a. 1. Are inventories classified as a current asset? Comment.

2. Does it appear that inventories are a highly liquid asset?

b. 1. Goodwill impairment'what does this imply?

2. Comment on the review of inventory for impairments. Why is this done under the guidelines of SFAS No. 144, Accounting for the impairment or disposal of long-lived assets?

c. 1. Why restricted cash? Can this cash be used in operations?

2. Comment on the impairments and the use of cash.

3. Do you think that cash dividends will be eliminated?Comment.

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D. R. HORTON, INC, AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended September 30, 2008 2007 2006 (In millions, ex cept per share data) Homebuilding Revenues: Home sales Land/lot sales S 6,164.3 10,721.2 367.6 11,088.8 14,545.4 354.3 6,518.6 14,760.5 Cost of sales Home sales 5,473.1 324.2 2.484.5 8,872.3 283.3 1,329.5 11,047.8 99.6 270.9 11,418.3 Land/lot sales Inventory impairments and land option cost write-offs 8,281.8 10.485 Gross profit (loss): Home sales 691.2 30.1 (2.484.5 ) 3,497.6 115.5 1,848.9 84.3 3295) Land/lot sales Inventory impairments and land option cost write-offs 603.7 474.1 12.1 3,342.2 1,456.6 (1,763.2) 1,141.5 Selling, general, and administrati ve expense Goodwill impairment Interest expense Loss on early retirement of debt Other (income) 791.8 79.4 39.0 2.6 17.9 (2.666.9) (1,202.0) 1,878.7 Financial Services: Revenues General and administrative expense Interest expen se Interest and other (income) 207.7 153.8 23.6 127.5 290.8 202.2 37.1 (56.9 08.4 1,987.1 753.8 S (712.5) S1,233.3 3.94 3.90 S 0.44 68.8 (951.2) (238.7) 35.1 Income (loss) before income taxes Provision for (2,631.8) (benefit from) income taxes Net income (loss) Basic net income (loss) per common share Net income (loss) per common share assuming dilution Cash dividends declared per common share S (2,633.6) S (8.34) S (8.34) S 0.45 S (2.27) 27) S 0.60