D.R. Horton adopts rights agreement to protect company's use of NOLs

By Lisa Kerner

Charlotte, N.C., Aug. 19 - D.R. Horton, Inc. said its board of directors adopted a rights agreement to preserve the value of certain deferred tax assets primarily associated with net operating loss carryforwards and built-in losses under Section 382 of the Internal Revenue Code.

According to D.R. Horton, it had about $1.23 billion of net deferred tax assets as of June 30.

Under the rights agreement, the Fort Worth-based homebuilder will distribute to its stockholders a non-taxable dividend distribution of one preferred stock purchase right for each company share held as of the close of business on Aug. 31.

The company's ability to use its tax benefits would be limited if a 50% ownership change occurred as defined by the IRS.

An ownership change occurs if the percentage of stock owned by its 5% stockholders increases by more than 50 percentage points over a rolling three-year period, a D.R. Horton news release said.

D.R. Horton's rights agreement reduces the likelihood of an unintended 50% ownership change occurring through the buying and selling of its common stock.

Stockholders who beneficially own 4.9% or more of D.R. Horton's outstanding common stock as of Aug. 19 will not become acquiring persons if they do not acquire any additional shares.

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