13 unchanged sentences
Mortgage loans held for sale 1,438.9 1,529.0
−Removed: Deferred income taxes, net of valuation allowance of $ 13.6 million and $ 18.7 million
−Removed: at June 30, 2020 and September 30, 2019, respectively
+Added: Deferred income taxes, net of valuation allowance of $ 7.5 million
+Added: at December 31, 2020 and September 30, 2020
Property and equipment, net 748.4 683.7
9 unchanged sentences
Common stock, $ .01 par value, 1,000,000,000 shares authorized, 395,389,246 shares issued
−Removed: and 363,633,208 shares outstanding at June 30, 2020 and 392,172,821 shares issued
+Added: and 363,647,879 shares outstanding at December 31, 2020 and 394,741,349 shares issued
and 363,999,982 shares outstanding at September 30, 2020
1 unchanged sentence
Retained earnings 10,476.7 9,757.8
−Removed: Treasury stock, 30,741,367 shares and 23,741,367 shares at June 30, 2020
+Added: Treasury stock, 31,741,367 shares and 30,741,367 shares at December 31, 2020
and September 30, 2020, respectively, at cost
8 unchanged sentences
Three Months Ended
−Removed: June 30, Nine Months Ended
−Removed: 2020 2019 2020 2019
(In millions, except per share data)
7 unchanged sentences
Net income 795.2 432.5
−Removed: Net income (loss) attributable to noncontrolling interests 2.2 ( 1.2 ) 4.6 1.5
+Added: Net income attributable to noncontrolling interests 3.4 1.2
Net income attributable to D.R.
21 unchanged sentences
Stock issued under employee benefit plans ( 604,947 shares)
−Removed: Cash paid for shares withheld for taxes — ( 17.3 ) — — — ( 17.3 )
−Removed: Stock-based compensation expense — 16.6 — — — 16.6
−Removed: Cash dividends declared ($ 0.175 per share)
0.1 — — — — 0.1
−Removed: Repurchases of common stock ( 3,000,000 shares)
−Removed: — — — ( 163.1 ) — ( 163.1 )
−Removed: Distributions to noncontrolling interests — — — — ( 0.4 ) ( 0.4 )
−Removed: Change of ownership interest in Forestar
−Removed: — ( 0.5 ) — — 0.5 —
−Removed: Balances at December 31, 2019 ( 366,273,190 shares)
−Removed: $ 3.9 $ 3,182.0 $ 8,006.8 $ ( 965.3 ) $ 275.5 $ 10,502.9
−Removed: Net income — — 482.7 — 1.3 484.0
−Removed: Exercise of stock options ( 310,032 shares)
−Removed: — 6.2 — — — 6.2
−Removed: Stock issued under employee benefit plans ( 954,588 shares)
−Removed: — 2.6 — — — 2.6
Cash paid for shares withheld for taxes — ( 26.3 ) — — — ( 26.3 )
4 unchanged sentences
— — — ( 69.8 ) — ( 69.8 )
−Removed: Balances at March 31, 2020 ( 363,537,810 shares)
−Removed: $ 3.9 $ 3,191.3 $ 8,425.4 $ ( 1,162.6 ) $ 276.8 $ 10,734.8
−Removed: Net income — — 630.7 — 2.2 632.9
−Removed: Exercise of stock options ( 93,491 shares)
−Removed: — 2.1 — — — 2.1
−Removed: Stock issued under employee benefit plans ( 1,907 shares)
−Removed: Cash paid for shares withheld for taxes — ( 0.1 ) — — — ( 0.1 )
−Removed: Stock-based compensation expense — 21.3 — — — 21.3
−Removed: Cash dividends declared ($ 0.175 per share)
−Removed: — — ( 63.6 ) — — ( 63.6 )
Distributions to noncontrolling interests — — — — ( 0.1 ) ( 0.1 )
Change of ownership interest in Forestar — ( 0.3 ) — — 0.3 —
−Removed: Balances at June 30, 2020 ( 363,633,208 shares)
+Added: Balances at December 31, 2020 ( 363,647,879 shares)
$ 4.0 $ 3,236.9 $ 10,476.7 $ ( 1,232.4 ) $ 285.1 $ 12,770.3
−Removed: See accompanying notes to consolidated financial statements.
−Removed: AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF TOTAL EQUITY (Continued)
Stock Additional
6 unchanged sentences
$ 3.9 $ 3,179.1 $ 7,640.1 $ ( 802.2 ) $ 274.2 $ 10,295.1
−Removed: Cumulative effect of adoption of ASC 606 — — 27.1 — — 27.1
−Removed: Net income (loss) — — 287.2 — ( 0.5 ) 286.7
−Removed: Exercise of stock options ( 806,817 shares)
−Removed: — 8.6 — — — 8.6
−Removed: Stock issued under employee benefit plans ( 273,608 shares)
−Removed: Cash paid for shares withheld for taxes — ( 4.1 ) — — — ( 4.1 )
−Removed: Stock-based compensation expense — 18.1 — — — 18.1
−Removed: Cash dividends declared ($ 0.15 per share)
−Removed: — — ( 56.0 ) — — ( 56.0 )
−Removed: Repurchases of common stock ( 4,100,000 shares)
−Removed: — — — ( 140.6 ) — ( 140.6 )
−Removed: Distributions to noncontrolling interests — — — — ( 0.5 ) ( 0.5 )
−Removed: Balances at December 31, 2018 ( 373,242,060 shares)
−Removed: $ 3.9 $ 3,107.6 $ 6,476.2 $ ( 463.0 ) $ 173.5 $ 9,298.2
Net income — — 431.3 — 1.2 432.5
2 unchanged sentences
Stock issued under employee benefit plans ( 582,936 shares)
−Removed: — 2.0 — — 0.3 2.3
Cash paid for shares withheld for taxes — ( 17.3 ) — — — ( 17.3 )
5 unchanged sentences
Distributions to noncontrolling interests — — — — ( 0.4 ) ( 0.4 )
−Removed: Balances at March 31, 2019 ( 373,132,964 shares)
−Removed: $ 3.9 $ 3,123.4 $ 6,771.6 $ ( 538.6 ) $ 173.7 $ 9,534.0
−Removed: Net income (loss) — — 474.8 — ( 1.2 ) 473.6
−Removed: Exercise of stock options ( 271,186 shares)
−Removed: — 4.6 — — — 4.6
−Removed: Stock issued under employee benefit plans ( 2,524 shares)
−Removed: Stock-based compensation expense — 18.0 — — — 18.0
−Removed: Cash dividends declared ($ 0.15 per share)
−Removed: — — ( 56.0 ) — — ( 56.0 )
−Removed: Repurchases of common stock ( 3,658,462 shares)
−Removed: — — — ( 159.3 ) — ( 159.3 )
−Removed: Distributions to noncontrolling interests — — — — ( 0.2 ) ( 0.2 )
−Removed: Balances at June 30, 2019 ( 369,748,212 shares)
+Added: Change of ownership interest in Forestar — ( 0.5 ) — — 0.5 —
+Added: Balances at December 31, 2019 ( 366,273,190 shares)
$ 3.9 $ 3,182.0 $ 8,006.8 $ ( 965.3 ) $ 275.5 $ 10,502.9
2 unchanged sentences
CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: Nine Months Ended
+Added: Three Months Ended
(In millions)
1 unchanged sentence
Net income $ 795.2 $ 432.5
−Removed: Adjustments to reconcile net income to net cash provided by operating activities:
+Added: Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 20.4 19.0
2 unchanged sentences
Equity in earnings of unconsolidated entities ( 0.9 ) ( 0.5 )
−Removed: Distributions of earnings of unconsolidated entities — 0.5
Deferred income taxes 2.9 7.2
6 unchanged sentences
( 716.8 ) ( 373.1 )
−Removed: Increase in other assets ( 62.2 ) ( 138.1 )
−Removed: Net increase in mortgage loans held for sale ( 430.7 ) ( 158.5 )
+Added: (Increase) decrease in other assets ( 124.9 ) 2.0
+Added: Net decrease in mortgage loans held for sale 90.1 46.9
Increase in accounts payable, accrued expenses and other liabilities 254.6 94.6
−Removed: Net cash provided by operating activities 588.9 80.7
+Added: Net cash used in operating activities ( 252.1 ) ( 113.8 )
INVESTING ACTIVITIES
3 unchanged sentences
Return of investment in unconsolidated entities 2.1 1.9
−Removed: Net principal increase of other mortgage loans and real estate owned ( 3.7 ) ( 2.0 )
+Added: Net principal decrease (increase) of other mortgage loans and real estate owned 0.2 ( 0.6 )
Payments related to business acquisitions ( 23.0 ) ( 0.7 )
3 unchanged sentences
Repayment of notes payable ( 400.1 ) —
−Removed: Advances on mortgage repurchase facility, net 284.0 158.8
+Added: Payments on mortgage repurchase facility, net ( 163.5 ) ( 38.6 )
Proceeds from stock associated with certain employee benefit plans 0.9 4.1
6 unchanged sentences
Other financing activities
−Removed: Net cash provided by (used in) financing activities 370.2 ( 375.1 )
−Removed: Net increase (decrease) in cash, cash equivalents and restricted cash 858.7 ( 620.7 )
+Added: Net cash (used in) provided by financing activities ( 221.7 ) 213.5
+Added: Net (decrease) increase in cash, cash equivalents and restricted cash ( 565.2 ) 81.9
Cash, cash equivalents and restricted cash at beginning of period 3,040.1 1,514.0
4 unchanged sentences
Accrued expenditures for property and equipment $ 21.8 $ 7.7
−Removed: Accrual for holdback payment related to acquisition $ 1.9 $ 15.0
+Added: Accrual for holdback payments related to acquisitions $ 2.6 $ 9.5
Repurchase of common stock not settled $ 16.0 $ —
2 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE A – BASIS OF PRESENTATION
9 unchanged sentences
These financial statements, including the consolidated balance sheet as of September 30, 2020, which was derived from audited financial statements, do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2020.
−Removed: Reclassifications
−Removed: Certain prior period amounts have been reclassified to conform to the current year presentation.
−Removed: At the beginning of fiscal 2020, the Company reclassified its single-family rental properties from other assets to property and equipment in its homebuilding segment.
−Removed: Reclassification of the prior period amount resulted in a $ 37.0 million decrease in other assets with a corresponding increase in property and equipment at September 30, 2019.
−Removed: This reclassification had no effect on the Company’s consolidated financial position or results of operations.
Use of Estimates
3 unchanged sentences
Historically, the homebuilding industry has experienced seasonal fluctuations;
−Removed: therefore, the operating results for the three and nine months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2020 or subsequent periods.
−Removed: Adoption of New Accounting Standards
−Removed: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, “Leases,” which requires that lease assets and liabilities be recognized on the balance sheet and that key information about leasing arrangements be disclosed.
−Removed: The guidance was effective for the Company beginning October 1, 2019 and did not have a material impact on its consolidated financial position, results of operations or cash flows.
−Removed: As a result of the adoption of this standard on October 1, 2019, the Company recorded right of use assets of $ 39.0 million and lease liabilities of $ 40.3 million.
−Removed: Lease right of use assets are included in other assets and lease liabilities are included in accrued expenses and other liabilities in the consolidated balance sheet.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
−Removed: In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees, in Rule 3-10 of Regulation S-X.
−Removed: The amended rule focuses on providing material, relevant and decision-useful information regarding guarantees and other credit enhancements, while eliminating certain prescriptive requirements.
−Removed: The rule is effective January 4, 2021 but earlier compliance is permitted.
−Removed: The Company adopted these amendments on March 31, 2020.
−Removed: Accordingly, summarized financial information has been presented only for the issuers and guarantors of the Company's registered securities for the most recent fiscal year and the year-to-date interim period, and the location of the required disclosures has been moved from Notes to Consolidated Financial Statements to Item 2.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations.
+Added: therefore, the operating results for the three months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2021 or subsequent periods.
+Added: Business Acquisition
+Added: In October 2020, the Company acquired the homebuilding operations of Braselton Homes for approximately $ 23.0 million in cash.
+Added: Braselton Homes operates in Corpus Christi, Texas.
+Added: The assets acquired included approximately 90 homes in inventory, 95 lots and control of approximately 840 additional lots through purchase contracts.
+Added: The Company also acquired a sales order backlog of approximately 125 homes.
Pending Accounting Standards
−Removed: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information in determining credit loss estimates.
−Removed: The guidance is effective for the Company beginning October 1, 2020 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows.
−Removed: In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other,” which simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test and requires the determination of the fair value of individual assets and liabilities of a reporting unit.
−Removed: Under the new guidance, goodwill impairment is measured as the amount by which a reporting unit’s carrying amount exceeds its fair value with the loss recognized limited to the total amount of goodwill allocated to the reporting unit.
−Removed: The guidance is effective for the Company beginning October 1, 2020 and is not expected to have a material impact on its consolidated financial position, results of operations or cash flows.
−Removed: In December 2019, the FASB issued ASU 2019-12 related to simplifying the accounting for income taxes.
+Added: In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12 related to simplifying the accounting for income taxes.
The guidance is effective for the Company beginning October 1, 2021, although early adoption is permitted.
3 unchanged sentences
The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.
−Removed: The Company will adopt this standard when LIBOR is discontinued, and does not expect it to have a material impact on its consolidated financial statements or related disclosures.
+Added: In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform - Scope,” which clarified the scope and application of the original guidance.
+Added: The Company will adopt these standards when LIBOR is discontinued and does not expect them to have a material impact on its consolidated financial statements or related disclosures.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE B – SEGMENT INFORMATION
15 unchanged sentences
Most of the revenue generated by the Company’s homebuilding operations is from the sale of completed homes and to a lesser extent from the sale of land and lots.
+Added: During fiscal 2020, the Company began constructing and leasing homes as income-producing single-family rental communities.
+Added: After a rental community is constructed and achieves a stabilized level of leased occupancy, the Company generally expects to market the community for a bulk sale of homes.
+Added: These operations are reported in the Company’s homebuilding segment.
+Added: During the three months ended December 31, 2020, the Company completed its first sale of a single-family rental community representing 124 homes for $ 31.8 million, resulting in a gain on sale of $ 14.0 million.
+Added: At December 31, 2020, the Company’s homebuilding fixed assets included $ 106.6 million of assets related to its single-family rental platform, representing 13 communities totaling 890 single-family rental homes and finished lots, which included 440 completed homes.
+Added: At September 30, 2020, the Company’s homebuilding fixed assets included $ 87.2 million of assets related to its single-family rental platform, representing 10 communities totaling 740 single-family rental homes and finished lots, which included 440 completed homes.
The Forestar segment is a residential lot development company with operations in 51 markets across 21 states.
5 unchanged sentences
The Company sells substantially all of the mortgages it originates and the majority of the related servicing rights to third-party purchasers.
−Removed: In addition to its homebuilding, Forestar and financial services operations, the Company has subsidiaries that engage in other business activities.
−Removed: These subsidiaries conduct insurance-related operations, construct and own income-producing multi-family rental properties, own non-residential real estate including ranch land and improvements and own and operate oil and gas related assets.
−Removed: The operating results of these subsidiaries are immaterial for separate reporting and therefore are grouped together and presented as other.
−Removed: One of these subsidiaries, DHI Communities, constructs multi-family rental properties and had four projects under active construction and one project that was substantially complete at June 30, 2020.
−Removed: DHI Communities sold two multi-family rental properties during the current fiscal year, one in November 2019 and another in February 2020, for a total of $ 128.5 million and recorded gains on sale totaling $ 59.4 million.
−Removed: At June 30, 2020 and September 30, 2019, the consolidated balance sheets included $ 224.8 million and $ 204.0 million, respectively, of assets owned by DHI Communities.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
+Added: In addition to its homebuilding, Forestar and financial services operations, the Company engages in other business activities through its subsidiaries.
+Added: The Company conducts insurance-related operations, constructs and owns income-producing multi-family rental properties, owns non-residential real estate including ranch land and improvements and owns and operates oil and gas related assets.
+Added: The results of these operations are immaterial for separate reporting and therefore are grouped together and presented as other.
+Added: The Company’s multi-family rental operations develop, construct, lease and own multi-family rental properties, which are typically marketed for sale after achieving a stabilized level of leased occupancy.
+Added: At December 31, 2020, the Company had four multi-family rental projects under active construction and four projects that were substantially complete.
+Added: These eight projects represent 2,325 multi-family units, including 1,015 units under active construction and 1,310 completed units.
+Added: At December 31, 2020 and September 30, 2020, the consolidated balance sheets included $ 294.3 million and $ 246.2 million, respectively, of multi-family rental assets.
The accounting policies of the reporting segments are described throughout Note A included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2020.
Financial information relating to the Company’s reporting segments is as follows:
−Removed: June 30, 2020
−Removed: Homebuilding Forestar (1) Financial Services Other (2) Eliminations (3) Other Adjustments (4) Consolidated
+Added: December 31, 2020
+Added: Homebuilding Forestar (1) Financial Services Other Eliminations and Other Adjustments (2) Consolidated
(In millions)
6 unchanged sentences
Residential land and lots — developed and under development 5,407.3 1,484.9 — — ( 36.1 ) 6,856.1
−Removed: 4,953.6 1,271.7 — — ( 28.0 ) 1.5 6,198.8
Land held for development
21 unchanged sentences
(1) Amounts are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.
−Removed: All purchase accounting adjustments are included in the Other Adjustments column.
−Removed: (2) Amounts represent the aggregate balances of certain subsidiaries that are immaterial for separate reporting.
−Removed: (3) Amounts represent the elimination of intercompany transactions.
−Removed: (4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.
+Added: (2) Amounts primarily represent the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
September 30, 2020
−Removed: Homebuilding Forestar (1) Financial Services Other (2) Eliminations (3) Other Adjustments (4) Consolidated
+Added: Homebuilding Forestar (1) Financial Services Other Eliminations and Other Adjustments (2) Consolidated
(In millions)
30 unchanged sentences
(1) Amounts are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.
−Removed: All purchase accounting adjustments are included in the Other Adjustments column.
−Removed: (2) Amounts represent the aggregate balances of certain subsidiaries that are immaterial for separate reporting.
−Removed: (3) Amounts represent the elimination of intercompany transactions.
−Removed: (4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
−Removed: Three Months Ended June 30, 2020
−Removed: Homebuilding Forestar (1) Financial Services Other (2) Eliminations (3) Other Adjustments (4) Consolidated
−Removed: (In millions)
−Removed: $ 5,207.6 $ — $ — $ — $ — $ — $ 5,207.6
−Removed: Land/lot sales and other
−Removed: 14.5 177.9 — 8.9 ( 175.5 ) — 25.8
−Removed: Financial services
−Removed: — — 156.6 — — — 156.6
−Removed: 5,222.1 177.9 156.6 8.9 ( 175.5 ) — 5,390.0
−Removed: Cost of sales
−Removed: Home sales (5)
−Removed: 4,082.3 — — — ( 16.8 ) — 4,065.5
−Removed: Land/lot sales and other
−Removed: 10.2 157.0 — — ( 152.7 ) ( 0.3 ) 14.2
−Removed: Inventory and land option charges
−Removed: 4.9 0.1 — — — — 5.0
−Removed: 4,097.4 157.1 — — ( 169.5 ) ( 0.3 ) 4,084.7
−Removed: Selling, general and administrative expense
−Removed: 415.1 11.2 93.9 7.1 — 0.2 527.5
−Removed: Other (income) expense ( 0.2 ) ( 0.7 ) ( 6.1 ) 2.4 — — ( 4.6 )
−Removed: Income (loss) before income taxes $ 709.8 $ 10.3 $ 68.8 $ ( 0.6 ) $ ( 6.0 ) $ 0.1 $ 782.4
−Removed: ______________
−Removed: (1) Results are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.
−Removed: All purchase accounting adjustments are included in the Other Adjustments column.
−Removed: (2) Amounts represent the aggregate results of certain subsidiaries that are immaterial for separate reporting.
−Removed: (3) Amounts represent the elimination of intercompany transactions.
−Removed: (4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.
−Removed: (5) Amount in the Eliminations column represents the profit on lots sold from Forestar to the homebuilding segment.
−Removed: Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
+Added: (2) Amounts primarily represent the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
−Removed: Nine Months Ended June 30, 2020
−Removed: Homebuilding Forestar (1) Financial Services Other (2) Eliminations (3) Other Adjustments (4) Consolidated
+Added: December 31, 2020
+Added: Three Months Ended December 31, 2020
+Added: Homebuilding Forestar (1) Financial Services Other Eliminations and Other Adjustments (2) Consolidated
(In millions)
7 unchanged sentences
Home sales (3) 4,325.1 — — — ( 27.7 ) 4,297.4
−Removed: 10,569.2 — — — ( 34.4 ) — 10,534.8
Land/lot sales and other
6 unchanged sentences
Gain on sale of assets ( 13.1 ) — — ( 0.9 ) — ( 14.0 )
−Removed: — ( 0.1 ) — ( 59.4 ) — — ( 59.5 )
Other (income) expense ( 1.5 ) ( 0.5 ) ( 6.4 ) 3.8 ( 0.7 ) ( 5.3 )
3 unchanged sentences
$ 15.4 $ 0.1 $ 0.4 $ 4.4 $ 0.1 $ 20.4
−Removed: Cash provided by (used in) operating activities
−Removed: $ 1,157.0 $ ( 205.7 ) $ ( 347.7 ) $ 2.1 $ ( 16.8 ) $ — $ 588.9
−Removed: ______________
−Removed: (1) Results are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.
−Removed: All purchase accounting adjustments are included in the Other Adjustments column.
−Removed: (2) Amounts represent the aggregate results of certain subsidiaries that are immaterial for separate reporting.
−Removed: (3) Amounts represent the elimination of intercompany transactions.
−Removed: (4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.
−Removed: (5) Amount in the Eliminations column represents the profit on lots sold from Forestar to the homebuilding segment.
−Removed: Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
−Removed: Three Months Ended June 30, 2019
−Removed: Homebuilding Forestar (1) Financial Services Other (2) Eliminations (3) Other Adjustments (4) Consolidated
−Removed: (In millions)
−Removed: $ 4,734.6 $ — $ — $ — $ — $ — $ 4,734.6
−Removed: Land/lot sales and other
−Removed: 27.5 88.2 — 9.6 ( 73.2 ) — 52.1
−Removed: Financial services
−Removed: — — 119.6 — — — 119.6
−Removed: 4,762.1 88.2 119.6 9.6 ( 73.2 ) — 4,906.3
−Removed: Cost of sales
−Removed: Home sales (5)
−Removed: 3,773.0 — — — ( 1.3 ) — 3,771.7
−Removed: Land/lot sales and other
−Removed: 23.2 75.3 — — ( 66.0 ) 8.2 40.7
−Removed: Inventory and land option charges
−Removed: 19.2 — — — — — 19.2
−Removed: 3,815.4 75.3 — — ( 67.3 ) 8.2 3,831.6
−Removed: Selling, general and administrative expense
−Removed: 387.4 7.9 76.4 8.2 — 0.1 480.0
−Removed: Gain on sale of assets
+Added: Cash (used in) provided by operating activities
$ ( 269.2 ) $ ( 158.7 ) $ 173.1 $ 1.2 $ 1.5 $ ( 252.1 )
−Removed: Other (income) expense ( 2.5 ) ( 1.9 ) ( 4.9 ) ( 0.1 ) — — ( 9.4 )
−Removed: Income before income taxes $ 561.8 $ 8.4 $ 48.1 $ 24.1 $ ( 5.9 ) $ ( 9.8 ) $ 626.7
______________
(1) Results are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.
−Removed: All purchase accounting adjustments are included in the Other Adjustments column.
−Removed: (2) Amounts represent the aggregate results of certain subsidiaries that are immaterial for separate reporting.
−Removed: (3) Amounts represent the elimination of intercompany transactions.
−Removed: (4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.
−Removed: (5) Amount in the Eliminations column represents the profit on lots sold from Forestar to the homebuilding segment.
+Added: (2) Amounts primarily represent the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.
+Added: (3) Amount in the Eliminations and Other Adjustments column represents the profit on lots sold from Forestar to the homebuilding segment.
Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
−Removed: Nine Months Ended June 30, 2019
−Removed: Homebuilding Forestar (1) Financial Services Other (2) Eliminations (3) Other Adjustments (4) Consolidated
+Added: December 31, 2020
+Added: Three Months Ended December 31, 2019
+Added: Homebuilding Forestar (1) Financial Services Other Eliminations and Other Adjustments (2) Consolidated
(In millions)
7 unchanged sentences
Home sales (3) 3,051.6 — — — ( 6.7 ) 3,044.9
−Removed: 9,716.5 — — — ( 3.1 ) — 9,713.4
Land/lot sales and other
5 unchanged sentences
358.4 10.5 77.9 8.8 0.2 455.8
−Removed: Gain on sale of assets
−Removed: ( 2.0 ) ( 2.4 ) — ( 51.9 ) — 2.4 ( 53.9 )
+Added: Loss (gain) on sale of assets — 0.1 — ( 31.2 ) — ( 31.1 )
Other (income) expense ( 5.4 ) ( 2.2 ) ( 5.5 ) 1.6 — ( 11.5 )
3 unchanged sentences
$ 16.5 $ 0.1 $ 0.4 $ 1.9 $ 0.1 $ 19.0
−Removed: Cash provided by (used in) operating activities
+Added: Cash (used in) provided by operating activities
$ ( 178.4 ) $ ( 11.7 ) $ 83.5 $ 3.9 $ ( 11.1 ) $ ( 113.8 )
1 unchanged sentence
(1) Results are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.
−Removed: All purchase accounting adjustments are included in the Other Adjustments column.
−Removed: (2) Amounts represent the aggregate results of certain subsidiaries that are immaterial for separate reporting.
−Removed: (3) Amounts represent the elimination of intercompany transactions.
−Removed: (4) Amounts represent purchase accounting adjustments related to the Forestar acquisition.
−Removed: (5) Amount in the Eliminations column represents the profit on lots sold from Forestar to the homebuilding segment.
+Added: (2) Amounts primarily represent the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.
+Added: (3) Amount in the Eliminations and Other Adjustments column represents the profit on lots sold from Forestar to the homebuilding segment.
Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
Homebuilding Inventories by Reporting Segment (1)
13 unchanged sentences
Homebuilding Results by Reporting Segment Three Months Ended
−Removed: June 30, Nine Months Ended
−Removed: 2020 2019 2020 2019
(In millions)
12 unchanged sentences
Southwest 0.1 0.1
−Removed: West 0.3 8.9 2.8 22.9
−Removed: $ 4.9 $ 19.2 $ 17.3 $ 41.0
Income before Income Taxes
6 unchanged sentences
$ 935.2 $ 461.6
−Removed: _________________
−Removed: (1) Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating the Company’s corporate office.
−Removed: The amortization of capitalized interest and property taxes is allocated to each homebuilding segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each homebuilding segment based on the segment’s inventory balances.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE C – INVENTORIES
At the end of each quarter, the Company reviews the performance and outlook for all of its communities and land inventories for indicators of potential impairment and performs detailed impairment evaluations and analyses when necessary.
−Removed: As of June 30, 2020, the Company performed detailed impairment evaluations of communities and land inventories with a combined carrying value of $ 52.1 million and determined that no communities or land inventories were impaired.
−Removed: Accordingly, no impairment charges were recorded during the three months ended June 30, 2020 compared to $ 6.8 million of impairment charges recorded in the prior year period.
−Removed: During the nine months ended June 30, 2020 and 2019, impairment charges totaled $ 1.7 million and $ 18.6 million, respectively.
−Removed: Inventory impairments and the land option charges discussed below are included in cost of sales in the consolidated statements of operations.
−Removed: As the Company manages its inventory investments across its operating markets to optimize returns and cash flows, it may modify its pricing and incentives, construction and development plans or land sale strategies in individual active communities and land held for development, which could result in the affected communities being evaluated for potential impairment.
−Removed: During the latter part of March and into April, the impacts of the COVID-19 (C-19) pandemic and the related widespread reductions in economic activity began to adversely affect the Company’s business operations and the demand for its homes.
−Removed: Although demand for the Company’s homes was strong in May and June, there is significant uncertainty regarding the extent to which and how long C-19 and its related effects will impact the U.S.
−Removed: economy and level of employment, capital markets, secondary mortgage markets, consumer confidence, demand for the Company’s homes and availability of mortgage loans to homebuyers.
−Removed: The extent to which this impacts the Company’s operational and financial performance will depend on future developments, including the duration and spread of C-19 and the impact on its customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.
−Removed: If the housing market or economic conditions are adversely affected for a prolonged period due to C-19 or otherwise, the Company may be required to evaluate additional communities for potential impairment.
−Removed: These evaluations could result in additional impairment charges which could be significant.
−Removed: During the three and nine months ended June 30, 2020, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 5.0 million and $ 16.1 million, respectively, compared to $ 12.4 million and $ 22.4 million in the same periods of fiscal 2019.
+Added: As of December 31, 2020, the Company performed detailed impairment evaluations of communities and land inventories with a combined carrying value of $ 33.5 million and recorded impairment charges of $ 5.6 million during the three months ended December 31, 2020 to reduce the carrying value of impaired land to fair value.
+Added: There were no impairment charges recorded in the prior year period.
+Added: During the three months ended December 31, 2020 and 2019, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 2.7 million and $ 3.8 million, respectively.
+Added: Inventory impairments and land option charges are included in cost of sales in the consolidated statements of operations.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE D – NOTES PAYABLE
15 unchanged sentences
Revolving credit facility — —
−Removed: 3.75 % convertible senior notes due 2020 (3)
8.0 % senior notes due 2024 (3)
5.0 % senior notes due 2028 (3)
+Added: Other secured notes 12.5 —
Financial Services:
2 unchanged sentences
____________________________
−Removed: (1) Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $ 11.7 million and $ 5.4 million at June 30, 2020 and September 30, 2019, respectively.
−Removed: (2) Homebuilding other secured notes at June 30, 2020 excludes $ 6.5 million of earnest money notes payable due to Forestar.
+Added: (1) Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $ 14.1 million and $ 10.7 million at December 31, 2020 and September 30, 2020, respectively.
+Added: (2) Homebuilding other secured notes excludes $ 3.8 million and $ 4.8 million of earnest money notes payable due to Forestar at December 31, 2020 and September 30, 2020, respectively.
These intercompany notes are eliminated in consolidation.
−Removed: (3) Forestar’s 3.75 % convertible senior notes due March 2020 included an unamortized fair value adjustment of $ 2.4 million at September 30, 2019.
−Removed: (4) Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $ 9.4 million and $ 6.2 million at June 30, 2020 and September 30, 2019, respectively.
+Added: (3) Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $ 8.4 million and $ 8.9 million at December 31, 2020 and September 30, 2020, respectively.
Homebuilding:
4 unchanged sentences
The maturity date of the facility is October 2, 2024.
−Removed: Borrowings and repayments under the facility were $ 1.06 billion each during the nine months ended June 30, 2020.
−Removed: At June 30, 2020, there were no borrowings outstanding and $ 127.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of approximately $ 1.46 billion.
+Added: At December 31, 2020, there were no borrowings outstanding and $ 151.6 million of letters of credit issued under the revolving credit facility, resulting in available capacity of approximately $ 1.44 billion.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
In May 2020, the Company entered into a credit agreement providing for a $ 375 million 364-day senior unsecured homebuilding revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $ 550 million, subject to certain conditions and availability of additional bank commitments.
1 unchanged sentence
The maturity date of the facility is May 27, 2021.
−Removed: There were no borrowings under the facility for the period from its inception through June 30, 2020.
+Added: There were no borrowings outstanding under the facility at December 31, 2020.
The Company’s homebuilding revolving credit facilities impose restrictions on its operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if the leverage ratio exceeds a certain level.
3 unchanged sentences
The credit agreements governing the facilities and the indentures governing the senior notes also impose restrictions on the creation of secured debt and liens.
−Removed: At June 30, 2020, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facilities and public debt obligations.
+Added: At December 31, 2020, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facilities and public debt obligations.
Horton has an automatically effective universal shelf registration statement filed with the SEC in August 2018, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.
1 unchanged sentence
The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 1.6 %.
−Removed: In February 2020, the Company repaid $ 500 million principal amount of its 4.0 % senior notes at maturity.
−Removed: In May 2020, the Company issued $ 500 million principal amount of 2.6 % senior notes due October 15, 2025 with interest payable semi-annually.
−Removed: The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 2.8 %.
+Added: In December 2020, the Company repaid $ 400 million principal amount of its 2.55 % senior notes at maturity.
Effective July 30, 2019, the Board of Directors authorized the repurchase of up to $ 500 million of the Company’s debt securities.
The authorization has no expiration date.
−Removed: All of the $ 500 million authorization was remaining at June 30, 2020.
+Added: All of the $ 500 million authorization was remaining at December 31, 2020.
Forestar has a $ 380 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $ 570 million, subject to certain conditions and availability of additional bank commitments.
The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $ 100 million and 50 % of the revolving credit commitment.
−Removed: Borrowings under the revolving credit facility are subject to a borrowing base based on Forestar’s book value of its real estate assets and unrestricted cash.
+Added: Borrowings under the revolving credit facility are subject to a borrowing base calculation based on Forestar’s book value of its real estate assets and unrestricted cash.
Letters of credit issued under the facility reduce the available borrowing capacity.
−Removed: At June 30, 2020, there were no borrowings outstanding and $ 31.6 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 348.4 million.
+Added: At December 31, 2020, there were no borrowings outstanding and $ 40.5 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 339.5 million.
The maturity date of the facility is October 2, 2022, which can be extended by up to one year on up to two additional occasions, subject to the approval of lenders holding a majority of the commitments.
3 unchanged sentences
A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
−Removed: In February 2020, Forestar issued $ 300 million principal amount of 5.0 % senior notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.
−Removed: The notes are due March 1, 2028, with interest payable semiannually, and represent unsecured obligations of Forestar.
−Removed: The annual effective interest rate of these notes after giving effect to the amortization of financing costs is 5.2 %.
−Removed: These notes may be redeemed prior to maturity, subject to certain limitations and premiums defined in the indenture agreement.
−Removed: Forestar also has $ 350 million principal amount of 8.0 % senior notes that mature April 15, 2024.
−Removed: In March 2020, Forestar repaid $ 118.9 million principal amount of its 3.75 % convertible senior notes in cash at maturity.
Forestar’s revolving credit facility and its senior notes are not guaranteed by D.R.
or any of the subsidiaries that guarantee the Company’s homebuilding debt.
−Removed: At June 30, 2020, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.
+Added: At December 31, 2020, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
+Added: December 31, 2020
+Added: Effective April 30, 2020, Forestar’s Board of Directors authorized the repurchase of up to $ 30 million of Forestar’s debt securities.
+Added: The authorization has no expiration date.
+Added: All of the $ 30 million authorization was remaining at December 31, 2020.
Financial Services:
1 unchanged sentence
DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames from 45 to 60 days in accordance with the terms of the mortgage repurchase facility.
−Removed: In May 2020, the mortgage repurchase facility was amended to increase its total capacity to $ 1.35 billion;
−Removed: however, the capacity increases without requiring additional commitments to $ 1.575 billion for approximately 30 days at the end of the third quarter of fiscal 2020 and first quarter of fiscal 2021 and for approximately 45 days at the end of fiscal 2020.
+Added: The total capacity of the facility is $ 1.35 billion;
+Added: however, the capacity increased, without requiring additional commitments, to $ 1.575 billion for approximately 45 days around September 30, 2020 and increased again for approximately 30 days around December 31, 2020.
The capacity of the facility can also be increased to $ 1.8 billion, subject to the availability of additional commitments.
The maturity date of the facility is February 19, 2021.
−Removed: As of June 30, 2020, $ 1.39 billion of mortgage loans held for sale with a collateral value of $ 1.36 billion were pledged under the mortgage repurchase facility.
−Removed: DHI Mortgage had an obligation of $ 1.2 billion outstanding under the mortgage repurchase facility at June 30, 2020 at a 2.4 % annual interest rate.
+Added: The Company is currently in discussions with its lenders and expects to renew and extend the facility on similar terms prior to its maturity date.
+Added: As of December 31, 2020, $ 1.31 billion of mortgage loans held for sale with a collateral value of $ 1.29 billion were pledged under the mortgage repurchase facility.
+Added: As a result of advance paydowns totaling $ 319.4 million, DHI Mortgage had an obligation of $ 969.1 million outstanding under the mortgage repurchase facility at December 31, 2020 at a 2.4 % annual interest rate.
The mortgage repurchase facility is not guaranteed by D.R.
2 unchanged sentences
These covenants are measured and reported to the lenders monthly.
−Removed: At June 30, 2020, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facility.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: At December 31, 2020, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facility.
NOTE E – CAPITALIZED INTEREST
2 unchanged sentences
During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred.
−Removed: During the first nine months of fiscal 2020 and fiscal 2019, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.
−Removed: The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and nine months ended June 30, 2020 and 2019:
+Added: During the first three months of fiscal 2021 and fiscal 2020, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.
+Added: The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three months ended December 31, 2020 and 2019:
Three Months Ended
−Removed: June 30, Nine Months Ended
−Removed: 2020 2019 2020 2019
(In millions)
4 unchanged sentences
_______________
−Removed: (1) Interest incurred included interest on the Company's mortgage repurchase facility of $ 4.3 million and $ 14.0 million in the three and nine months ended June 30, 2020, respectively, and $ 4.5 million and $ 10.8 million in the same periods of fiscal 2019.
−Removed: Also included in interest incurred is Forestar interest of $ 11.4 million and $ 29.8 million in the three and nine months ended June 30, 2020, respectively, and $ 7.9 million and $ 10.7 million in the same periods of fiscal 2019.
+Added: (1) Interest incurred included interest on the Company's mortgage repurchase facility of $ 4.5 million and $ 4.7 million in the three months ended December 31, 2020 and 2019, respectively, and Forestar interest of $ 11.5 million and $ 8.7 million in those periods.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE F – PROPERTY AND EQUIPMENT
−Removed: The Company’s property and equipment balances and the related accumulated depreciation at June 30, 2020 and September 30, 2019 are summarized below.
−Removed: These balances include properties related to the operations of DHI Communities, which develops, constructs and owns multi-family residential properties that produce rental income.
−Removed: DHI Communities had four projects under active construction and one project that was substantially complete at June 30, 2020.
+Added: The Company’s property and equipment balances and the related accumulated depreciation at December 31, 2020 and September 30, 2020 are summarized below.
2020 September 30,
1 unchanged sentence
Buildings and improvements $ 272.7 $ 267.4
−Removed: $ 349.7 $ 329.4
−Removed: Multi-family rental properties under construction 86.2 65.2
−Removed: Single-family rental properties 118.9 37.0
Model home furniture 134.4 134.0
Office furniture and equipment 109.4 108.1
−Removed: Total property and equipment
−Removed: $ 920.6 $ 760.1
+Added: Land 31.8 32.3
+Added: Single-family rental operations
+Added: Single-family rental properties 89.3 68.1
+Added: Land 17.3 19.1
+Added: Total single-family rental operations 106.6 87.2
Accumulated depreciation ( 266.6 ) ( 256.2 )
+Added: Total homebuilding 388.3 372.8
+Added: Other Businesses
+Added: Multi-family rental operations
+Added: Multi-family rental properties 204.2 173.8
+Added: Land 77.0 58.3
+Added: Total multi-family rental operations 281.2 232.1
+Added: Oil and gas related assets 69.2 69.7
+Added: Office furniture and equipment 16.1 15.6
+Added: Land 19.7 19.7
+Added: Accumulated depreciation ( 27.1 ) ( 28.2 )
+Added: Total other businesses 359.1 308.9
+Added: Forestar, net 1.9 1.1
+Added: Financial services, net 3.7 3.9
+Added: Eliminations ( 4.6 ) ( 3.0 )
Property and equipment, net $ 748.4 $ 683.7
−Removed: $ 631.9 $ 499.2
−Removed: _____________
−Removed: (1) At June 30, 2020, buildings and improvements included $ 63.5 million related to completed multi-family rental properties and $ 65.1 million related to the Company’s oil and gas related assets.
−Removed: Additionally, at June 30, 2020, land included $ 60.0 million related to the Company’s multi-family rental operations.
−Removed: (2) At September 30, 2019, buildings and improvements included $ 50.7 million related to completed multi-family rental properties and $ 56.9 million related to the Company’s oil and gas related assets.
−Removed: Additionally, at September 30, 2019, land included $ 38.0 million related to the Company’s multi-family rental operations.
−Removed: Depreciation expense was $ 17.1 million and $ 51.6 million during the three and nine months ended June 30, 2020, respectively, compared to $ 16.7 million and $ 48.4 million in the same periods of fiscal 2019.
+Added: Depreciation expense was $ 17.8 million and $ 17.2 million during the three months ended December 31, 2020 and 2019, respectively.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE G – MORTGAGE LOANS
Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property.
−Removed: At June 30, 2020, mortgage loans held for sale had an aggregate carrying value of $ 1.5 billion and an aggregate outstanding principal balance of $ 1.4 billion.
+Added: At December 31, 2020, mortgage loans held for sale had an aggregate carrying value of $ 1.44 billion and an aggregate outstanding principal balance of $ 1.37 billion.
At September 30, 2020, mortgage loans held for sale had an aggregate carrying value of $ 1.53 billion and an aggregate outstanding principal balance of $ 1.46 billion.
−Removed: During the nine months ended June 30, 2020 and 2019, mortgage loans originated totaled $ 8.4 billion and $ 6.0 billion, respectively, and mortgage loans sold totaled $ 8.0 billion and $ 5.8 billion, respectively.
−Removed: The Company had gains on sales of loans and servicing rights of $ 116.7 million and $ 263.7 million during the three and nine months ended June 30, 2020, respectively, compared to $ 85.4 million and $ 218.3 million in the prior year periods.
+Added: During the three months ended December 31, 2020 and 2019, mortgage loans originated totaled $ 3.5 billion and $ 2.3 billion, respectively, and mortgage loans sold totaled $ 3.6 billion and $ 2.3 billion, respectively.
+Added: The Company had gains on sales of loans and servicing rights of $ 138.9 million during the three months ended December 31, 2020 compared to $ 73.6 million in the prior year period.
Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations.
−Removed: Approximately 93 % of the mortgage loans sold by DHI Mortgage during the nine months ended June 30, 2020 were sold to four major financial entities, of which one entity purchased 36 %.
−Removed: In response to C-19, the U.S.
+Added: During the three months ended December 31, 2020, approximately 66 % of the Company’s mortgage loans were sold directly to the Federal National Mortgage Association (Fannie Mae) or into securities backed by the Government National Mortgage Association (Ginnie Mae) and 27 % were sold to two other major financial entities.
+Added: In response to the COVID-19 pandemic (C-19), the U.S.
government has taken various actions to support the economy and the continued functioning of the financial markets.
−Removed: On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which included changes to current forbearance options for government-backed loans designed to keep homeowners in their homes.
+Added: In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which included changes to current forbearance options for government-backed loans designed to keep homeowners in their homes.
Due to the uncertainty surrounding these forbearance options, servicing values declined rapidly at the end of March.
−Removed: The Company began retaining the servicing rights on some of its loan originations during the three months ended June 30, 2020.
−Removed: At June 30, 2020, the fair value of mortgage servicing rights was $ 10.0 million and is included in other assets in the consolidated balance sheet.
−Removed: The Company also occasionally uses hedging instruments as part of a program to offer below market interest rate financing to its homebuyers in certain markets.
−Removed: At June 30, 2020, the Company had mortgage-backed securities (MBS) totaling $ 1.3 billion that did not yet have interest rate lock commitments or closed loans created or assigned and recorded a liability of $ 11.7 million for the fair value of such MBS position.
+Added: As a result, the Company began retaining the servicing rights on a portion of its loan originations.
+Added: Servicing values have since improved, and the Company sold a portion of its retained mortgage servicing rights in the three months ended December 31, 2020.
+Added: The Company expects to continue retaining some servicing rights prior to selling them to third parties, typically within six months of loan origination.
+Added: At December 31, 2020 and September 30, 2020, the fair value of mortgage servicing rights was $ 9.8 million and $ 17.1 million, respectively, and is included in other assets in the consolidated balance sheets.
+Added: The Company also uses hedging instruments as part of a program to offer below market interest rate financing to its homebuyers.
+Added: At December 31, 2020 and September 30, 2020, the Company had mortgage-backed securities (MBS) totaling $ 1.4 billion and $ 1.1 billion, respectively, that did not yet have interest rate lock commitments or closed loans created or assigned and recorded a liability of $ 7.5 million and $ 5.3 million for the fair value of such MBS position.
NOTE H – INCOME TAXES
−Removed: The Company’s income tax expense for the three and nine months ended June 30, 2020 was $ 149.5 million and $ 377.6 million, respectively, compared to $ 153.1 million and $ 350.5 million in the prior year periods.
−Removed: The effective tax rate was 19.1 % and 19.6 % for the three and nine months ended June 30, 2020, respectively, compared to 24.4 % and 23.9 % in the prior year periods.
−Removed: The effective tax rate for the three and nine months ended June 30, 2020 includes a tax benefit of $ 38.1 million and $ 77.6 million, respectively, from the enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (the Act).
−Removed: The Act retroactively reinstated the federal energy efficient homes tax credit that expired on December 31, 2017 to homes closed from January 1, 2018 to December 31, 2020.
−Removed: The effective tax rates for all periods include an expense for state income taxes, reduced by tax benefits related to stock-based compensation.
−Removed: The Company’s deferred tax assets, net of deferred tax liabilities, were $ 172.2 million at June 30, 2020 compared to $ 181.8 million at September 30, 2019.
−Removed: The Company has a valuation allowance of $ 13.6 million at June 30, 2020 and $ 18.7 million at September 30, 2019 related to state deferred tax assets for net operating loss (NOL) carryforwards that are more likely than not to expire before being realized.
+Added: The Company’s income tax expense for the three months ended December 31, 2020 and 2019 was $ 239.1 million and $ 90.8 million, respectively.
+Added: The effective tax rate was 23.1 % for the three months ended December 31, 2020 compared to 17.4 % in the prior year period.
+Added: The effective tax rates for both periods include an expense for state income taxes and tax benefits related to stock-based compensation and the federal energy efficient homes tax credit.
+Added: For the three months ended December 31, 2019, the retroactive reinstatement of the federal energy efficient homes tax credit for homes closed from January 1, 2018 to September 30, 2019 reduced the effective tax rate by 5.6 %.
+Added: The Company’s deferred tax assets, net of deferred tax liabilities, were $ 149.5 million at December 31, 2020 compared to $ 152.4 million at September 30, 2020.
+Added: The Company has a valuation allowance of $ 7.5 million at December 31, 2020 and September 30, 2020 related to state deferred tax assets for net operating loss (NOL) carryforwards that are more likely than not to expire before being realized.
The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to the remaining state NOL carryforwards.
5 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE I – EARNINGS PER SHARE
1 unchanged sentence
Three Months Ended
−Removed: June 30, Nine Months Ended
−Removed: 2020 2019 2020 2019
(In millions)
12 unchanged sentences
Forestar also has an effective shelf registration statement filed with the SEC in September 2018, registering $ 500 million of equity securities.
−Removed: On September 30, 2019, Forestar issued approximately 6.0 million shares of its common stock for $ 17.50 per share in a public underwritten offering.
−Removed: Following the offering, $ 394.3 million remains available for issuance under Forestar’s shelf registration statement.
+Added: As of December 31, 2020, $ 394.3 million remained available for issuance under Forestar’s shelf registration statement, $ 100 million of which is reserved for sales under its at-the-market equity offering program that became effective in August 2020.
+Added: As of December 31, 2020, no shares had been issued under the at-the-market equity offering program.
Effective July 30, 2019, the Board of Directors authorized the repurchase of up to $ 1.0 billion of the Company’s common stock.
The authorization has no expiration date.
−Removed: During the nine months ended June 30, 2020, the Company repurchased 7.0 million shares of its common stock for $ 360.4 million, none of which were purchased in the three months ended June 30, 2020.
−Removed: The Company’s remaining authorization at June 30, 2020 was $ 535.3 million.
−Removed: During each of the first three quarters of fiscal 2020, the Board of Directors approved and paid quarterly cash dividends of $ 0.175 per common share, the most recent of which was paid on May 21, 2020 to stockholders of record on May 11, 2020.
−Removed: In July 2020, the Board of Directors approved a quarterly cash dividend of $ 0.175 per common share, payable on August 24, 2020 to stockholders of record on August 12, 2020.
+Added: During the three months ended December 31, 2020, the Company repurchased 1.0 million shares of its common stock for $ 69.8 million.
+Added: The Company’s remaining authorization at December 31, 2020 was $ 465.5 million.
+Added: During the three months ended December 31, 2020, the Board of Directors approved a quarterly cash dividend of $ 0.20 per common share, which was paid on December 14, 2020 to stockholders of record on December 4, 2020.
+Added: In January 2021, the Board of Directors approved a quarterly cash dividend of $ 0.20 per common share, payable on February 25, 2021 to stockholders of record on February 17, 2021.
Cash dividends of $ 0.175 per common share were approved and paid in each quarter of fiscal 2020.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE K – EMPLOYEE BENEFIT PLANS
4 unchanged sentences
The RSUs have no dividend or voting rights until vested.
−Removed: In November 2019, a total of 360,000 performance-based RSU equity awards were granted to the Company’s executive officers.
+Added: In November 2020, the Company granted 360,000 performance-based RSU equity awards to its executive officers.
These awards vest at the end of a three -year performance period ending September 30, 2023.
5 unchanged sentences
The grant date fair value of these equity awards was $ 70.60 per unit.
−Removed: Compensation expense related to this grant was $ 2.5 million and $ 7.0 million in the three and nine months ended June 30, 2020, respectively, based on the Company’s performance against its peer group, the elapsed portion of the performance period and the grant date fair value of the award.
−Removed: During the nine months ended June 30, 2020, a total of 1.7 million time-based RSUs were granted to approximately 960 recipients, including the Company’s executive officers, other key employees and non-management directors.
−Removed: The weighted average grant date fair value of these equity awards was $ 35.98 per unit, and they vest annually in equal installments over periods of three to five years.
−Removed: Compensation expense related to these grants was $ 3.4 million and $ 7.5 million in the three and nine months ended June 30, 2020, respectively, of which $ 3.5 million related to expense recognized for employees that were retirement eligible on the date of grant.
−Removed: Total stock-based compensation expense related to the Company’s restricted stock units during the three and nine months ended June 30, 2020 was $ 20.4 million and $ 56.6 million, respectively, compared to $ 16.8 million and $ 51.1 million during the three and nine months ended June 30, 2019, respectively.
+Added: Compensation expense related to this grant was $ 3.2 million in the three months ended December 31, 2020, based on an estimate of the Company’s performance against its peer group, the elapsed portion of the performance period and the grant date fair value of the award.
+Added: Stock-based compensation expense related to the Company’s performance-based and time-based restricted stock units was $ 21.2 million during the three months ended December 31, 2020 compared to $ 15.9 million during the three months ended December 31, 2019.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE L – COMMITMENTS AND CONTINGENCIES
2 unchanged sentences
The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates and is adjusted to reflect qualitative risks associated with the types of homes built and the geographic areas in which they are built.
−Removed: Changes in the Company’s warranty liability during the three and nine months ended June 30, 2020 and 2019 were as follows:
+Added: Changes in the Company’s warranty liability during the three months ended December 31, 2020 and 2019 were as follows:
Three Months Ended
−Removed: June 30, Nine Months Ended
−Removed: 2020 2019 2020 2019
(In millions)
8 unchanged sentences
The Company has established reserves for these contingencies based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes.
−Removed: The estimated liabilities for these contingencies were $ 461.3 million and $ 434.7 million at June 30, 2020 and September 30, 2019, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets.
−Removed: Approximately 99 % of these reserves related to construction defect matters at both June 30, 2020 and September 30, 2019.
−Removed: Expenses related to the Company’s legal contingencies were $ 41.1 million and $ 19.9 million in the nine months ended June 30, 2020 and 2019, respectively.
−Removed: Changes in the Company’s legal claims reserves during the nine months ended June 30, 2020 and 2019 were as follows:
−Removed: Nine Months Ended
+Added: The estimated liabilities for these contingencies were $ 491.8 million and $ 473.8 million at December 31, 2020 and September 30, 2020, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets.
+Added: Approximately 99 % of these reserves related to construction defect matters at both December 31, 2020 and September 30, 2020.
+Added: Expenses related to the Company’s legal contingencies were $ 17.4 million and $ 16.6 million in the three months ended December 31, 2020 and 2019, respectively.
+Added: Changes in the Company’s legal claims reserves during the three months ended December 31, 2020 and 2019 were as follows:
+Added: Three Months Ended
(In millions)
5 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
The Company estimates and records receivables under its applicable insurance policies related to its estimated contingencies for known claims and anticipated future construction defect claims on previously closed homes and other legal claims and lawsuits incurred in the ordinary course of business when recovery is probable.
+Added: However, because the self-insured retentions under these policies are significant, the Company anticipates it will largely be self-insured.
+Added: The Company’s estimated insurance receivables from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $ 82.2 million, $ 81.2 million and $ 76.9 million at December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and are included in other assets in the consolidated balance sheets.
Additionally, the Company may have the ability to recover a portion of its losses from its subcontractors and their insurance carriers when the Company has been named as an additional insured on their insurance policies.
−Removed: The Company’s receivables related to its estimates of insurance recoveries from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $ 82.4 million, $ 75.1 million and $ 69.8 million at June 30, 2020, September 30, 2019 and June 30, 2019, respectively, and are included in other assets in the consolidated balance sheets.
The estimation of losses related to these reserves and the related estimates of recoveries from insurance policies are subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to the Company’s markets and the types of products built, claim frequency, claim settlement costs and patterns, insurance industry practices and legal interpretations, among others.
5 unchanged sentences
Land purchase contract deposits and capitalized pre-acquisition costs are expensed to inventory and land option charges when the Company believes it is probable that it will not acquire the property under contract and will not be able to recover these costs through other means.
−Removed: At June 30, 2020, the Company’s homebuilding segment had total deposits of $ 561.9 million, consisting of cash deposits of $ 517.4 million and promissory notes of $ 44.5 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $ 8.5 billion.
+Added: At December 31, 2020, the Company’s homebuilding segment had total deposits of $ 776.0 million, consisting of cash deposits of $ 710.3 million and promissory notes and surety bonds of $ 65.7 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $ 11.9 billion.
The majority of land and lots under contract are currently expected to be purchased within three years.
Of these amounts, $ 122.9 million of the deposits related to contracts with Forestar to purchase land and lots with a remaining purchase price of $ 1.3 billion.
−Removed: A limited number of the homebuilding land and lot purchase contracts at June 30, 2020, representing $ 50.8 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations.
+Added: A limited number of the homebuilding land and lot purchase contracts at December 31, 2020, representing $ 73.5 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations.
Of the $ 73.5 million remaining purchase price subject to specific performance provisions, $ 41.5 million related to contracts between the homebuilding segment and Forestar.
−Removed: During the three and nine months ended June 30, 2020, Forestar reimbursed the homebuilding segment $ 7.0 million and $ 23.2 million, respectively, for previously paid earnest money and $ 12.9 million and $ 26.2 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar.
−Removed: During the three and nine months ended June 30, 2019, Forestar reimbursed the homebuilding segment $ 10.8 million and $ 27.6 million, respectively, for previously paid earnest money and $ 4.7 million and $ 8.4 million, respectively, for pre-acquisition and other due diligence costs.
+Added: During the three months ended December 31, 2020 and 2019, Forestar reimbursed the homebuilding segment $ 16.1 million and $ 10.7 million, respectively, for previously paid earnest money and $ 20.9 million and $ 5.2 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar.
Other Commitments
−Removed: At June 30, 2020, the Company had outstanding surety bonds of $ 1.7 billion and letters of credit of $ 159.4 million to secure performance under various contracts.
+Added: At December 31, 2020, the Company had outstanding surety bonds of $ 1.9 billion and letters of credit of $ 192.1 million to secure performance under various contracts.
Of the total letters of credit, $ 151.6 million were issued under the homebuilding revolving credit facility and $ 40.5 million were issued under Forestar’s revolving credit facility.
1 unchanged sentence
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE M – OTHER ASSETS, ACCRUED EXPENSES AND OTHER LIABILITIES
−Removed: The Company’s other assets at June 30, 2020 and September 30, 2019 were as follows:
+Added: The Company’s other assets at December 31, 2020 and September 30, 2020 were as follows:
2020 September 30,
6 unchanged sentences
Margin deposits 33.4 16.2
−Removed: Multi-family rental property held for sale — 28.9
Contract assets - insurance agency commissions 49.1 47.1
3 unchanged sentences
$ 1,236.2 $ 1,113.7
−Removed: The Company’s accrued expenses and other liabilities at June 30, 2020 and September 30, 2019 were as follows:
+Added: The Company’s accrued expenses and other liabilities at December 31, 2020 and September 30, 2020 were as follows:
2020 September 30,
14 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
+Added: December 31, 2020
NOTE N – FAIR VALUE MEASUREMENTS
−Removed: The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2020 and September 30, 2019.
−Removed: Changes in the fair value of the Level 3 assets during the nine months ended June 30, 2020 and 2019 were not material.
−Removed: Fair Value at June 30, 2020
+Added: The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020 and September 30, 2020.
+Added: Changes in the fair value of the Level 3 assets during the three months ended December 31, 2020 and 2019 were not material.
+Added: Fair Value at December 31, 2020
Balance Sheet Location Level 1 Level 2 Level 3 Total
1 unchanged sentence
Debt securities collateralized by residential real estate Other assets $ — $ — $ 3.9 $ 3.9
−Removed: Mortgage loans held for sale (a) Mortgage loans held for sale — 1,474.8 17.7 1,492.5
−Removed: Mortgage servicing rights (b) Other assets — — 10.0 10.0
−Removed: Derivatives not designated as hedging instruments (c):
+Added: Mortgage loans held for sale (1) Mortgage loans held for sale — 1,411.6 17.9 1,429.5
+Added: Mortgage servicing rights (2) Other assets — — 9.8 9.8
+Added: Derivatives not designated as hedging instruments (3):
Interest rate lock commitments Other assets — 26.4 — 26.4
Forward sales of mortgage-backed securities Other liabilities — ( 38.5 ) — ( 38.5 )
−Removed: Best-efforts and mandatory commitments Other liabilities — ( 0.7 ) — ( 0.7 )
Fair Value at September 30, 2020
2 unchanged sentences
Debt securities collateralized by residential real estate Other assets $ — $ — $ 3.9 $ 3.9
−Removed: Mortgage loans held for sale (a) Mortgage loans held for sale — 1,055.3 9.8 1,065.1
−Removed: Derivatives not designated as hedging instruments (c):
+Added: Mortgage loans held for sale (1) Mortgage loans held for sale — 1,503.2 15.1 1,518.3
+Added: Mortgage servicing rights (2) Other assets — — 17.1 17.1
+Added: Derivatives not designated as hedging instruments (3):
Interest rate lock commitments Other assets — 31.3 — 31.3
Forward sales of mortgage-backed securities Other liabilities — ( 16.2 ) — ( 16.2 )
−Removed: Best-efforts and mandatory commitments Other liabilities — ( 1.0 ) — ( 1.0 )
___________________
−Removed: (a) The Company typically elects the fair value option upon origination for mortgage loans held for sale.
+Added: (1) The Company typically elects the fair value option upon origination for mortgage loans held for sale.
Interest income earned on mortgage loans held for sale is based on contractual interest rates and included in other income.
−Removed: Mortgage loans held for sale valued using Level 3 inputs at June 30, 2020 and September 30, 2019 include $ 17.7 million and $ 9.8 million, respectively, of loans for which the Company elected the fair value option upon origination and did not sell into the secondary market.
+Added: Mortgage loans held for sale valued using Level 3 inputs at December 31, 2020 and September 30, 2020 include $ 17.9 million and $ 15.1 million, respectively, of loans for which the Company elected the fair value option upon origination and did not sell into the secondary market.
The fair value of these mortgage loans held for sale is generally calculated considering pricing in the secondary market and adjusted for the value of the underlying collateral, including interest rate risk, liquidity risk and prepayment risk.
The Company plans to sell these loans as market conditions permit.
−Removed: (b) Although the majority of the Company’s mortgage loans are sold on a servicing-released basis, when the servicing rights are retained, the Company records them at fair value using third-party valuations.
−Removed: The key assumptions used in the valuation, which are generally unobservable inputs, are mortgage prepayment rates, discount rates and delinquency rates, which were 13 %, 11 % and 5 %, respectively, for the three months ended June 30, 2020.
−Removed: (c) Fair value measurements of these derivatives represent changes in fair value, as calculated by reference to quoted prices for similar assets, and are reflected in the balance sheet as other assets or accrued expenses and other liabilities.
+Added: (2) Although the majority of the Company’s mortgage loans are sold on a servicing-released basis, when the servicing rights are retained, the Company records them at fair value using third-party valuations.
+Added: The key assumptions used in the valuation, which are generally unobservable inputs, are mortgage prepayment rates, discount rates and delinquency rates, which were 11 %, 11 % and 5 %, respectively, at December 31, 2020 and 13 %, 11 % and 5 %, respectively, at September 30, 2020.
+Added: (3) Fair value measurements of these derivatives represent changes in fair value, as calculated by reference to quoted prices for similar assets, and are reflected in the balance sheet as other assets or accrued expenses and other liabilities.
Changes in the fair value of these derivatives are included in revenues in the consolidated statements of operations.
−Removed: The net fair value change for the three and nine months ended June 30, 2020 and 2019 recognized in revenues in the consolidated statements of operations was not significant.
+Added: The net fair value change for the three months ended December 31, 2020 and 2019 recognized in revenues in the consolidated statements of operations was not significant.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
−Removed: The following table summarizes the Company’s assets measured at fair value on a nonrecurring basis at June 30, 2020 and September 30, 2019:
+Added: December 31, 2020
+Added: The following table summarizes the Company’s assets measured at fair value on a nonrecurring basis at December 31, 2020 and September 30, 2020:
Fair Value at
−Removed: June 30, 2020 Fair Value at
+Added: December 31, 2020 Fair Value at
September 30, 2020
1 unchanged sentence
(In millions)
−Removed: Inventory held and used (a) (b) Inventories $ — $ — $ — $ 4.5
−Removed: Mortgage loans held for sale (a) (c) Mortgage loans held for sale — 4.2 — 2.7
−Removed: Other mortgage loans (a) (d) Other assets — 2.8 — 1.8
+Added: Inventory held and used (1) (2) Inventories $ — $ 9.7 $ — $ —
+Added: Mortgage loans held for sale (1) (3) Mortgage loans held for sale — 1.5 1.5 2.2
+Added: Other mortgage loans (1) (4) Other assets — 1.1 0.6 2.0
___________________
−Removed: (a) The fair values included in the table above represent only those assets whose carrying values were adjusted to fair value as a result of impairment in the respective period and were held at the end of the period.
−Removed: (b) In performing its impairment analysis of communities, discount rates ranging from 16 % to 18 % were used in the periods presented.
−Removed: (c) These mortgage loans have some degree of impairment affecting their marketability and are valued at the lower of carrying value or fair value.
+Added: (1) The fair values included in the table above represent only those assets whose carrying values were adjusted to fair value as a result of impairment in the respective period and were held at the end of the period.
+Added: (2) The fair value of inventory was determined based on recent offers received from outside parties.
+Added: (3) These mortgage loans have some degree of impairment affecting their marketability and are valued at the lower of carrying value or fair value.
When available, quoted prices in the secondary market are used to determine fair value (Level 2);
otherwise, a cash flow valuation model is used to determine fair value (Level 3).
−Removed: (d) The fair values of other mortgage loans was determined based on the value of the underlying collateral.
−Removed: For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at June 30, 2020 and September 30, 2019:
−Removed: Carrying Value Fair Value at June 30, 2020
+Added: (4) The fair values of other mortgage loans was determined based on the value of the underlying collateral.
+Added: For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at December 31, 2020 and September 30, 2020:
+Added: Carrying Value Fair Value at December 31, 2020
Level 1 Level 2 Level 3 Total
(In millions)
−Removed: Cash and cash equivalents (a) $ 2,353.5 $ 2,353.5 $ — $ — $ 2,353.5
−Removed: Restricted cash (a) 19.2 19.2 — — 19.2
−Removed: Notes payable (b) (c) 4,297.3 — 3,253.4 1,219.2 4,472.6
+Added: Cash and cash equivalents (1) $ 2,454.9 $ 2,454.9 $ — $ — $ 2,454.9
+Added: Restricted cash (1) 20.0 20.0 — — 20.0
+Added: Notes payable (2) (3) 4,225.6 — 3,389.9 1,050.3 4,440.2
Carrying Value Fair Value at September 30, 2020
1 unchanged sentence
(In millions)
−Removed: Cash and cash equivalents (a) $ 1,494.3 $ 1,494.3 $ — $ — $ 1,494.3
−Removed: Restricted cash (a) 19.7 19.7 — — 19.7
−Removed: Notes payable (b) (c) 3,399.4 — 2,533.9 991.9 3,525.8
+Added: Cash and cash equivalents (1) $ 3,018.5 $ 3,018.5 $ — $ — $ 3,018.5
+Added: Restricted cash (1) 21.6 21.6 — — 21.6
+Added: Notes payable (2) (3) 4,283.3 — 3,285.5 1,203.7 4,489.2
___________________
−Removed: (a) The fair values of cash, cash equivalents and restricted cash approximate their carrying values due to their short-term nature and are classified as Level 1 within the fair value hierarchy.
−Removed: (b) The fair value of the senior notes is determined based on quoted prices, which is classified as Level 2 within the fair value hierarchy.
−Removed: (c) The fair values of other secured notes and borrowings on the revolving credit facilities and the mortgage repurchase facility approximate carrying value due to their short-term nature or floating interest rate terms, as applicable, and are classified as Level 3 within the fair value hierarchy.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
−Removed: June 30, 2020
−Removed: NOTE O – RELATED PARTY TRANSACTIONS
−Removed: In March 2019, the Company assigned its rights under a land purchase contract it entered into in December 2017 to R&R Riverview LLC (R&R), an entity owned by Ryan Horton and Reagan Horton, the adult sons of Donald R.
−Removed: Horton, the Company’s Chairman.
−Removed: In March 2019, R&R exercised its rights under the purchase contract and paid $ 77.5 million for 119 acres of undeveloped land in Arizona.
−Removed: In connection with the transaction, Donald R.
−Removed: Horton loaned R&R $ 77.5 million at a 2.55 % annual interest rate and obtained a security interest in the land.
−Removed: Concurrent with the contract assignment to R&R, the Company entered into a land purchase contract with R&R to purchase the 119 acres for R&R’s cost plus an annualized return of 16 %.
−Removed: In accordance with the Company’s policy on related party transactions, this transaction was reviewed and approved by a committee of the Board of Directors composed of independent directors.
−Removed: The Company determined that R&R was a variable interest entity, and the Company had the power through its rights in its land purchase contract with R&R to control the activities that most significantly impact the entity’s economic performance, and the Company is the primary beneficiary.
−Removed: Accordingly, the Company consolidated the variable interest entity in its consolidated financial statements by increasing inventory and notes payable by $ 77.5 million, and this amount was included in those balances at September 30, 2019.
−Removed: In October 2019, the Company paid R&R $ 84.2 million for all 119 acres of land and deconsolidated the variable interest entity from the financial statements.
−Removed: The purchase transaction was also reviewed and approved by a committee of the Board of Directors composed of independent directors.
+Added: (1) The fair values of cash, cash equivalents and restricted cash approximate their carrying values due to their short-term nature and are classified as Level 1 within the fair value hierarchy.
+Added: (2) The fair value of the senior notes is determined based on quoted prices, which is classified as Level 2 within the fair value hierarchy.
+Added: (3) The fair values of other secured notes and borrowings on the revolving credit facilities and the mortgage repurchase facility approximate carrying value due to their short-term nature or floating interest rate terms, as applicable, and are classified as Level 3 within the fair value hierarchy.
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.