What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-11-18 compared with 2020-11-20 · 131 added, 119 removed, 230 unchanged (52% of the section changed)

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Horton, America’s Builder , Emerald Homes, Express Homes and Freedom Homes.

Our common stock is included in the S&P 500 Index and listed on the New York Stock Exchange under the ticker symbol “DHI.” Unless the context otherwise requires, the terms “D.R.

Our common stock is included in the S&P 500 Index and listed on the New York Stock Exchange (NYSE) under the ticker symbol “DHI.” Unless the context otherwise requires, the terms “D.R.

Horton,” the “Company,” “we” and “our” used herein refer to D.R.

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For the year ended September 30, 2021, we closed 81,965 homes with an average closing price of $323,300.

Our business operations consist of homebuilding, a majority-owned residential lot development company, financial services and other activities.

Our homebuilding operations are our core business, generating 97% of our consolidated revenues of $20.3 billion, $17.6 billion and $16.1 billion in fiscal 2020, 2019 and 2018, respectively.

Our business operations consist of homebuilding, a majority-owned residential lot development company, financial services, rental and other activities.

Our homebuilding operations are our core business, generating 96% of our consolidated revenues of $27.8 billion in fiscal 2021 and 97% of consolidated revenues of $20.3 billion and $17.6 billion in fiscal 2020 and 2019, respectively.

Our homebuilding operations generate most of their revenues from the sale of completed homes and to a lesser extent from the sale of land and lots.

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Our position as the most geographically diverse and largest volume homebuilder in the United States provides a strong platform for us to compete for new home sales.

In recent years, we have expanded our product offerings to include a broad range of homes for entry-level, move-up, active adult and luxury buyers across our markets.

Our product offerings include a broad range of homes for entry-level, move-up, active adult and luxury buyers.

Our entry-level homes at affordable price points have experienced very strong demand from homebuyers, as the entry-level segment of the new home market remains under-served, with low inventory levels relative to demand.

During fiscal 2018, we acquired 75% of the outstanding shares of Forestar Group Inc.

(Forestar), a publicly traded residential lot development company listed on the New York Stock Exchange under the ticker symbol “FOR.” Forestar is a component of our homebuilding strategy to enhance operational and capital efficiency and returns by expanding relationships with land developers and increasing the portion of our land and lot position controlled under land purchase contracts.

(Forestar), a publicly traded residential lot development company listed on the NYSE under the ticker symbol “FOR.” Forestar is a component of our homebuilding strategy to enhance operational and capital efficiency and returns by expanding relationships with land developers and increasing the portion of our land and lot position controlled through land purchase contracts.

At September 30, 2021, we owned 63% of Forestar’s outstanding common stock.

Our financial services operations provide mortgage financing and title agency services to homebuyers in many of our homebuilding markets.

DHI Mortgage, our 100% owned subsidiary, provides mortgage financing services primarily to our homebuyers and sells substantially all of the mortgages it originates and the majority of the related servicing rights to third-party purchasers.

DHI Mortgage originates loans in accordance with purchaser guidelines and sells substantially all of its mortgage production shortly after origination.

DHI Mortgage, our 100% owned subsidiary, provides mortgage financing services primarily to our homebuyers and sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers.

DHI Mortgage originates loans in accordance with purchaser guidelines and sells substantially all of its mortgage production after origination.

Our 100% owned subsidiary title companies serve as title insurance agents by providing title insurance policies, examination and closing services, primarily to our homebuyers.

In addition to our homebuilding, Forestar and financial services operations, we have subsidiaries that engage in other business activities.

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.

The operating results of these subsidiaries are immaterial for separate reporting and therefore are grouped together and presented as other.

Our rental segment consists of multi-family and single-family rental operations.

The multi-family rental operations develop, construct, lease, own and ultimately sell the residential properties.

The single-family rental operations construct single-family rental homes with the intent to later market the community for a bulk sale of homes.

In addition to our homebuilding, Forestar, financial services and rental operations, we engage in other business activities through our subsidiaries.

We conduct insurance-related operations, own non-residential real estate including ranch land and improvements and own and operate energy related assets.

The results of these operations are immaterial for separate reporting and therefore are grouped together and presented as other.

Available Information

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Our SEC filings are also available to the public on the SEC’s website at www.sec.gov.

In addition to our SEC filings, our corporate governance documents, including our Code of Ethical Conduct for the Chief Executive Officer, Chief Financial Officer and senior financial officers, are available on the “Investor Relations” section of our website under “Corporate Governance.” Our stockholders may also obtain these documents in paper format free of charge upon request made to our Investor Relations department.

In addition to our SEC filings, our corporate governance documents, including our Code of Ethical Conduct for the Chief Executive Officer, Chief Financial Officer and senior financial officers, are available on the “Investor Relations” section of our website under “ESG.” Our stockholders may also obtain these documents in paper format free of charge upon request made to our Investor Relations department.

Our principal executive offices are located at 1341 Horton Circle, Arlington, Texas 76011, and our telephone number is (817) 390-8200.

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Our homebuilding operating divisions are aggregated into six reporting segments, also referred to as reporting regions, which comprise the markets below.

During the fourth quarter of fiscal 2021, we reassessed our operating segments and reportable segments and realigned the aggregation of our homebuilding operating segments into six new reportable segments to better allocate our homebuilding operating segments across geographic reporting regions.

Our financial statements and the notes thereto contain additional information regarding segment performance.

State Reporting Region/Market State Reporting Region/Market

East Region Midwest Region

Delaware Central Delaware Colorado Denver

Northern Delaware Fort Collins

Georgia Savannah Illinois Chicago

Maryland Baltimore Indiana Fort Wayne

Suburban Washington, D.C.

New Jersey Northern New Jersey Iowa Des Moines

Southern New Jersey Minnesota Minneapolis/St.

North Carolina Asheville Ohio Cincinnati

Charlotte Columbus

Greensboro/Winston-Salem

Raleigh/Durham South Central Region

Wilmington Louisiana Baton Rouge

Pennsylvania Central Pennsylvania Lake Charles/Lafayette

Philadelphia Oklahoma Oklahoma City

South Carolina Charleston Texas Austin

Columbia Bryan/College Station

Greenville/Spartanburg Dallas

Hilton Head Fort Worth

Myrtle Beach Houston

Virginia Northern Virginia Killeen/Temple/Waco

Southern Virginia Midland/Odessa

New Braunfels/San Marcos

Southeast Region San Antonio

Alabama Birmingham

Huntsville Southwest Region

Mobile/Baldwin County Arizona Phoenix

Montgomery Tucson

Tuscaloosa New Mexico Albuquerque

Florida Fort Myers/Naples

Gainesville West Region

Jacksonville California Bakersfield

Lakeland Bay Area

Melbourne/Vero Beach Fresno

Miami/Fort Lauderdale Los Angeles County

Ocala Modesto/Merced

Orlando Riverside County

Pensacola/Panama City Sacramento

Lucie San Bernardino County

Tampa/Sarasota San Diego County

Volusia County Hawaii Oahu

West Palm Beach Nevada Las Vegas

Georgia Atlanta Reno

Augusta Oregon Bend

Mississippi Gulf Coast Portland/Salem

Tennessee Chattanooga Utah Salt Lake City

Knoxville Washington Seattle/Tacoma/Everett/Olympia

Memphis Spokane

Nashville Vancouver

Northwest Region South Central Region

Colorado Colorado Springs Oklahoma Oklahoma City

Fort Collins Texas Austin

Oregon Bend Beaumont

Portland/Salem Bryan/College Station

Utah Salt Lake City Corpus Christi

George Dallas

Washington Seattle/Tacoma/Everett/Olympia Fort Worth

Spokane Houston

Vancouver Killeen/Temple/Waco

Midland/Odessa

Southwest Region New Braunfels/San Marcos

Arizona Phoenix San Antonio

California Bakersfield East Region

Bay Area Georgia Atlanta

Fresno Augusta

Los Angeles County Savannah

Modesto/Merced/Stockton North Carolina Asheville

Riverside County Charlotte

Sacramento Greensboro/Winston-Salem

San Bernardino County Raleigh/Durham

San Diego County Wilmington

Hawaii Oahu South Carolina Charleston

Nevada Las Vegas Columbia

Reno Greenville/Spartanburg

New Mexico Albuquerque Hilton Head

Southeast Region Tennessee Chattanooga

Alabama Birmingham Knoxville

Huntsville Memphis

Mobile/Baldwin County Nashville

Tuscaloosa North Region

Florida Fort Myers/Naples Delaware Central Delaware

Gainesville Northern Delaware

Jacksonville Illinois Chicago

Lakeland Indiana Fort Wayne

Melbourne/Vero Beach Indianapolis

Miami/Fort Lauderdale Northwest Indiana

Ocala Iowa Des Moines

Orlando Kentucky Louisville

Pensacola/Panama City Maryland Baltimore

Lucie Suburban Washington, D.C.

Tallahassee Western Maryland

Tampa/Sarasota Minnesota Minneapolis/St.

Volusia County Nebraska Omaha

West Palm Beach New Jersey Northern New Jersey

Louisiana Baton Rouge Southern New Jersey

Lake Charles/Lafayette Ohio Cincinnati

Mississippi Gulf Coast Columbus

Pennsylvania Central Pennsylvania

Virginia Northern Virginia

Southern Virginia

When evaluating new or existing homebuilding markets for purposes of capital allocation, we consider local, market-specific factors, including among others:

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We centralize many important risk elements of our homebuilding business through our regional and corporate offices.

We have five separate homebuilding regional offices.

Generally, each regional office consists of a region president, a chief financial officer, legal counsel and other operational and office support staff.

We have separate homebuilding regional offices, which generally consist of a region president, a chief financial officer, legal counsel and other operational and office support staff.

Each of our region presidents and their management teams are responsible for oversight of the operations of a number of homebuilding operating divisions, including:

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Land/Lot Acquisition and Inventory Management

We acquire land for use in our homebuilding and Forestar operations after we have completed due diligence and generally after we have obtained the rights (known as entitlements) to begin development or construction work resulting in an acceptable number of residential lots.

We acquire land for use in our operations after we have completed due diligence and generally after we have obtained the rights (known as entitlements) to begin development or construction work resulting in an acceptable number of residential lots.

Before we acquire lots or tracts of land, we complete a feasibility study, which includes soil tests, independent environmental studies, other engineering work and financial analysis.

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We attempt to mitigate our exposure to real estate inventory risks by:

• Controlling our level of inventory investment and managing our supply of land/lots owned and controlled under purchase contracts to match the expected housing demand in each of our operating markets;

• Controlling our level of inventory investment and managing our supply of land/lots owned and controlled through purchase contracts to match the expected housing demand in each of our operating markets;

• Monitoring local market and demographic trends, housing preferences and related economic developments, including the identification of desirable housing submarkets based on the quality of local schools, new job opportunities, local growth initiatives and personal income trends;

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Construction time for our homes depends on the availability of labor, materials and supplies, the weather, the size of the home and other factors.

We complete the construction of most homes within two to six months.

We completed the construction of most homes within two to seven months in fiscal 2021, which is longer than prior years, as construction times have been impacted by the labor and materials shortages discussed below.

We typically do not maintain significant inventories of land development or construction materials, except for work in progress materials for active development projects and homes under construction.

Generally, the construction materials used in our operations are readily available from numerous sources.

We have contracts exceeding one year with certain suppliers of building materials that are cancelable at our option.

Generally, the construction materials used in our operations have been readily available from numerous sources, and we have contracts exceeding one year with certain suppliers of building materials that are cancelable at our option.

In fiscal 2021, the effects of the COVID-19 pandemic and labor shortages on manufacturing production, combined with the improvement in economic conditions and the strong demand for new homes, caused multiple disruptions in our supply chain and have resulted in shortages in certain building materials and tightness in the construction labor market, which has caused our construction cycle to lengthen.

We are subject to governmental regulations that affect our land development and construction operations.

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We also use names of acquired companies for a period of time after the acquisition.

We currently utilize the Pacific Ridge Homes brand in our Seattle, Washington market;

the Lexington Homes brand in our Spokane, Washington market;

and the Terramor Homes brand in our Raleigh, North Carolina market.

We currently utilize the Pacific Ridge Homes brand in our Seattle, Washington market and the Terramor Homes brand in our Raleigh, North Carolina market.

The product offerings in all of these markets are similar to, and included with, our D.R.

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We train and inform our sales personnel regarding construction schedules and marketing and advertising plans.

As market conditions warrant, we may provide potential homebuyers with incentives, such as discounts or free upgrades, to be competitive in a particular market or to attain our targeted sales pace.

As market conditions warrant, we may provide potential homebuyers with incentives, such as discounts or included upgrades, to be competitive in a particular market or to attain our targeted sales pace.

We market our homes and communities to prospective homebuyers and real estate brokers digitally, through email, search engine marketing, social media and our company website and other real estate websites, in addition to print media and advertisement.

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We determine our speculative homes strategy in each market based on local market factors, such as new job growth, the number of job relocations, housing demand and supply, seasonality, current sales contract cancellation trends and our past experience in the market.

We maintain a level of speculative home inventory in each community based on our current and planned sales pace, and we monitor and adjust speculative home inventory on an ongoing basis as conditions warrant.

We attempt to maintain a level of speculative home inventory in each community based on our current and planned sales pace, and we monitor and adjust speculative home inventory on an ongoing basis as conditions warrant.

Sales Contracts and Backlog

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Additionally, customers are generally required to pay additional deposits when they select options or upgrade features for their homes.

Our sales contracts include a financing contingency which permits customers to cancel and receive a refund of their deposit if they cannot obtain mortgage financing at prevailing or specified interest rates within a specified period.

Our contracts may include other contingencies, such as the sale of an existing home.

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At September 30, 2021, the value of our backlog of sales orders was $9.5 billion (26,221 homes), an increase of 16% from $8.2 billion (26,683 homes) at September 30, 2020.

The average sales price of homes in backlog was $306,800 at September 30, 2020, up slightly from the $304,100 average at September 30, 2019.

The average sales price of homes in backlog was $360,900 at September 30, 2021, up from the $306,800 average at September 30, 2020.

Many of the contracts in our sales order backlog are subject to contingencies, such as those described above, which can result in cancellations.

As a percentage of gross sales orders, cancellations of sales contracts were 17% in fiscal 2021 compared to 20% in fiscal 2020.

The length of time between the signing of a sales contract for a home and delivery of the home to the buyer (closing) is generally from one to six months;

The length of time between the signing of a sales contract for a home and delivery of the home to the buyer (closing) is generally from one to seven months;

therefore, substantially all of the homes in our sales backlog at September 30, 2021 are scheduled to close in fiscal 2022.

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We typically provide our homebuyers with a ten-year limited warranty for major defects in structural elements such as framing components and foundation systems, a two-year limited warranty on major mechanical systems, and a one-year limited warranty on other construction components.

The subcontractors who perform the actual construction also provide us with warranties on workmanship and are generally prepared to respond to us and the homeowner promptly upon request.

The subcontractors who perform the actual construction also provide us with warranties on workmanship and are expected to respond to us and the homeowner in a timely manner.

In addition, some of our suppliers provide manufacturer’s warranties on specified products installed in the home.

Single-Family Rental Properties

During fiscal 2020, several of our homebuilding divisions began constructing and leasing homes as single-family rental properties.

After these rental properties are constructed and achieve a stabilized level of leased occupancy, the properties in each community are expected to be marketed in bulk for sale.

At September 30, 2020, our homebuilding fixed assets included $87.2 million of assets related to our single-family rental platform representing approximately 740 single-family rental homes and finished lots, including approximately 440 completed homes.

There were no bulk sales of single-family rental properties in fiscal 2020.

Rental Properties

Our multi-family rental operations develop, construct, lease, own and ultimately sell multi-family residential properties that produce rental income.

We primarily focus on constructing garden style multi-family rental communities, which typically accommodate 200 to 400 dwelling units, in high growth suburban markets.

We sold three multi-family rental properties in fiscal 2021 and two multi-family rental properties in fiscal 2020.

During fiscal 2020, we began constructing and leasing single-family homes as income-producing rental communities.

Our single-family rental operations construct single-family rental homes with the intent to later market the community for a bulk sale of homes.

We completed three bulk sales of single-family rental properties in fiscal 2021 and no bulk sales of these properties in fiscal 2020.

Forestar Residential Lot Development Operations

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We owned approximately 63% of Forestar’s outstanding common stock at September 30, 2021.

Forestar is a component of our homebuilding strategy to enhance operational efficiency and returns by expanding relationships with land developers and increasing the portion of our land and lot position controlled under land purchase contracts.

Forestar’s strategy is focused on making investments in land acquisition and development to expand its residential lot development business across a geographically diversified national platform and consolidating market share in the fragmented U.S.

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A shared services agreement is in place whereby we provide Forestar certain administrative, compliance, operational and procurement services.

As the controlling shareholder of Forestar, we have significant influence in guiding the strategic direction and operations of Forestar.

As the controlling shareholder, we have significant influence in guiding the strategic direction and operations of Forestar.

Customer Mortgage Financing

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To limit the risks associated with our mortgage operations, DHI Mortgage originates loan products that we believe can be sold to third-party purchasers of mortgage loans, the majority of which are eligible for sale to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Government National Mortgage Association (Ginnie Mae).

DHI Mortgage sells substantially all of the loans and the majority of the related servicing rights to third-party purchasers shortly after origination with limited recourse provisions.

DHI Mortgage sells substantially all of the loans and the related servicing rights to third-party purchasers after origination with limited recourse provisions.

DHI Mortgage centralizes most of its control and oversight functions, including those related to loan underwriting, quality control, regulatory compliance, secondary marketing of loans, hedging activities, accounting and financial reporting.

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Through our subsidiary title companies, we serve as a title insurance agent in selected markets by providing title insurance policies, examination and closing services primarily to our homebuilding customers.

Insurance Agency

Through our insurance agency subsidiary, we collect insurance commissions on homeowner policies placed with third party carriers.

Multi-Family Rental Properties

Through DHI Communities, a 100% owned subsidiary, we develop, construct and own multi-family residential properties that produce rental income.

DHI Communities is primarily focused on constructing garden style multi-family communities, which typically accommodate 200 to 400 dwelling units, in high growth suburban markets.

After DHI Communities has completed construction and achieved a stabilized level of leased occupancy, the property is typically marketed for sale.

DHI Communities had five projects under active construction and one project that was substantially complete at September 30, 2020.

These six projects represent 1,730 multi-family units, including 1,430 units under active construction and 300 completed units.

During fiscal 2020 and 2019, DHI Communities sold multi-family rental properties for a total of $128.5 million and $133.4 million, respectively, and recorded gains on sale totaling $59.4 million and $51.9 million.

At September 30, 2020 and 2019, our consolidated balance sheets included $246.2 million and $204.0 million, respectively, of assets related to DHI Communities.

Human Capital Resources

As of September 30, 2020, we employ 9,716 people, of whom 6,818 work in our homebuilding operations, 2,163 in our financial services segment, 463 at our corporate office, 143 for our Forestar subsidiary and 129 in our other businesses.

People and Culture

For the past two fiscal years, despite the COVID-19 pandemic, we increased the number of employees in all of our operating segments and made no reductions to our employee compensation plans or employee benefit plans.

As of September 30, 2021, we employed 11,788 people, of whom 7,947 work in our homebuilding operations, 2,891 in our financial services segment, 482 at our corporate office, 250 for our Forestar subsidiary, 175 in our rental operations and 43 in our other businesses.

Of our homebuilding employees, 3,369 are involved in construction, 2,018 are sales and marketing personnel and 2,560 are office personnel.

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We focus significant attention toward attracting and retaining talented and experienced individuals to manage and support our operations.

We offer our employees a broad range of company-paid benefits, and we believe our compensation package and benefits are competitive with others in our industry.

Additional information about our employee benefit plans is included in Note K.

Our management team supports a culture of developing future leaders from our existing workforce, enabling us to promote from within for many leadership positions.

Our people are expected to exhibit and promote honest, ethical and respectful conduct in the workplace.

All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and includes required internal training on preventing, identifying, reporting and stopping any type of discrimination.

Recruitment, Development and Retention

We are committed to hiring, developing and supporting a diverse workforce and maintaining an inclusive workplace.

We believe diversity in the workplace produces unique perspectives and fresh ideas and helps us better serve our customers.

Our management team also supports a culture of developing future leaders from our existing workforce, enabling us to promote from within for many leadership positions.

We believe this provides long-term focus and continuity to our operations while also providing opportunities for the growth and advancement of our employees.

Additionally, the long-term retention of our employees provides us with an experienced, cohesive workforce, which has been vital to achieving our goals.

Our focus on retention is evident in the length of service of our executive, regional and divisional management teams.

The average tenure of our executive team and homebuilding region presidents is 27 years and the average tenure of our homebuilding division presidents and city managers is greater than 10 years.

We are committed to hiring, developing and supporting a diverse and inclusive workplace.

Our management teams are expected to exhibit and promote honest, ethical and respectful conduct in the workplace.

During fiscal 2020, despite the COVID-19 pandemic (C-19), we increased the number of employees in all of our operating segments and kept all of our employee compensation and benefit plans intact.

We have implemented safety protocols to protect our employees and our homebuyers during the pandemic.

These protocols include complying with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

Many of our administrative and operational functions during this time have required modification, including some of our workforce working remotely.

The average tenure of our executive team and homebuilding region presidents is 28 years, our homebuilding division presidents is 15 years and our city managers is greater than 10 years.

Compensation and Benefits

We believe our compensation package and benefits are competitive with others in our industry.

In addition to base pay, eligible employees may participate in our short-term incentive bonus program and/or our stock compensation plan.

We also offer our employees a broad range of benefits, including medical, dental and vision healthcare insurance and paid parental leave.

Additional information about our compensation and employee benefit plans, such as our 401(k) savings plan, employee stock purchase plan and our stock compensation plans, is included in Note K to the accompanying financial statements.

Workplace Safety and Wellness

The safety and well-being of our employees is our first priority.

We take workplace safety seriously at our construction sites and in our offices.

We provide third-party training for our field personnel to become certified by the Occupational Safety and Health Administration (OSHA), and we communicate with all of our employees through a monthly safety newsletter to inform and reinforce our commitment to and concern for their well being.

We implemented safety protocols to protect our employees and our homebuyers during the COVID-19 pandemic.

These protocols include complying with health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

Many of our administrative and operational functions during this time required modification, including some of our workforce working remotely.

Our experienced teams of people adapted to the changes in our work environment and have managed our business successfully during this challenging time.

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These inventory positions and local market knowledge and relationships could take us several years to develop through our own efforts.

We seek to limit the risks associated with acquiring other companies by conducting extensive operational, financial and legal due diligence on each acquisition and by performing financial analysis to determine that each acquisition will have a positive impact on our earnings within an acceptable period of time.

The homebuilding and lot development industries are highly competitive.

We compete with numerous other national, regional and local homebuilders and developers for homebuyers, desirable land, raw materials, skilled labor, employees, management talent and financing.

We also compete with resales of existing and foreclosed homes and with the rental housing market.

Our homes compete on the basis of price, location, quality, design and mortgage financing terms.

The competitors to our financial services businesses include other mortgage lenders and title companies, including national, regional and local mortgage bankers and other financial institutions.

Some of these competitors are subject to fewer governmental regulations and may have greater access to capital, and some of them may operate with different lending criteria and may offer a broader array of financing and other products and services to consumers than we do.

We seek to limit the risks associated with acquiring other companies by conducting extensive operational, financial and legal due diligence on each acquisition and by performing financial analysis to determine that each acquisition is expected to have a positive impact on our earnings within an acceptable period of time.

The homebuilding, lot development and rental housing industries are highly competitive.

We compete not only for homebuyers and renters, but also for desirable properties, raw materials, skilled labor and financing.

We compete with local, regional and national companies in these industries and also with existing home sales, foreclosures and rental properties.

We compete on the basis of price, location, quality and design of our homes and on mortgage financing terms.

The competitors to our financial services businesses include other mortgage lenders and title companies, including national, regional and local mortgage banks and other financial institutions.

Some of these competitors are subject to fewer governmental regulations and have greater access to capital than we do, may operate with different lending criteria and/or may offer a broader or more attractive array of financing and other products and services to potential customers.

We strive to provide flexible, fairly priced financing alternatives subject to applicable regulations.

Our businesses compete with other companies across all industries to attract and retain highly skilled and experienced employees, managers and executives.

Competition for the services of these individuals increases as business conditions improve in the homebuilding, lot development, financial services and rental housing industries and in the general economy.

Governmental Regulations and Environmental Matters

The homebuilding industry is subject to extensive and complex regulations.

The homebuilding, lot development and rental housing industries are subject to extensive and complex regulations.

We and the subcontractors we use must comply with many federal, state and local laws and regulations.

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In addition, our new housing developments may be subject to various assessments for schools, parks, streets, utilities and other public improvements.

Our homebuilding and land development operations are also subject to an extensive array of local, state and federal statutes, ordinances, rules and regulations concerning protection of health, safety and the environment.

Our construction and land development activities are also subject to an extensive array of local, state and federal statutes, ordinances, rules and regulations concerning protection of health, safety and the environment.

The particular compliance requirements for each site vary greatly according to location, environmental condition and the present and former uses of the site and adjoining properties.

Our mortgage company must comply with extensive state and federal laws and regulations, which are administered by numerous agencies, including but not limited to the Consumer Financial Protection Bureau (CFPB), Federal Housing Finance Agency, U.S.

We believe that we are in compliance in all material respects with existing environmental regulations applicable to our business.

Additionally, our compliance with such regulations has not had, nor is expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

However, changes in regulations could increase our costs to comply with such regulations, as discussed in “Item 1A.

Risk Factors.”

Our mortgage company must comply with extensive state and federal laws and regulations, which are administered by numerous agencies, including the Consumer Financial Protection Bureau, Federal Housing Finance Agency, U.S.

Department of Housing and Urban Development, FHA, VA, United States Department of Agriculture (USDA), Fannie Mae, Freddie Mac and Ginnie Mae.

These laws and regulations include many compliance requirements, including but not limited to licensing, consumer disclosures, fair lending and real estate settlement procedures.

These laws and regulations include many compliance requirements, including licensing, consumer disclosures, fair lending and real estate settlement procedures.

As a result, our operations are subject to regular, extensive examinations by the applicable agencies.

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and operating income in the third and fourth quarters of our fiscal year.

The seasonal nature of our business can also cause significant variations in our working capital requirements in our homebuilding, lot development and financial services operations.

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and pre-tax income in the third and fourth quarters of our fiscal year.

The seasonal nature of our business can also cause significant variations in the working capital requirements for our homebuilding, lot development, financial services and rental operations.

As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year.

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.

What changed 10-K

Item 1. Business