early adoption, the
Company  plans to apply the new rules for goodwill and other  intangible  assets
beginning  October  1,  2001.  Application  of  the  provision  prohibiting  the
amortization  of goodwill is expected to result in an increase in income  before
income taxes of  approximately  $9.0 million in the fiscal year ended  September
30, 2002.  During the year,  the Company  will  perform the  required  tests for
impairment of goodwill. The Company does not believe that such tests will have a
significant, adverse effect on its results of operations or financial position.






                                       7



                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                  June 30, 2001

NOTE C - SEGMENT INFORMATION

The Company's financial reporting segments consist of homebuilding and financial
services.  The Company's  homebuilding  operations comprise the most substantial
part of its business,  with more than 98% of consolidated revenues for the three
months and nine months ended June 30, 2001 and 2000. The homebuilding operations
segment generates the majority of its revenues from the sale of completed homes,
with a lesser  amount  from the sale of land and lots.  The  financial  services
segment  generates  its revenues  from  originating  and selling  mortgages  and
collecting fees for title insurance agency and closing services.


NOTE D - NET INCOME PER SHARE

Basic net income per share for the three and nine months ended June 30, 2001 and
2000 is  based  on the  weighted  average  number  of  shares  of  common  stock
outstanding.  Diluted  net  income  per share is based on the  weighted  average
number of shares of common stock and dilutive securities outstanding.

The following  table sets forth the weighted  average number of shares of common
stock and dilutive  securities  outstanding used in the computation of basic and
diluted earnings per share (in thousands):



                                                 Three Months Ended       Nine Months Ended
                                                      June 30,                June 30,
                                                 ------------------       -----------------
                                                   2001       2000         2001       2000
                                                   ----       ----         ----       ----
                                                                          
Denominator for basic earnings per
  share--weighted average shares ............     75,594      74,799      75,329      75,142
Employee stock options ......................      1,305         603       1,250         575
                                              ----------  ----------  ----------  ----------
Denominator for diluted earnings per
  share--adjusted weighted average shares ...     76,899      75,402      76,579      75,717
                                              ==========  ==========  ==========  ==========



In  February,  2001,  the  Company's  Board of  Directors  declared an 11% stock
dividend,  payable on March 23, 2001 to stockholders of record on March 9, 2001.
All average share amounts  presented  above for the three and nine month periods
ended June 30,  2000 have been  restated to reflect the effects of the 11% stock
dividend.


NOTE E - DEBT

On May 11, 2001 the Company  issued,  for gross proceeds of  approximately  $200
million,  Zero Coupon  Convertible  Senior Notes due 2021  ("Notes") with a face
amount at maturity of approximately  $381.1 million.  The Notes were issued at a
price of $524.78 per $1,000 face amount at maturity,  which equates to an annual
yield to  maturity  over  the life of the  Notes  of  3.25%.  Proceeds  from the
offering,  after underwriting  discount,  were approximately $195.5 million, and
were used to repay  amounts  outstanding  under the Company's  revolving  credit
facility. The Notes are convertible into the Company's common stock at any time,
if the sale price of the common stock exceeds  specified  thresholds or in other
specified  instances,  at the rate of approximately  17.5 shares per $1,000 face
amount at maturity.  The conversion ratio equates to an initial conversion price
of  $30.00  per  share.  Holders  have the  option to  require  the  Company  to
repurchase the Notes on any of the second,  seventh or twelfth anniversary dates
from the issue  date for the  initial  issue  price  plus  accrued  yield to the
purchase  date.  The Company must satisfy any Notes  submitted for repurchase on
the second  anniversary  date in cash. Any Notes submitted for repurchase on the
seventh or twelfth  anniversary  dates may be settled in any combination of cash
and/or the Company's  common stock,  at the Company's  option.  The Company will
have the  option to redeem  the  Notes,  in cash,  at any time  after the second
anniversary  date of the Notes for the initial issue price plus accrued yield to
redemption.  The  Company  will pay  contingent  interest  on the  Notes  during
specified  six-month  periods  beginning on May 12, 2003, if the market price of
the Notes exceeds specified levels.

                                       8





                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                  June 30, 2001


NOTE F - INTEREST

The  Company   capitalizes   interest  during   development  and   construction.
Capitalized  interest  is charged to cost of sales as the related  inventory  is
delivered to the home buyer. Homebuilding interest costs are (in thousands):



                                                Three Months Ended       Nine Months Ended
                                                      June 30,               June 30,
                                              ----------------------  ----------------------
                                                 2001        2000        2001        2000
                                              ----------  ----------  ----------  ----------

                                                                      
Capitalized interest, beginning of period ... $   85,579  $   55,148  $   66,092  $   41,525
Interest incurred - homebuilding ............     34,133      29,310      94,861      76,382
Interest expensed:
     Directly - homebuilding ................     (2,089)     (2,339)     (6,618)     (7,195)
     Amortized to cost of sales .............    (24,012)    (18,631)    (60,724)    (47,224)
                                              ----------  ----------  ----------  ----------
Capitalized interest, end of period ......... $   93,611  $   63,488  $   93,611  $   63,488
                                              ==========  ==========  ==========  ==========



NOTE G - ACQUISITIONS

On May 1,  2001,  the  Company  acquired  the assets of  Fortress-Florida,  Inc.
(Fortress),  a wholly owned  subsidiary of The Fortress  Group,  Inc., for $28.7
million. Fortress assets, primarily inventories, amounted to approximately $47.1
million.  Total  liabilities  assumed amounted to  approximately  $24.3 million,
including  notes  payable  of $17.5  million,  which were paid at  closing.  The
Fortress  acquisition  was treated as a purchase for  accounting  purposes.  Pro
forma results of operations had the Fortress  acquisition  occurred on the first
day of our fiscal year are not materially  different from historical results and
are not presented.

On July 17,  2001,  the Company  completed  the  acquisition  of the assets of
Emerald  Builders  (Emerald),  a privately  held  homebuilder  based in Houston,
Texas. In the transaction,  the Company issued  approximately 1.0 million shares
of common stock,  paid $30.7  million in cash and assumed debt of  approximately
$115.3 million,  including  notes payable of $109.6 million,  which were paid at
closing. The final number of shares issued is subject to adjustment,  based on a
final  determination  of the book  value of the  assets  acquired.  The  Emerald
acquisition will be treated as a purchase for accounting purposes.










                                       9





                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                  June 30, 2001


NOTE H - SUMMARIZED FINANCIAL INFORMATION

The 8%, 8 3/8%,  10% and 10 1/2%  Senior  Notes,  the 9 3/8%  and 9 3/4%  Senior
Subordinated  Notes, and the Zero Coupon  Convertible Senior Notes are fully and
unconditionally  guaranteed,  on a  joint  and  several  basis,  by  all  of the
Company's direct and indirect subsidiaries (Guarantor Subsidiaries),  other than
financial services subsidiaries and certain other  inconsequential  subsidiaries
(collectively,  Non-Guarantor Subsidiaries).  Each of the Guarantor Subsidiaries
is wholly-owned.  In lieu of providing separate audited financial statements for
the Guarantor  Subsidiaries,  consolidated  condensed  financial  statements are
presented below. Separate financial statements and other disclosures  concerning
the Guarantor  Subsidiaries are not presented because  management has determined
that they are not material to investors.



                                             Consolidating Balance Sheet
                                                    June 30, 2001
                                                                           Non-Guarantor
                                                                           Subsidiaries
                                                                      ----------------------
                                                D.R.      Guarantor    Financial             Intercompany
                                            Horton, Inc. Subsidiaries  Services     Other    Eliminations      Total
                                            ------------ ------------ ----------  ---------- ------------   ----------
                                                                          (In thousands)
ASSETS
Homebuilding:
                                                                                         
  Cash and cash equivalents ................. $     --    $   59,154  $     --    $    1,285   $     --     $   60,439
  Advances to/investments in subsidiaries ...  2,264,397      92,513        --         4,673   (2,361,583)        --
  Inventories ...............................    558,432   2,130,803        --        26,798         (359)   2,715,674
  Property and equipment (net) ..............      8,826      34,992        --         5,306         --         49,124
  Earnest money deposits and other assets ...     55,283     134,910        --        25,420      (30,885)     184,728
  Excess of cost over net assets acquired (net)     --       119,851        --          --           --        119,851
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                               2,886,938   2,572,223        --        63,482   (2,392,827)   3,129,816
                                              ----------  ----------  ----------  ----------   ----------   ----------
Financial services:
  Cash and cash equivalents .................       --          --        20,964        --           --         20,964
  Mortgage loans held for sale ..............       --          --       170,197        --           --        170,197
  Other assets ..............................       --          --        13,991        --           --         13,991
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                    --          --       205,152        --           --        205,152
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Total Assets .............................. $2,886,938  $2,572,223  $  205,152  $   63,482   $(2,392,827) $3,334,968
                                              ==========  ==========  ==========  ==========   ===========  ==========
LIABILITIES & EQUITY
Homebuilding:
  Accounts payable and other liabilities .... $  140,313  $  350,821  $     --    $    2,457   $  (92,789)  $  400,802
  Advances from parent/subsidiaries .........       --     1,680,710        --        43,118   (1,723,828)        --
  Notes payable .............................  1,606,904      19,020        --        10,578      (10,578)   1,625,924
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                               1,747,217   2,050,551        --        56,153   (1,827,195)   2,026,726
                                              ----------  ----------  ----------  ----------   ----------   ----------
Financial services:
  Accounts payable and other liabilities ....       --          --         9,956        --         (5,028)       4,928
  Advances from parent/subsidiaries .........       --          --         7,657        --         (7,657)        --
  Notes payable .............................       --          --       155,237        --           --        155,237
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                    --          --       172,850        --        (12,685)     160,165
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Total Liabilities .........................  1,747,217   2,050,551     172,850      56,153   (1,839,880)   2,186,891
                                              ----------  ----------  ----------  ----------   ----------   ----------

  Minority interest .........................       --         3,672          11       4,673         --          8,356
                                              ----------  ----------  ----------  ----------   ----------   ----------

  Common stock ..............................        757           1           6       6,155       (6,162)         757
  Additional capital ........................    677,248      84,611       2,299      10,129      (97,039)     677,248
  Retained earnings .........................    461,716     433,388      29,986     (13,628)    (449,746)     461,716
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                               1,139,721     518,000      32,291       2,656     (552,947)   1,139,721
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Total Liabilities & Equity ................ $2,886,938  $2,572,223  $  205,152  $   63,482  $(2,392,827) $ 3,334,968
                                              ==========  ==========  ==========  ==========  ===========  ===========



                                       10






                       D.R. HORTON, INC. AND SUBSIDIARIES
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                 June 30, 2001




NOTE H - SUMMARIZED FINANCIAL INFORMATION - (Continued)




                                             Consolidating Balance Sheet
                                                  September 30, 2000
                                                                           Non-Guarantor
                                                                           Subsidiaries
                                                                       ---------------------
                                                 D.R.      Guarantor    Financial            Intercompany
                                              Horton,Inc. Subsidiaries   Services   Other    Eliminations     Total
                                              ----------- ------------ ----------- --------- -------------- ----------
                                                                          (In thousands)
ASSETS
Homebuilding:
                                                                                          
  Cash and cash equivalents ................. $   20,397  $   40,349  $     --    $    1,052  $      --     $   61,798
  Advances to/investments in subsidiaries ...  1,862,988      14,653        --          --     (1,877,641)        --
  Inventories ...............................    395,848   1,774,357        --        21,115         (289)   2,191,031
  Property and equipment (net) ..............      3,031      30,645        --         5,284         --         38,960
  Earnest money deposits and other assets ...     44,463      86,134        --        28,773      (10,387)     148,983
  Excess of cost over net assets acquired (net)     --       115,966        --          --           --        115,966
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                               2,326,727   2,062,104        --        56,224   (1,888,317)   2,556,738
                                              ----------  ----------  ----------  ----------   ----------   ----------

Financial services:
  Cash and cash equivalents .................       --          --        10,727        --           --         10,727
  Mortgage loans held for sale ..............       --          --       119,581        --           --        119,581
  Other assets ..............................       --          --         7,531        --           --          7,531
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                    --          --       137,839        --           --        137,839
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Total Assets .............................. $2,326,727  $2,062,104  $  137,839  $   56,224   $(1,888,317) $2,694,577
                                              ==========  ==========  ==========  ==========   ===========  ==========

LIABILITIES & EQUITY
Homebuilding:
  Accounts payable and other liabilities .... $  124,823  $  359,004  $     --    $    2,246   $ (115,684)  $  370,389
  Advances from parent/subsidiaries .........     11,617   1,268,266        --        27,547   (1,307,430)        --
  Notes payable .............................  1,220,724      24,861        --        10,222      (10,221)   1,245,586
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                               1,357,164   1,652,131        --        40,015   (1,433,335)   1,615,975
                                              ----------  ----------  ----------  ----------   ----------   ----------
Financial services:
  Accounts payable and other liabilities ....       --          --         9,388        --         (4,430)       4,958
  Advances from parent/subsidiaries .........       --          --         5,653        --         (5,653)        --
  Notes payable .............................       --          --        98,817        --           --         98,817
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                    --          --       113,858        --        (10,083)     103,775
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Total Liabilities .........................  1,357,164   1,652,131     113,858      40,015   (1,443,418)   1,719,750
                                              ----------  ----------  ----------  ----------   ----------   ----------

  Minority interest .........................       --          --            10       5,254         --          5,264
                                              ----------  ----------  ----------  ----------   ----------   ----------

  Common stock ..............................        701           1           6       6,155       (6,162)         701
  Additional capital ........................    537,145      84,795       2,299      10,128      (97,222)     537,145
  Retained earnings .........................    468,664     325,177      21,666      (5,328)    (341,515)     468,664
  Treasury stock ............................    (36,947)       --          --          --           --        (36,947)
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 969,563     409,973      23,971      10,955     (444,899)     969,563
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Total Liabilities & Equity ................ $2,326,727  $2,062,104  $  137,839  $   56,224   $(1,888,317) $2,694,577
                                              ==========  ==========  ==========  ==========   ===========  ==========






                                       11





                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                 June 30, 2001




NOTE H - SUMMARIZED FINANCIAL INFORMATION - (Continued)




                                          Consolidating Statement of Income
                                           Three Months Ended June 30, 2001
                                                                         Non-Guarantor
                                                                          Subsidiaries
                                                                     ---------------------
                                               D.R.      Guarantor    Financial             Intercompany
                                           Horton, Inc. Subsidiaries  Services     Other    Eliminations      Total
                                           ------------ ------------ ----------- --------- --------------- -----------
                                                                         (In thousands)
Homebuilding:
  Revenues:
                                                                                          
    Home sales .............................. $  199,313  $  887,058  $     --    $    3,871   $     --     $1,090,242
    Land/lot sales ..........................      6,267       5,457        --          --           --         11,724
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 205,580     892,515        --         3,871         --      1,101,966
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Cost of Sales:
    Home sales ..............................    154,876     714,376        --         2,985         (142)     872,095
    Land/lot sales ..........................      5,502       5,210        --          --           --         10,712
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 160,378     719,586        --         2,985         (142)     882,807
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Gross profit:
    Home sales ..............................     44,437     172,682        --           886          142      218,147
    Land/lot sales ..........................        765         247        --          --           --          1,012
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                  45,202     172,929        --           886          142      219,159
  Selling, general and administrative
    expense .................................     28,294      77,838        --         1,779        1,174      109,085
  Interest expense ..........................      2,043          44        --            14          (12)       2,089
  Other expense (income) ....................    (95,220)       (305)       --         6,895       93,670        5,040
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 110,085      95,352        --        (7,802)     (94,690)     102,945
                                              ----------  ----------  ----------  ----------   ----------   ----------
Financial services:
  Revenues ..................................       --          --        19,015        --           --         19,015
  Selling, general and administrative
    expense .................................       --          --        13,714        --         (1,174)      12,540
  Interest expense ..........................       --          --         1,575        --           --          1,575
  Other (income) ............................       --          --        (2,240)       --           --         (2,240)
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                    --          --         5,966        --          1,174        7,140
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Income before income taxes ................    110,085      95,352       5,966      (7,802)     (93,516)     110,085
  Provision for income taxes ................     41,282      35,757       2,237      (2,925)     (35,069)      41,282
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Net income ................................ $   68,803  $   59,595  $    3,729  $   (4,877)  $  (58,447)  $   68,803
                                              ==========  ==========  ==========  ==========   ==========   ==========







                                       12





                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                 June 30, 2001




NOTE H - SUMMARIZED FINANCIAL INFORMATION - (Continued)




                                          Consolidating Statement of Income
                                           Nine Months Ended June 30, 2001
                                                                         Non-Guarantor
                                                                          Subsidiaries
                                                                      --------------------
                                               D.R.      Guarantor    Financial             Intercompany
                                           Horton, Inc. Subsidiaries  Services     Other    Eliminations      Total
                                           ------------ ------------- ----------- -------- --------------- -----------
                                                                         (In thousands)
Homebuilding:
  Revenues:
                                                                                          
    Home sales .............................. $  474,816  $2,309,055  $     --    $   16,023   $     --     $2,799,894
    Land/lot sales ..........................     22,876      45,157        --          --           --         68,033
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 497,692   2,354,212        --        16,023         --      2,867,927
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Cost of Sales:
    Home sales ..............................    377,190   1,856,010        --        11,953         (399)   2,244,754
    Land/lot sales ..........................     17,776      37,015        --          --           --         54,791
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 394,966   1,893,025        --        11,953         (399)   2,299,545
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Gross profit:
    Home sales ..............................     97,626     453,045        --         4,070          399      555,140
    Land/lot sales ..........................      5,100       8,142        --          --           --         13,242
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 102,726     461,187        --         4,070          399      568,382
  Selling, general and administrative
    expense .................................     70,449     215,610        --         6,100        2,925      295,084
  Interest expense ..........................      6,478         134        --           196         (190)       6,618
  Other expense (income) ....................   (243,176)     (1,517)       --        10,456      248,275       14,038
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 268,975     246,960        --       (12,682)    (250,611)     252,642
                                              ----------  ----------  ----------  ----------   ----------   ----------
Financial services:
  Revenues ..................................       --          --        47,553        --           --         47,553
  Selling, general and administrative
    expense .................................       --          --        35,432        --         (2,925)      32,507
  Interest expense ..........................       --          --         3,582        --           --          3,582
  Other (income) ............................       --          --        (4,869)       --           --         (4,869)
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                    --          --        13,408        --          2,925       16,333
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Income before income taxes ................    268,975     246,960      13,408     (12,682)    (247,686)     268,975
  Provision for income taxes ................    100,866      92,610       5,028      (4,755)     (92,883)     100,866
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Income before cumulative effect of
    change in accounting principle ..........    168,109     154,350       8,380      (7,927)    (154,803)     168,109
  Cumulative effect of change in
    accounting principle, net of
    income taxes ............................      2,136        --          --          --           --          2,136
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Net income ................................ $  170,245  $  154,350  $    8,380  $   (7,927)  $ (154,803)  $  170,245
                                              ==========  ==========  ==========  ==========   ==========   ==========







                                       13





                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                 June 30, 2001




NOTE H - SUMMARIZED FINANCIAL INFORMATION - (Continued)




                                          Consolidating Statement of Income
                                           Three Months Ended June 30, 2000
                                                                          Non-Guarantor
                                                                           Subsidiaries
                                                                       ---------------------
                                               D.R.        Guarantor   Financial              Intercompany
                                            Horton, Inc.  Subsidiaries Services     Other     Eliminations     Total
                                            ------------  ------------ ----------  ---------  ------------- -----------
                                                                          (In thousands)
Homebuilding:
  Revenues:
                                                                                          
    Home sales .............................. $  150,081  $  771,216  $     --    $    9,489   $     --     $  930,786
    Land/lot sales ..........................      2,953      12,677        --          --           --         15,630
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 153,034     783,893        --         9,489         --        946,416
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Cost of Sales:
    Home sales ..............................    126,903     621,548        --         7,238         (162)     755,527
    Land/lot sales ..........................      3,396      14,991        --          --           --         18,387
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 130,299     636,539        --         7,238         (162)     733,914
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Gross profit:
    Home sales ..............................     23,178     149,668        --         2,251          162      175,259
    Land/lot sales ..........................       (443)     (2,314)       --          --           --         (2,757)
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                  22,735     147,354        --         2,251          162      172,502
  Selling, general and  administrative
    expense .................................     23,821      69,296        --         2,192        1,934       97,243
  Interest expense ..........................      2,287          52        --           161         (161)       2,339
  Other expense (income) ....................    (80,900)        295        --           178       79,680         (747)
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                  77,527      77,711        --          (280)     (81,291)      73,667
                                              ----------  ----------  ----------  ----------   ----------   ----------
Financial services:
  Revenues ..................................       --          --        12,800        --           --         12,800
  Selling, general and administrative
    expense .................................       --          --        11,089        --         (1,934)       9,155
  Interest expense ..........................       --          --         1,485        --           --          1,485
  Other (income) ............................       --          --        (1,700)       --           --         (1,700)
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                    --          --         1,926        --          1,934        3,860
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Income before income taxes ................     77,527      77,711       1,926        (280)     (79,357)      77,527
  Provision for income taxes ................     29,460      29,534         728        (106)     (30,156)      29,460
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Net income ................................ $   48,067  $   48,177  $    1,198  $     (174)  $  (49,201)  $   48,067
                                              ==========  ==========  ==========  ==========   ==========   ==========







                                       14





                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                 June 30, 2001




NOTE H - SUMMARIZED FINANCIAL INFORMATION - (Continued)




                                          Consolidating Statement of Income
                                           Nine Months Ended June 30, 2000
                                                                          Non-Guarantor
                                                                           Subsidiaries
                                                                       ---------------------
                                               D.R.        Guarantor   Financial              Intercompany
                                            Horton, Inc.  Subsidiaries Services     Other     Eliminations     Total
                                            ------------  ------------ ----------  ---------  ------------- -----------
                                                                          (In thousands)
Homebuilding:
  Revenues:
                                                                                          
    Home sales .............................. $  386,111  $2,083,739  $     --    $   23,464   $     --     $2,493,314
    Land/lot sales ..........................      3,929      34,851        --          --           --         38,780
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 390,040   2,118,590        --        23,464         --      2,532,094
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Cost of Sales:
    Home sales ..............................    324,387   1,686,854        --        17,617         (509)   2,028,349
    Land/lot sales ..........................      4,336      32,188        --          --           --         36,524
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 328,723   1,719,042        --        17,617         (509)   2,064,873
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Gross profit:
    Home sales ..............................     61,724     396,885        --         5,847          509      464,965
    Land/lot sales ..........................       (407)      2,663        --          --           --          2,256
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                  61,317     399,548        --         5,847          509      467,221
  Selling, general and  administrative
    expense .................................     59,332     196,000        --         4,811        1,930      262,073
  Interest expense ..........................      7,078         117        --           471         (471)       7,195
  Other expense (income) ....................   (214,824)     (1,401)       --           615      214,138       (1,472)
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                 209,731     204,832        --           (50)    (215,088)     199,425
                                              ----------  ----------  ----------  ----------   ----------   ----------
Financial services:
  Revenues ..................................       --          --        34,926        --           --         34,926
  Selling, general and administrative
    expense .................................       --          --        27,082        --         (1,930)      25,152
  Interest expense ..........................       --          --         4,191        --           --          4,191
  Other (income) ............................       --          --        (4,723)       --           --         (4,723)
                                              ----------  ----------  ----------  ----------   ----------   ----------
                                                    --          --         8,376        --          1,930       10,306
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Income before income taxes ................    209,731     204,832       8,376         (50)    (213,158)     209,731
  Provision for income taxes ................     79,698      77,840       3,179         (19)     (81,000)      79,698
                                              ----------  ----------  ----------  ----------   ----------   ----------
  Net income ................................ $  130,033  $  126,992  $    5,197  $      (31)  $ (132,158)  $  130,033
                                              ==========  ==========  ==========  ==========   ==========   ==========







                                       15





                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                 June 30, 2001




NOTE H - SUMMARIZED FINANCIAL INFORMATION - (Continued)




                                        Consolidating Statement of Cash Flows
                                           Nine Months Ended June 30, 2001
                                                                         Non-Guarantor
                                                                          Subsidiaries
                                                                     -----------------------
                                               D.R.      Guarantor    Financial              Intercompany
                                           Horton, Inc. Subsidiaries  Services     Other     Eliminations     Total
                                           ------------ ------------ ----------- ----------- ------------- -----------
                                                                         (In thousands)
OPERATING ACTIVITIES
                                                                                          
   Net income ............................... $  170,245  $  154,350  $    8,380  $   (7,927)  $ (154,803)  $  170,245
   Adjustments to reconcile net income to
   net cash provided by (used in) operating
   activities:
     Depreciation and amortization ..........      1,418      15,711         955         379         --         18,463
     Amortization of debt premiums and fees .      2,645        --          --          --           --          2,645
     Changes in operating assets and
     liabilities:
     (Increase)/decrease in inventories .....   (141,521)   (269,505)       --        (5,683)          70     (416,639)
     (Increase)/decrease in earnest money
       deposits and other assets ............     (5,522)    (48,394)     (5,555)      5,323       20,499      (33,649)
      Increase in mortgage loans held for
       sale .................................       --          --       (50,616)       --           --        (50,616)
      Increase/(decrease) in accounts
       payable and other liabilities ........     15,490     (11,378)        569        (369)      22,296       26,608
                                              ----------  ----------  ----------  ----------   ----------   ----------
Net cash provided by (used in) operating
   activities ...............................     42,755    (159,216)    (46,267)     (8,277)    (111,938)    (282,943)
                                              ----------  ----------  ----------  ----------   ----------   ----------
INVESTING ACTIVITIES
   Net purchases of property and equipment ..     (7,213)    (12,333)     (1,860)       (401)        --        (21,807)
   Net investments in venture capital
    entities ................................       --          --          --        (1,970)        --         (1,970)
   Net cash paid for acquisitions ...........       --       (49,009)       --          --           --        (49,009)
                                              ----------  ----------  ----------  ----------   ----------   ----------
Net cash used in investing activities .......     (7,213)    (61,342)     (1,860)     (2,371)        --        (72,786)
                                              ----------  ----------  ----------  ----------   ----------   ----------
FINANCING ACTIVITIES
   Net change in notes payable ..............    357,174     (48,899)     56,420         356         (357)     364,694
   Increase/(decrease) in intercompany
    payables ................................   (413,026)    449,761       6,444      10,526      (53,705)        --
   Proceeds from stock associated with
    certain employee benefit plans ..........      9,798        --          --          --           --          9,798
   Cash dividends/distributions paid ........     (9,885)   (161,500)     (4,500)       --        166,000       (9,885)
                                              ----------  ----------  ----------  ----------   ----------   ----------
Net cash (used in) provided by financing
   activities ...............................    (55,939)    239,362      58,364      10,882      111,938      364,607
                                              ----------  ----------  ----------  ----------   ----------   ----------
Increase/(decrease) in cash .................    (20,397)     18,804      10,237         234         --          8,878
Cash at beginning of period .................     20,397      40,349      10,727       1,052         --         72,525
                                              ----------  ----------  ----------  ----------   ----------   ----------
Cash at end of period ....................... $     --    $   59,153  $   20,964  $    1,286   $     --     $   81,403
                                              ==========  ==========  ==========  ==========   ==========   ==========






                                       16





                       D.R. HORTON, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
                                 June 30, 2001




NOTE H - SUMMARIZED FINANCIAL INFORMATION - (Continued)




                                        Consolidating Statement of Cash Flows
                                           Nine Months Ended June 30, 2000
                                                                          Non-Guarantor
                                                                           Subsidiaries
                                                                       ---------------------
                                               D.R.       Guarantor    Financial              Intercompany
                                            Horton, Inc.  Subsidiaries  Services     Other    Eliminations    Total
                                            ------------  -----------  ----------  ---------  ------------  ----------
                                                                         (In thousands)
OPERATING ACTIVITIES
                                                                                          
   Net income ............................... $  130,033  $  126,992  $    5,197  $      (31)  $ (132,158)  $  130,033
   Adjustments to reconcile net income to
   net cash provided by (used in) operating
   activities:
     Depreciation and amortization ..........      1,133      13,404         823         539         --         15,899
     Amortization of debt premiums and fees .      1,830        --          --          --           --          1,830
     Changes in operating assets and
       liabilities:
       (Increase)/decrease in inventories ...    (82,053)   (226,795)       --         2,827           92     (305,929)
       (Increase)/decrease in earnest
          money deposits and other assets ...      1,706     (24,976)       (508)     (2,541)      (6,158)     (32,477)
       Decrease in mortgage loans held
          for sale ..........................       --          --        13,857        --           --         13,857
       Increase/(decrease) in accounts
          payable and other liabilities .....      7,853     (37,536)     (1,156)        582       27,694       (2,563)
                                              ----------  ----------  ----------  ----------   ----------   ----------
Net cash provided by (used in) operating
   activities ...............................     60,502    (148,911)     18,213       1,376     (110,530)    (179,350)
                                              ----------  ----------  ----------  ----------   ----------   ----------
INVESTING ACTIVITIES
   Net purchases of property and equipment ..     (1,347)    (12,394)       (744)       (189)        --        (14,674)
   Net investments in venture capital
    entities ................................       --          --          --       (18,311)        --        (18,311)
   Net cash paid for acquisitions ...........       --        (5,091)         75        --           --         (5,016)
                                              ----------  ----------  ----------  ----------   ----------   ----------
Net cash used in investing activities .......     (1,347)    (17,485)       (669)    (18,500)        --        (38,001)
                                              ----------  ----------  ----------  ----------   ----------   ----------
FINANCING ACTIVITIES
   Net change in notes payable ..............    217,497      (7,666)    (22,149)     (3,949)       3,951      187,684
   Increase/(decrease) in intercompany
    payables ................................   (254,019)    222,188       7,802      19,744        4,285         --
   Repurchase of treasury stock .............    (14,543)       --          --          --           --        (14,543)
   Proceeds from stock associated with
    certain employee benefit plans ..........      1,599        --          --          --           --          1,599
   Cash dividends/distributions paid ........     (6,813)   (101,594)       (700)       --        102,294       (6,813)
                                              ----------  ----------  ----------  ----------   ----------   ----------
Net cash (used in) provided by financing
   activities ...............................    (56,279)    112,928     (15,047)     15,795      110,530      167,927
                                              ----------  ----------  ----------  ----------   ----------   ----------
Increase/(decrease) in cash .................      2,876     (53,468)      2,497      (1,329)        --        (49,424)
Cash at beginning of period .................     66,777      53,468       6,360       1,963         --        128,568
                                              ----------  ----------  ----------  ----------   ----------   ----------
Cash at end of period ....................... $   69,653  $     --    $    8,857  $      634   $     --     $   79,144
                                              ==========  ==========  ==========  ==========   ==========   ==========







                                       17






ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS - CONSOLIDATED

D. R. Horton,  Inc. and  subsidiaries  (the  "Company")  provide  homebuilding
activities in 22 states and 38 markets through its 45  homebuilding  divisions.
Through its  financial  services  segment,  the Company also provides mortgage
banking and title agency services in many of these same markets.

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Consolidated revenues for the three months ended June 30, 2001, increased 16.9%,
to $1,121.0  million,  from $959.2  million for the  comparable  period of 2000,
primarily due to increases in home sales revenues.

Income before  income taxes for the three months ended June 30, 2001,  increased
42.0%, to $110.1 million,  from $77.5 million for the comparable period of 2000.
As a percentage  of revenues,  income  before  income taxes for the three months
ended June 30, 2001, increased 1.7 percentage points, to 9.8%, from 8.1% for the
comparable  period of 2000,  primarily  due to an increase  in the gross  profit
percentage achieved by the homebuilding segment.

The  consolidated  provision for income taxes increased  40.1%, to $41.3 million
for the three months ended June 30, 2001, from $29.5 million for the same period
of 2000, due to the  corresponding  increase in income before income taxes.  The
effective income tax rate decreased 0.5 percentage  points, to 37.5%, from 38.0%
for the  comparable  period of 2000,  primarily  due to changes in the estimated
overall effective state income tax rate.


Nine Months Ended June 30, 2001 Compared to Nine Months Ended June 30, 2000

Consolidated  revenues for the nine months ended June 30, 2001, increased 13.6%,
to $2,915.5  million,  from $2,567.0 million for the comparable  period of 2000,
primarily due to increases in home sales revenues.

Income  before  income taxes for the nine months ended June 30, 2001,  increased
28.2%, to $269.0 million, from $209.7 million for the comparable period of 2000.
As a percentage  of  revenues,  income  before  income taxes for the nine months
ended June 30, 2001, increased 1.0 percentage points, to 9.2%, from 8.2% for the
comparable  period of 2000,  primarily  due to an increase  in the gross  profit
percentage achieved by the homebuilding segment.

The  consolidated  provision for income taxes increased 26.6%, to $100.9 million
for the nine months ended June 30, 2001,  from $79.7 million for the same period
of 2000, due to the  corresponding  increase in income before income taxes.  The
effective income tax rate decreased 0.5 percentage  points, to 37.5%, from 38.0%
for the  comparable  period of 2000,  primarily  due to changes in the estimated
overall effective state income tax rate.

The  cumulative  effect of a change in  accounting  principle was an increase in
income of $2.1 million,  net of income taxes, for the nine months ended June 30,
2001.  This  accounting  change is the result of the  Company's  October 1, 2000
adoption of SFAS No. 133,  "Accounting  for Derivative  Instruments  and Hedging
Activities,"  which  requires  the Company to recognize  its interest  rate swap
agreements in the consolidated balance sheet at fair value.






                                       18



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS - HOMEBUILDING

The  following  tables set forth certain  operating  and financial  data for the
Company's homebuilding activities:


                                                     Percentages of Homebuilding Revenues
                                                     ------------------------------------
                                                Three Months Ended       Nine Months Ended
                                                      June 30,               June 30,
                                              ----------------------  ----------------------
                                                 2001        2000        2001        2000
                                              ----------  ----------  ----------  ----------
Cost and expenses:
                                                                            
  Cost of sales .............................       80.1%       81.8%       80.2%       81.5%
  Selling, general and administrative
    expense .................................        9.9        10.3        10.3        10.4
  Interest expense ..........................        0.2         0.2         0.2         0.3
                                              ----------  ----------  ----------  ----------
Total costs and expenses ....................       90.2        92.3        90.7        92.2
Other expense (income) ......................        0.5        (0.1)        0.5        (0.1)
                                              ----------  ----------  ----------  ----------
Income before income taxes ..................        9.3%        7.8%        8.8%        7.9%
                                              ==========  ==========  ==========  ==========




Homes Closed                         Three Months Ended June 30,               Nine Months Ended June 30,
                               -------------------------------------     ------------------------------------
                                      2001                2000                  2001               2000
                               -----------------   -----------------     -----------------   ----------------
                               Homes               Homes                 Homes               Homes
                               Closed   Revenues   Closed   Revenues     Closed   Revenues   Closed  Revenues
                               ------   --------   ------   --------     ------   --------   ------  --------
                                        ($'s in millions)                         ($'s in millions)
                                                                             
Mid-Atlantic                      725   $  158.8      860     $178.5      1,950   $  432.3    2,187  $  436.1
Midwest                           437      105.2      470      108.3      1,311      313.6    1,424     309.2
Southeast                         818      143.6      767      129.7      1,976      348.3    2,015     337.1
Southwest                       2,277      378.9    1,888      288.0      5,955      981.7    5,603     833.3
West                            1,210      303.7    1,025      226.3      2,895      724.0    2,637     577.6
                                -----   --------    -----     ------     ------   --------   ------  --------
                                5,467   $1,090.2    5,010     $930.8     14,087   $2,799.9   13,866  $2,493.3
                                =====   ========    =====     ======     ======   ========   ======  ========




Net Sales Contracts                  Three Months Ended June 30,              Nine Months Ended June 30,
                                ------------------------------------     -----------------------------------
                                      2001               2000                   2001              2000
                                ----------------    ----------------     -----------------   ---------------
                                Homes              Homes                 Homes               Homes
                                 Sold       $       Sold        $         Sold        $       Sold      $
                                -----    -------    -----   --------     ------   --------   ------  -------
                                         ($'s in millions)                        ($'s in millions)
                                                                             
Mid-Atlantic                      674   $  146.7      754   $  159.1      2,084   $  459.4    2,084  $  434.4
Midwest                           520      139.2      476      118.4      1,441      374.8    1,317     326.4
Southeast                         868      152.9      718      126.5      2,266      404.8    2,160     369.8
Southwest                       2,453      411.0    1,998      321.2      6,927    1,142.2    5,992     937.6
West                            1,499      364.7    1,149      276.4      4,237    1,089.4    2,827     650.8
                                -----   --------    -----   --------     ------   --------   ------  --------
                                6,014   $1,214.5    5,095   $1,001.6     16,955   $3,470.6   14,380  $2,719.0
                                =====   ========    =====   ========     ======   ========   ======  ========




Sales Contract Backlog       June 30, 2001        June 30, 2000
                           -----------------     ---------------
                            Homes       $        Homes      $
                           ------    -------     -----  --------
                                      ($'s in millions)
                                            
Mid-Atlantic                  957    $  234.7      988  $  241.1
Midwest                     1,030       286.6    1,027     264.4
Southeast                   1,629       288.2      981     173.3
Southwest                   4,161       711.9    3,470     577.3
West                        2,831       740.0    1,357     326.1
                           ------    --------    -----  --------
                           10,608    $2,261.4    7,823  $1,582.2
                           ======    ========    =====  ========



            
The Company's market regions consist of the following markets:
Mid-Atlantic   Charleston, Charlotte, Columbia, Greensboro, Greenville, Hilton Head, Myrtle Beach,
               New Jersey, Newport News, Raleigh/Durham, Richmond, Suburban Washington, D.C. and Wilmington
Midwest        Chicago, Cincinnati, Louisville, Minneapolis/St. Paul and St. Louis
Southeast      Atlanta, Birmingham, Jacksonville, Orlando and South Florida
Southwest      Albuquerque, Austin, Dallas/Fort Worth, Houston, Killeen, Phoenix, San Antonio and Tucson
West           Denver, Las Vegas, Los Angeles, Portland, Sacramento, Salt Lake City and San Diego



                                       19



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Revenues from  homebuilding  activities  increased  16.4%,  to $1,102.0  million
(5,467  homes  closed) for the three  months  ended June 30,  2001,  from $946.4
million  (5,010 homes closed) for the comparable  period of 2000.  Revenues from
home  sales  increased  in three of the  Company's  five  market  regions,  with
percentage  increases ranging from 10.7% in the Southeast region to 34.2% in the
West  region.  Home sales  revenues  declined  2.8% and 11.1% in the Midwest and
Mid-Atlantic regions, respectively. The increases in total homebuilding revenues
and revenues from home sales were due to strong  housing  demand  throughout the
majority of the Company's markets,  and an increase in the average selling price
of homes closed.

The average selling price of homes closed during the three months ended June 30,
2001 was  $199,400,  up 7.3% from  $185,800  for the same  period  in 2000.  The
increase in average  selling price was due to changes in the mix of homes closed
and, with the strong housing demand,  the Company's  ability to sell more custom
features with its homes and to raise prices in some of its markets.

The value of net sales contracts  increased  21.3%,  to $1,214.5  million (6,014
homes) for the three months ended June 30, 2001,  from $1,001.6  million  (5,095
homes) for the same period of 2000. The value of net sales  contracts  increased
in four of the Company's five market regions,  with percentage increases ranging
from 17.6% in the Midwest  region to 32.0% in the West region.  The value of net
sales contracts declined 7.8% in the Mid-Atlantic region. The average price of a
net sales contract in the three months ended June 30, 2001 was $201,900, up 2.7%
over the $196,600  average in the three months ended June 30, 2000. The increase
in average  selling  price was due to changes in the mix of homes sold and, with
the strong housing  demand,  the Company's  ability to sell more custom features
with its homes and to raise prices in some of its markets.

At June 30, 2001, the Company's  backlog of sales contracts was $2,261.4 million
(10,608 homes),  up 42.9% from $1,582.2  million (7,823 homes) at June 30, 2000.
The average sales price of homes in sales backlog was $213,200 at June 30, 2001,
up 5.4% from the $202,300  average at June 30, 2000.  The average sales price of
homes in backlog  typically  is higher  than the  average  sales price of closed
homes because it takes longer to construct more expensive homes.

Cost of sales  increased by 14.1%,  to $882.8 million for the three months ended
June 30,  2001,  from $773.9  million for the  comparable  quarter of 2000.  The
increase  in cost  of  sales  was  primarily  attributable  to the  increase  in
revenues. Cost of home sales as a percentage of home sales revenues declined 1.2
percentage points, to 80.0% for the three months ended June 30, 2001, from 81.2%
for the comparable  period of 2000, due to the increase in average selling price
of homes closed, higher margins obtained from selling more custom features,  and
reduced  material  costs.  Total  homebuilding  cost of sales was 80.1% of total
homebuilding revenues,  down 1.7 percentage points from 81.8% for the comparable
period  of  2000,  primarily  due to the  decline  in cost of  home  sales  as a
percentage of revenues.

Selling, general and administrative (SG&A) expenses from homebuilding activities
increased by 12.2%,  to $109.1  million in the three months ended June 30, 2001,
from  $97.2  million  in the  comparable  period  of 2000.  As a  percentage  of
homebuilding  revenues,  SG&A  expenses  decreased  to 9.9% for the three months
ended June 30, 2001, from 10.3% for the comparable period of 2000, due primarily
to the large increase in revenues absorbing fixed costs.

Interest  expense  associated  with  homebuilding  activities  decreased to $2.1
million  in the three  months  ended  June 30,  2001,  from $2.3  million in the
comparable   period  of  2000.  As  a  percentage  of   homebuilding   revenues,
homebuilding interest expense was 0.2% for both three month periods. During both
periods,  the  Company  expensed  the  portion of  incurred  interest  and other
financing  costs which could not be charged to inventory.  The Company follows a
policy  of  capitalizing  interest  only  on  inventory  under  construction  or
development. Capitalized interest and other financing costs are included in cost
of sales at the time of home closings.

Other expense  associated with  homebuilding  activities was $5.0 million in the
three months  ended June 30,  2001,  compared to $0.1 million of other income in
the  comparable  period  of  2000.  The  expense  in  2001 is  primarily  due to
write-downs  to estimated  fair value of the carrying  amounts of the  Company's
investments  in start-up and  emerging  growth  companies,  offset in part by an
increase in the fair value of the Company's interest rate swap agreements during
the quarter.



                                       20





                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Nine Months Ended June 30, 2001 Compared to Nine Months Ended June 30, 2000

Revenues from  homebuilding  activities  increased  13.3%,  to $2,867.9  million
(14,087  homes  closed) for the nine months ended June 30, 2001,  from  $2,532.1
million (13,866 homes closed) for the comparable  period of 2000.  Revenues from
home  sales  increased  in four  of the  Company's  five  market  regions,  with
percentage  increases  ranging  from 1.4% in the Midwest  region to 25.4% in the
West  region.  Revenues  from  homebuilding  activities  declined  0.9%  in  the
Southeast region. The increases in total homebuilding revenues and revenues from
home sales were due to strong  housing  demand  throughout  the  majority of the
Company's markets, and an increase in the average selling price of homes closed.

The average  selling price of homes closed during the nine months ended June 30,
2001 was  $198,800,  up 10.6% from  $179,800  for the same  period in 2000.  The
increase in average  selling price was due to changes in the mix of homes closed
and, with the strong housing demand,  the Company's  ability to sell more custom
features with its homes and to raise prices in some of its markets.

The value of net sales contracts  increased  27.6%, to $3,470.6  million (16,955
homes) for the nine months ended June 30, 2001,  from $2,719.0  million  (14,380
homes) for the same period of 2000. The value of net sales  contracts  increased
in all of the Company's five market regions,  with percentage  increases ranging
from 5.8% in the  Mid-Atlantic  region to 67.4% in the West region.  The average
price  of a net  sales  contract  in the nine  months  ended  June 30,  2001 was
$204,700,  up 8.2% over the  $189,100  average in the nine months ended June 30,
2000.  The  increase in average  selling  price was due to changes in the mix of
homes sold and, with the strong housing  demand,  the Company's  ability to sell
more custom features with its homes and to raise prices in some of its markets.

Cost of sales increased by 11.4%, to $2,299.5  million for the nine months ended
June 30, 2001,  from $2,064.9  million for the  comparable  period of 2000.  The
increase  in cost  of  sales  was  primarily  attributable  to the  increase  in
revenues. Cost of home sales as a percentage of home sales revenues declined 1.2
percentage  points, to 80.2% for the nine months ended June 30, 2001, from 81.4%
for the comparable  period of 2000, due to the increase in average selling price
of homes closed, higher margins obtained from selling more custom features,  and
reduced  material  costs.  Total  homebuilding  cost of sales was 80.2% of total
homebuilding revenues,  down 1.3 percentage points from 81.5% for the comparable
period  of  2000,  due  primarily  to the  decline  in cost of home  sales  as a
percentage of revenues.

Selling, general and administrative (SG&A) expenses from homebuilding activities
increased  by 12.6%,  to $295.1  million in the nine months ended June 30, 2001,
from  $262.1  million  in the  comparable  period of 2000.  As a  percentage  of
homebuilding  revenues,  SG&A  expenses  decreased  to 10.3% for the nine months
ended June 30, 2001, from 10.4% for the comparable period of 2000, due primarily
to the large increase in revenues absorbing fixed costs.

Interest expense associated with homebuilding activities was $6.6 million in the
nine months  ended June 30,  2001,  compared to $7.2  million in the  comparable
period of 2000. As a percentage of homebuilding revenues,  homebuilding interest
expense  decreased to 0.2% for the nine months ended June 30, 2001, from 0.3% in
the comparable  period of 2000.  During both periods,  the Company  expensed the
portion of  incurred  interest  and other  financing  costs  which  could not be
charged to inventory. The Company follows a policy of capitalizing interest only
on inventory under construction or development.  Capitalized  interest and other
financing costs are included in cost of sales at the time of home closings.

Other expense  associated with homebuilding  activities was $14.0 million in the
nine months ended June 30, 2001,  as compared to $1.5 million of other income in
the  comparable  period  of  2000.  The  expense  in  2001 is  primarily  due to
write-downs  to estimated  fair value of the carrying  amounts of the  Company's
investments  in start-up and emerging  growth  companies  and the decline in the
fair value of the Company's interest rate swap agreements during the period.



                                       21





                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



RESULTS OF OPERATIONS - FINANCIAL SERVICES

The following table summarizes financial and other information for the Company's
financial services operations:



                                                Three Months Ended       Nine Months Ended
                                                      June 30,               June 30,
                                              ----------------------  ----------------------
                                                 2001        2000        2001        2000
                                              ----------  ----------  ---------   ----------
                                                               ($ in Thousands)
                                                                      
Number of loans originated ..................      3,658       2,384       8,733       6,470
                                              ----------  ----------  ----------  ----------
Loan origination fees ....................... $    3,969  $    2,650  $    9,695  $    6,995
Sale of servicing rights and gains from
sale of mortgages ...........................      8,326       5,428      21,512      14,695
Other revenues ..............................      2,130       1,142       4,952       3,344
                                              ----------  ----------  ----------  ----------
Total mortgage banking revenues .............     14,425       9,220      36,159      25,034
Title policy premiums, net ..................      4,590       3,580      11,394       9,892
                                              ----------  ----------  ----------  ----------
Total revenues ..............................     19,015      12,800      47,553      34,926
General and administrative expense ..........     12,540       9,155      32,507      25,152
Interest expense ............................      1,575       1,485       3,582       4,191
Interest/other (income) .....................     (2,240)     (1,700)     (4,869)     (4,723)
                                              ----------  ----------  ----------  ----------
Income before income taxes .................. $    7,140  $    3,860  $   16,333  $   10,306
                                              ==========  ==========  ==========  ==========



Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Revenues from the financial  services segment  increased 48.6%, to $19.0 million
in the three months ended June 30, 2001,  from $12.8  million in the  comparable
period of 2000. The increase in financial services revenues was due to the rapid
expansion  of the  Company's  mortgage  loan  and  title  services  provided  to
customers of the  Company's  homebuilding  segment.  General and  administrative
expenses associated with financial services increased 37.0%, to $12.5 million in
the three months ended June 30, 2001, from $9.2 million in the comparable period
of  2000.  As  a  percentage  of  financial  services   revenues,   general  and
administrative  expenses  decreased by 5.6  percentage  points,  to 65.9% in the
three months ended June 30, 2001,  from 71.5% in the comparable  period in 2000,
due  primarily to fiscal year 2000 startup  expenses in new markets with limited
revenues.


Nine Months Ended June 30, 2001 Compared to Nine Months Ended June 30, 2000

Revenues from the financial  services segment  increased 36.2%, to $47.6 million
in the nine months ended June 30,  2001,  from $34.9  million in the  comparable
period of 2000. The increase in financial services revenues was due to the rapid
expansion  of the  Company's  mortgage  loan  and  title  services  provided  to
customers of the  Company's  homebuilding  segment.  General and  administrative
expenses associated with financial services increased 29.2%, to $32.5 million in
the nine months ended June 30, 2001, from $25.2 million in the comparable period
of  2000.  As  a  percentage  of  financial  services   revenues,   general  and
administrative expenses decreased by 3.6 percentage points, to 68.4% in the nine
months ended June 30, 2001,  from 72.0% in the  comparable  period in 2000,  due
primarily  to fiscal year 2000  startup  expenses in new  markets  with  limited
revenues.





                                       22



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2001, the Company had available  cash and cash  equivalents of $81.4
million.  Inventories  (including finished homes,  construction in progress, and
developed  residential  lots and other land) at June 30, 2001,  had increased by
$524.6 million since  September 30, 2000, due to a general  increase in business
activity and the  expansion of operations  in the  Company's  market areas.  The
inventory  increase  was  financed  largely  by issuing  $200  million of senior
subordinated  notes,  issuing for $200 million of zero coupon convertible senior
notes  and  by  retaining  earnings.   As  a  result,  the  Company's  ratio  of
homebuilding  notes  payable to total  capital at June 30, 2001,  increased  2.6
percentage  points to 58.8%, from 56.2% at September 30, 2000. The stockholders'
equity to total assets ratio decreased 1.8 percentage  points,  to 34.2% at June
30, 2001, from 36.0% at September 30, 2000.

The Company has an $825 million, unsecured revolving credit facility, consisting
of a $775 million four-year revolving loan and a $50 million four-year letter of
credit facility, that matures in 2002. Additionally, the Company has another $45
million  standby  letter of credit  agreement  maturing in 2003.  The Company is
currently in  negotiations  to refinance the four year revolving loan and letter
of credit facilities. At June 30, 2001, the Company had outstanding homebuilding
debt of $1,625.9 million, of which $144.0 million represented advances under the
revolving  credit  facility.  Under  the  debt  covenants  associated  with  the
revolving  credit  facility,  at June  30,  2001,  the  Company  had  additional
homebuilding  borrowing capacity of $631.0 million. The Company has entered into
multi-year  interest rate swap agreements with notional amounts aggregating $200
million  that serve to fix the interest  rate on a portion of the variable  rate
revolving credit facility.  An additional  interest rate swap agreement,  with a
notional  amount of $148.5  million,  was  entered  into in  December  1999.  It
exchanged one of the Company's  fixed rate  obligations for a variable rate one.
In accordance with its terms, it was canceled by the counterparty in April 2001.

In April 2001, a universal shelf registration  statement for an aggregate amount
of $750 million was filed.  It was  declared  effective  by the  Securities  and
Exchange  Commission  on  April  20,  2001.  Under  the new  shelf  registration
statement,  on May 11, 2001,  the Company issued $381.1 million (at maturity) in
zero coupon convertible senior notes due May 11, 2021. Each $1,000 note was sold
for  $524.78,  providing a  yield-to-maturity  of 3.25% per year.  The notes are
convertible  into the  Company's  common stock at any time, if the sale price of
the common stock exceeds specified  thresholds or in other specified  instances,
at the rate of approximately 17.5 shares per $1,000 face amount at maturity. The
conversion  ratio  equates to an initial  conversion  price of $30.00 per share.
Holders have the option to require the Company to repurchase the notes on any of
the  second,  seventh or twelfth  anniversary  dates from the issue date for the
initial  issue price plus accrued yield to the purchase  date.  The Company must
satisfy any notes  submitted for  repurchase on the second  anniversary  date in
cash. Any notes  submitted for repurchase on the seventh or twelfth  anniversary
dates may be settled in any  combination  of cash  and/or the  Company's  common
stock, at the Company's  option.  The Company will have the option to redeem the
notes, in cash, at any time after the second  anniversary  date of the notes for
the initial issue price plus accrued yield to  redemption.  The Company will pay
contingent interest on the notes during specified six-month periods beginning on
May 12, 2003, if the market price of the notes exceeds specified levels.

The Company  expects to issue $200  million  7.875%  Senior Notes due August 15,
2011 on or about August 15, 2001.  The Company  intends to use the proceeds from
the offering of these notes to repay outstanding debt under our revolving credit
facility and for general corporate purposes.

In June 2001,  the  Company  issued a  post-effective  amendment  to an existing
registration  statement,  which increased to 9.0 million the number of shares of
the  Company's  common  stock  available  for  issuance  as  consideration   for
acquisitions.  The  amendment  was  declared  effective  by the  Securities  and
Exchange Commission on June 18, 2001.

At June 30, 2001,  the financial  services  segment had mortgage  loans held for
sale of $170.2 million and loan  commitments  for $113.3 million at fixed rates.
The Company  hedges the interest rate market risk on these  mortgage  loans held
for  sale  and loan  commitments  through  the use of  best-efforts  whole  loan
delivery  commitments,  mandatory  forward  commitments to sell  mortgage-backed
securities and the purchase of options on financial instruments.

The  financial  services  segment has a $175 million,  one-year  bank  warehouse
facility that matures on August 13, 2001,  and is secured by mortgage loans held
for sale. The warehouse facility is not guaranteed by the parent company.  As of
June 30, 2001,  $155.2 million had been drawn under this facility.  All mortgage
company activities are financed under the warehouse facility.



                                       23




                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


On May 1,  2001,  the  Company  acquired  the assets of  Fortress-Florida,  Inc.
(Fortress),  a wholly owned  subsidiary of The Fortress  Group,  Inc., for $28.7
million. Fortress assets, primarily inventories, amounted to approximately $47.1
million.  Total  liabilities  assumed amounted to  approximately  $24.3 million,
including  notes payable of $17.5 million,  which were paid at closing.  On July
17,  2001,  the  Company  completed  the  acquisition  of the  assets of Emerald
Builders (Emerald), a privately held homebuilder based in Houston, Texas. In the
transaction,  the Company  issued  approximately  1.0  million  shares of common
stock,  paid $30.7  million in cash and  assumed  debt of  approximately  $115.3
million,  including notes payable of $109.6 million, which were paid at closing.
The final  number of shares  issued is subject to  adjustment,  based on a final
determination of the book value of the assets acquired.

The Company's rapid growth and acquisition  strategy require significant amounts
of cash. It is anticipated that future home construction, lot and land purchases
and acquisitions will be funded through internally  generated funds and existing
and future credit  facilities.  After giving effect to the Emerald  acquisition,
under the currently  effective  shelf  registration  statement,  the Company has
approximately  8.0  million  shares  issuable  to  effect,  in whole or in part,
possible future acquisitions.  In the future, the Company intends to continue to
maintain effective shelf registration  statements that will facilitate access to
the capital markets.

During the three months ended June 30, 2001,  the  Company's  Board of Directors
declared a quarterly cash dividend of $0.05 per common share,  which was paid on
May 15, 2001 to stockholders of record on May 8, 2001.

In 1999 and 2000, the Company  entered into three separate  limited  partnership
agreements  with the  purpose of  investing  in  start-up  and  emerging  growth
companies  whose  technology and business plans have the potential of permitting
the  Company  to  leverage  its  size,   expertise  and  customer  base  in  the
homebuilding  industry.  The Company originally  authorized  investment of up to
$125 million in such companies over a four-year period. Since January, 2001, the
original  $125 million  authorization  was reduced to the $31.3 million that had
been  invested  in  such  companies  as  of  that  date.  The   investments  are
concentrated in e-commerce  businesses that serve the homebuilding,  real estate
and financial service industries, as well as in businesses whose strategic focus
allows for the diversification of the Company's operations. As of June 30, 2001,
the carrying value of the Company's  investments in such companies,  reported in
homebuilding other assets, amounted to $22.0 million.

Except for ordinary  expenditures for the construction of homes, the acquisition
of land and lots  for  development  and sale of  homes,  at June 30,  2001,  the
Company had no material commitments for capital expenditures.




SAFE HARBOR STATEMENT

Certain  statements  contained herein, as well as statements made by the Company
in periodic press releases and oral statements  made by the Company's  officials
to analysts and  stockholders in the course of  presentations  about the Company
may be  construed  as  "Forward-Looking  Statements"  as defined in the  Private
Securities  Litigation  Reform Act of 1995. Such statements may involve unstated
risks,  uncertainties  and other factors that may cause actual results to differ
materially from those initially anticipated. Such risks, uncertainties and other
factors include, but are not limited to:

        - Changes in general  economic,  real estate and  business  conditions
        - Changes in interest rates and the  availability of mortgage  financing
        - Governmental  regulations  and  environmental  matters
        - The  Company's substantial  leverage
        - Competitive  conditions  within the homebuilding industry
        - The availability of capital
        - The Company's ability to effect its growth strategies successfully

Additional  information  about  issues  that could lead to  material  changes in
performance is contained in the Company's  annual report on Form 10-K,  which is
filed with the Securities and Exchange Commission.



                                       24







ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to interest rate risk on its long term debt.  The Company
monitors its exposure to changes in interest  rates and utilizes  both fixed and
variable rate debt.  For fixed rate debt,  changes in interest  rates  generally
affect the value of the debt instrument,  but not the Company's 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  the
Company's future earnings and cash flows. The Company has mitigated its exposure
to changes in interest  rates on its  variable  rate bank debt by entering  into
interest rate swap  agreements to obtain a fixed  interest rate for a portion of
the variable rate borrowings.  The Company generally does 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 the Company's
fixed-rate  debt  until  such time as the  Company  is  required  to  refinance,
repurchase or repay such debt.

The Company's  interest rate swaps were not designated as hedges under Statement
of  Financial  Accounting  Standards  No. 133 when it was  adopted on October 1,
2000.  Since their  maturities  and other terms did not match the related  debt,
they were  determined to be  ineffective  hedges (as defined by the  Statement).
Therefore,  the Company is exposed to market risk associated with changes in the
fair  values of the  swaps,  since any such  changes  must be  reflected  in the
Company's income statements.

The following  table shows,  as of June 30, 2001,  the Company's  long term debt
obligations,  principal  cash  flows by  scheduled  maturity,  weighted  average
interest rates and estimated fair market value. In addition, the table shows the
notional  amounts,  weighted  average  interest  rates and estimated fair market
value of the Company's interest rate swaps.





                            Three Months
                                Ended
                              Sept. 30,            Year ended September 30,
                            ------------ -----------------------------------------------             Fair
                                                      ($ in millions)                               market
                                                                                                   value at
                                2001      2002     2003     2004      2005   Thereafter   Total    06/30/01
                               ------    ------   ------   ------    ------  -----------  ------   --------
Debt:
                                                                           
    Fixed rate                   $6.5     $24.4    $14.0   $157.4    $201.2    $1,264.6  $1,668.1  $1,486.9
    Average interest rate       8.50%     6.98%    6.58%    8.71%    10.83%       8.10%     8.50%        --
    Variable rate              $155.2    $144.0       --       --        --          --    $299.2    $299.2
    Average interest rate       4.75%     5.65%       --       --        --          --     5.19%        --
Interest Rate Swaps:
    Variable to fixed          $200.0    $200.0   $200.0   $200.0    $200.0      $200.0        --    ($2.2)
    Average pay rate            5.10%     5.10%    5.10%    5.10%     5.10%       5.08%        --        --
    Average receive rate       90-day LIBOR









                                       25






PART II.        OTHER INFORMATION

ITEM 2.         CHANGES  IN SECURITIES

On May 11, 2001, the Company issued $381,113,000 principal amount at maturity of
its Zero Coupon Convertible Senior Notes due 2021 (the "Notes"). As part of that
issuance, the Company executed an Eleventh Supplemental  Indenture,  dated as of
May 11, 2001, among the Company, the Guarantors named therein and American Stock
Transfer & Trust Company,  as Trustee,  authorizing the Notes.  The Supplemental
Indenture,  and the  Indenture  to which it  relates  (dated  June 9,  1997,  as
supplemented),  impose  limitations  on the  ability  of  the  Company  and  its
subsidiaries  guaranteeing the Notes to, among other things, incur indebtedness,
make "Restricted Payments" (as defined,  which includes payments of dividends or
other  distributions on the Common Stock of the Company),  effect certain "Asset
Dispositions"  (as defined),  enter into certain  transactions  with affiliates,
merge or consolidate with any person,  or transfer all or  substantially  all of
their properties and assets. These limitations are substantially  similar to the
limitations  already  existing with respect to the Company's other senior notes,
and related indentures and supplemental indentures.

Holders  of the  Notes may  convert  their  Notes at any time on or  before  the
maturity date, unless the Notes have been redeemed or purchased previously, into
17.4927  shares of the  Company's  common stock per $1,000  principal  amount at
maturity,  if (1) the sale price of the common stock issuable upon conversion of
a Note  reaches a  specified  threshold,  (2) the credit  rating of the Notes is
reduced to or below a specified level by the rating agencies,  (3) the Notes are
called for redemption or (4) specified corporate transactions have occurred. The
conversion rate will be subject to adjustment in some events.

Other  information  concerning  the  offering  and  issuance  of the  Notes  has
previously  been  reported  in,  and is  described  in,  Amendment  No. 1 to the
Company's  Registration  Statement on Form S-3  (Registration  Number 333-57388)
dated April 18, 2001, the Company's Prospectus Supplement, dated May 4, 2001 and
filed with the Securities and Exchange  Commission (the  "Commission") on May 9,
2001  pursuant to Rule 424(b),  and the Company's  current  reports on Form 8-K,
dated May 4, 2001 and filed with the  Commission on May 10, 2001,  and dated May
11, 2001 and filed with the Commission on May 14, 2001.

















                                       26






ITEM 5.  OTHER INFORMATION

The Company has executed the Third Supplemental  Indenture,  dated as of May 21,
2001, to the Indenture  dated as of September 11, 2000,  among the Company,  the
guarantors  named  therein and American  Stock  Transfer and Trust  Company,  as
Trustee, relating to the Senior Subordinated Debt Securities of the Company; the
Twelfth Supplemental Indenture, dated as of May 21, 2001, to the Indenture dated
as of June 9, 1997, among the Company, the guarantors named therein and American
Stock Transfer & Trust Company,  as Trustee,  relating to Senior Debt Securities
of the Company; and the Fourth Supplemental Indenture, dated as of May 21, 2001,
to the Indenture dated as of April 15, 1996,  between  Continental Homes Holding
Corp. ("Continental") and First Union National Bank, as Trustee, relating to the
10%  Senior  Notes due 2006,  of  Continental,  which  have been  assumed by the
Company. The effect of these three supplemental indentures,  dated as of May 21,
2001,  is to include  additional  subsidiaries  of the  Company  as  "Restricted
Subsidiaries"  and "  Guarantors"  of the debt to which the  related  Indentures
apply. The new Restricted Subsidiaries are as follows:





                                                              Jurisdiction
                  Name                                       of Organization
                  ----                                       ---------------
                                                            
                  DRH Cambridge Homes, LLC                      Delaware

                  DRH Southwest Construction, Inc.             California

                  DRH Title Company of Colorado, Inc.           Colorado

                  Meadows VIII, Ltd.                            Delaware

                  D.R. Horton, Inc. - Dietz-Crane,
                  (formerly DRH Regrem I, Inc.)                 Delaware

                  DRH Regrem II, Inc.                           Delaware

                  DRH Regrem III, Inc.                          Delaware

                  DRH Regrem IV, Inc.                           Delaware

                  DRH Regrem V, Inc.                            Delaware

                  DRH Regrem VII, LP                              Texas

                  D.R. Horton - Emerald, Ltd., (formerly
                  DRH Regrem VI, LP)                              Texas

                  DRH Regrem VIII, LLC                          Delaware



The three supplemental  indentures,  dated as of May 21, 2001, are each attached
hereto as exhibits.








                                       27








ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

        (a)Exhibits.


               
  Exhibit No.     Description

      4.1         Indenture,  dated as of September 11, 2000, among the Company,
                  the  guarantors  named therein and American Stock Transfer and
                  Trust Company, as Trustee, relating to the Senior Subordinated
                  Debt  Securities  of the Company,  is  incorporated  herein by
                  reference from Exhibit 4.1(a) to the Company's  Current Report
                  on Form 8-K filed with the Commission on September 7, 2000.

      4.2*        Third Supplemental Indenture,  dated as of May 21, 2001, among
                  the Company,  the guarantors  named therein and American Stock
                  Transfer and Trust Company, as Trustee.

      4.3         Indenture,  dated as of June 9, 1997,  among the Company,  the
                  guarantors  named therein and American  Stock Transfer & Trust
                  Company,  as Trustee,  relating to Senior Debt Securities,  is
                  incorporated  herein by reference  from Exhibit  4.1(a) to the
                  Company's Registration Statement on Form S-3 (Registration No.
                  333-27521) filed with the Commission on May 21, 1997.

      4.4         Eleventh Supplemental Indenture, dated as of May 11, 2001,
                  among the Company, the guarantors named therein and American
                  Stock Transfer & Trust Company, as Trustee, relating to the
                  Zero Coupon Convertible Senior Notes due 2021, incorporated
                  herein by reference from Exhibit 4.1(a) to the Company's
                  Form 8-K filed with the Commission on May 14, 2001.

      4.5*        Twelfth  Supplemental  Indenture,  dated  as of May 21,  2001,
                  among the Company,  the guarantors  named therein and American
                  Stock Transfer & Trust Company, as Trustee.

      4.6         Indenture dated as of April 15, 1996 between Continental Homes
                  Holding Corp.  ("Continental")  and First Union National Bank,
                  as  Trustee,  relating  to the 10% Senior  Notes due 2006,  is
                  incorporated   herein  by   reference   from  Exhibit  4.1  to
                  Continental's Annual Report on Form 10-K for the year ended
                  May 31, 1996.  The Commission file number for Continental is
                  1-10700.

      4.7*        Fourth Supplemental Indenture, dated as of May 21, 2001, among
                  the Company, the guarantors named herein and First Union
                  National Bank, as Trustee.


-------------------
* filed herewith

    (b)    Reports on Form 8-K.

           On April 18,  2001,  the Company  filed a Current  Report on Form 8-K
           (Item 5)  announcing  its  financial  results for its second  quarter
           ended March 31, 2001.

           On May 10,  2001,  the  Company  filed a  Current  Report on Form 8-K
           (Items 5 and 7), which filed an underwriting  agreement and a form of
           supplemental indenture, both relating to the offering and issuance of
           $381,113,000  million  principal  amount at maturity of the Company's
           Zero Coupon Convertible Senior Notes due 2021.

           On May 14,  2001,  the  Company  filed a  Current  Report on Form 8-K
           (Items  5 and  7),  which  filed  a  supplemental  indenture  and tax
           opinion,  both relating to the offering and issuance of  $381,113,000
           million  principal  amount at maturity of the  Company's  Zero Coupon
           Convertible Senior Notes due 2021.








                                       28






                                   SIGNATURES


Pursuant  to the  requirements  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: August 14, 2001                  By:  /s/ Samuel R. Fuller
                                       ---------------------------------------
                                       Samuel R. Fuller, on behalf of
                                       D.R. Horton, Inc. and as Executive
                                       Vice President, Treasurer and Chief
                                       Financial Officer (Principal Financial
                                       and Accounting Officer)

































                                       29




                                INDEX TO EXHIBITS



   EXHIBIT
    NUMBER       DESCRIPTION
  ---------      -----------
     4.2*        Third Supplemental  Indenture,  dated as of May 21, 2001, among
                 the Company,  the  guarantors  named therein and American Stock
                 Transfer and Trust Company, as Trustee.

     4.5*        Twelfth Supplemental Indenture, dated as of May 21, 2001, among
                 the Company,  the  guarantors  named therein and American Stock
                 Transfer & Trust Company, as Trustee.

     4.7*        Fourth Supplemental Indenture,  dated as of May 21, 2001, among
                 the Company,  the  guarantors  named  herein and First
                 Union  National Bank, as Trustee.


















                                       30