6 unchanged sentences
We are exposed to interest rate risk associated with our mortgage loan origination services.
−Removed: We manage interest rate risk through the use of forward sales of mortgage-backed securities (MBS), which are referred to as “hedging instruments” in the following discussion.
+Added: We manage interest rate risk through the use of forward sales of MBS, which are referred to as “hedging instruments” in the following discussion.
We do not enter into or hold derivatives for trading or speculative purposes.
7 unchanged sentences
At September 30, 2020, hedging instruments used to mitigate interest rate risk related to uncommitted mortgage loans held for sale and uncommitted IRLCs totaled a notional amount of $2.8 billion.
−Removed: Uncommitted IRLCs totaled a notional amount of approximately $702.7 million and uncommitted mortgage loans held for sale totaled a notional amount of approximately $663.8 million at September 30, 2019 .
−Removed: From time to time, we enter into forward sales of MBS as part of a program to offer below market interest rate financing to our homebuyers in certain markets.
−Removed: At September 30, 2019 , we had MBS totaling $111.4 million that did not yet have IRLCs or closed loans created or assigned and recorded a liability of $0.5 million for the fair value of such MBS position.
+Added: Uncommitted IRLCs totaled a notional amount of approximately $1.7 billion and uncommitted mortgage loans held for sale totaled a notional amount of approximately $1.2 billion at September 30, 2020.
+Added: We occasionally enter into forward sales of MBS as part of a program to offer below market interest rate financing to our homebuyers in certain markets.
+Added: At September 30, 2020 and 2019, we had MBS totaling $1.1 billion and $111.4 million, respectively, that did not yet have IRLCs or closed loans created or assigned and recorded a liability of $5.3 million and $0.5 million for the fair value of such MBS position.
The following table sets forth principal cash flows by scheduled maturity, effective weighted average interest rates and estimated fair value of our debt obligations as of September 30, 2020.
1 unchanged sentence
The interest rate for our variable rate debt represents the weighted average interest rate in effect at September 30, 2020.
−Removed: Fiscal Year Ending September 30,
−Removed: Fair Value at September 30, 2019
+Added: Fiscal Year Ending September 30, Fair Value at September 30, 2020
+Added: 2021 2022 2023 2024 2025 Thereafter Total
($ in millions)
+Added: Fixed rate $ 466.5 $ 350.3 $ 700.4 $ 352.7 $ 500.4 $ 800.8 $ 3,171.1 $ 3,356.6
Average interest rate 2.9 % 4.5 % 5.5 % 8.5 % 2.7 % 3.8 % 4.5 %
4 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of D.R.
−Removed: and subsidiaries (the Company) as of September 30, 2019, and the related consolidated statements of operations, total equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.
+Added: We have audited the accompanying consolidated balance sheets of D.R.
+Added: and subsidiaries (the Company) as of September 30, 2020 and 2019, the related consolidated statements of operations, total equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.
generally accepted accounting principles.
2 unchanged sentences
These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
3 unchanged sentences
Estimation of reserves for construction defect matters
−Removed: Description of the Matter
−Removed: At September 30, 2019, the Company’s reserve for legal claims related to construction defect matters was $432.8 million.
−Removed: As explained in Note K to the consolidated financial statements, the Company has established reserves for construction defect matters based on the estimated costs of pending legal claims and the estimated costs of anticipated future legal claims related to previously closed homes, and this liability is included within the accrued expenses and other liabilities account in the consolidated balance sheet.
+Added: Description of the Matter At September 30, 2020, the Company’s reserve for legal claims related to construction defect matters was $472.4 million.
+Added: As explained in Note L to the consolidated financial statements, the Company has established reserves for construction defect matters based on the estimated costs of pending legal claims and the estimated costs of anticipated future legal claims related to previously closed homes, and this liability is included within the accrued expenses and other liabilities account in the consolidated balance sheet.
This reserve estimate is subject to a high degree of variability and ongoing revision as the circumstances of individual pending claims and historical data and trends change.
3 unchanged sentences
Further, the estimated reserve balance is sensitive to changes in these key assumptions.
−Removed: How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating the reserve for construction defect matters.
+Added: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating the reserve for construction defect matters.
We tested the Company’s controls that address the risk of material misstatement related to the measurement and valuation of the reserve for construction defect matters, including the key assumptions related to the projections of the frequency and costs of future claims, and the completeness and accuracy of data used in the model developed by management.
4 unchanged sentences
We also performed sensitivity analyses to determine the effect of changes in assumptions, where appropriate.
−Removed: Finally, we reconciled historical data included in the model and performed recalculations to evaluate the completeness and accuracy of the underlying data used by management to determine the estimate.
+Added: We also tested completeness and accuracy of underlying claims data used in management’s estimation calculations and performed recalculations to evaluate the accuracy of the model used by management to determine the estimate.
/s/ Ernst & Young LLP
9 unchanged sentences
and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2020, based on the COSO criteria .
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of September 30, 2019, the related consolidated statements of operations, total equity, and cash flows for the year then ended, and the related notes and our report dated November 25, 2019 expressed an unqualified opinion thereon.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2020 and 2019, the related consolidated statements of operations, total equity, and cash flows for the years then ended, and the related notes and our report dated November 19, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
20 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the consolidated balance sheet of D.R.
−Removed: and its subsidiaries (the “Company”) as of September 30, 2018 , and the related consolidated statements of operations, total equity, and cash flows for each of the two years in the period ended September 30, 2018 , including the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2018 , and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2018 in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the consolidated statements of operations, total equity, and cash flows of D.R.
+Added: and its subsidiaries (the “Company”) for the year ended September 30, 2018, including the related notes (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended September 30, 2018 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.
+Added: Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.
+Added: We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
+Added: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
+Added: We believe that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
3 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.