What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-11-19 compared with 2024-11-19 · 278 added, 205 removed, 1148 unchanged (30% of the section changed)

31 unchanged sentences

Estimation of reserves for construction defect matters

Description of the Matter At September 30, 2024, the Company’s reserve for legal claims related to construction defect matters was $926 million.

Description of the Matter At September 30, 2025, the Company’s reserve for legal claims related to construction defect matters was $1.1 billion.

As explained in Note L to the consolidated financial statements, the Company has established reserves for construction defect matters based on the estimated costs of pending legal claims and the estimated costs of anticipated future legal claims related to previously closed homes, and this liability is included within the accrued expenses and other liabilities account in the consolidated balance sheet.

96 unchanged sentences

$ 3,585.2 $ 4,756.4 $ 4,745.7

Basic net income per common share attributable to D.R.

$ 14.44 $ 13.93 $ 16.65

Weighted average number of common shares 329.5 340.7 351.7

Diluted net income per common share attributable to D.R.

$ 14.34 $ 13.82 $ 16.51

Adjusted weighted average number of common shares 331.6 343.3 354.8

Net income per share attributable to D.R.

Basic $ 11.62 $ 14.44 $ 13.93

Diluted $ 11.57 $ 14.34 $ 13.82

Weighted average shares outstanding

Basic 308.5 329.5 340.7

Diluted 309.9 331.6 343.3

See accompanying notes to consolidated financial statements.

7 unchanged sentences

(In millions, except common stock share data)

Balances at September 30, 2021 ( 356,015,843 shares)

Balances at September 30, 2022

( 343,953,023 shares)

$ 4.0 $ 3,349.5 $ 19,185.3 $ ( 3,142.5 ) $ 389.3 $ 19,785.6

Net income — — 4,745.7 — 49.5 4,795.2

Exercise of stock options ( 292,290 shares)

Exercise of stock options

( 603,823 shares)

— 14.4 — — — 14.4

Stock issued under employee benefit plans ( 1,690,547 shares)

Stock issued under employee benefit plans

( 1,425,493 shares)

— 16.0 — — — 16.0

3 unchanged sentences

— — ( 341.2 ) — — ( 341.2 )

Repurchases of common stock ( 14,045,657 shares)

Repurchases of common stock

( 11,133,774 shares)

— — — ( 1,187.3 ) — ( 1,187.3 )

Change of ownership interest in Forestar — ( 2.8 ) — — 2.9 0.1

Noncontrolling interest acquired — — — — 18.0 18.0

Balances at September 30, 2022 ( 343,953,023 shares)

Balances at September 30, 2023

( 334,848,565 shares)

$ 4.0 $ 3,432.2 $ 23,589.8 $ ( 4,329.8 ) $ 441.7 $ 23,137.9

Net income — — 4,756.4 — 49.6 4,806.0

Exercise of stock options ( 603,823 shares)

Exercise of stock options

( 219,663 shares)

— 5.2 — — — 5.2

Stock issued under employee benefit plans ( 1,425,493 shares)

Stock issued under employee benefit plans

( 1,426,426 shares)

— 20.4 — — — 20.4

3 unchanged sentences

— — ( 395.2 ) — — ( 395.2 )

Repurchases of common stock ( 11,133,774 shares)

Repurchases of common stock

( 12,467,294 shares)

— — — ( 1,803.1 ) — ( 1,803.1 )

Change of ownership interest in Forestar — ( 1.3 ) — — 20.3 19.0

Balances at September 30, 2023 ( 334,848,565 shares)

Balances at September 30, 2024

( 324,027,360 shares)

$ 4.0 $ 3,490.7 $ 27,951.0 $ ( 6,132.9 ) $ 511.6 $ 25,824.4

Net income — — 3,585.2 — 35.7 3,620.9

Exercise of stock options ( 219,663 shares)

— 5.2 — — — 5.2

Stock issued under employee benefit plans ( 1,426,426 shares)

Stock issued under employee benefit plans

( 1,183,101 shares)

— 22.5 — — — 22.5

3 unchanged sentences

— — ( 494.8 ) — — ( 494.8 )

Repurchases of common stock ( 12,467,294 shares)

Repurchases of common stock

( 30,735,308 shares)

— — — ( 4,298.2 ) — ( 4,298.2 )

Change of ownership interest in Forestar — ( 3.9 ) — — 4.5 0.6

Balances at September 30, 2024 ( 324,027,360 shares)

Balances at September 30, 2025

( 294,475,153 shares)

$ 4.0 $ 3,576.1 $ 31,041.4 $ ( 10,431.1 ) $ 551.8 $ 24,742.2

13 unchanged sentences

Changes in operating assets and liabilities:

Decrease (increase) in construction in progress and finished homes 141.3 861.8 ( 2,059.0 )

Decrease in construction in progress and finished homes 1,228.8 141.3 861.8

Increase in residential land and lots —

1 unchanged sentence

( 1,884.3 ) ( 2,576.5 ) ( 1,226.4 )

Increase in rental properties ( 214.6 ) ( 151.8 ) ( 1,723.2 )

Decrease (increase) in rental properties 195.4 ( 214.6 ) ( 151.8 )

(Increase) decrease in other assets ( 248.2 ) ( 331.4 ) 23.8

Decrease (increase) in mortgage loans held for sale 42.4 ( 133.9 ) ( 358.8 )

(Increase) decrease in mortgage loans held for sale ( 89.0 ) 42.4 ( 133.9 )

Increase (decrease) in accounts payable, accrued expenses and other liabilities 83.7 19.6 ( 101.8 )

17 unchanged sentences

Net cash used in financing activities ( 4,762.9 ) ( 1,355.3 ) ( 2,666.7 )

Net increase (decrease) in cash, cash equivalents and restricted cash 643.9 1,327.2 ( 664.3 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 1,510.7 ) 643.9 1,327.2

Cash, cash equivalents and restricted cash at beginning of year 4,544.0 3,900.1 2,572.9

44 unchanged sentences

The Company typically elects the fair value option for its mortgage loan originations whereby mortgage loans held for sale are recorded at fair value based on either sale commitments or current market quotes and loan values are adjusted through revenues for subsequent changes in fair value until the loans are sold.

Expected gains and losses from the sale of servicing rights are included in the measurement of all written loan commitments that are

Expected gains and losses from the sale of loans, adjusted for (i) estimated costs to complete and originate the loan and (ii) the estimated percentage of written loan commitments that will result in a closed mortgage loan, are included in the measurement of all

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

accounted for at fair value through revenues at the time of commitment.

written loan commitments that are accounted for at fair value through revenues at the time of commitment.

The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers, typically within 60 days of origination.

16 unchanged sentences

Cost of sales for lots sold includes all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) allocated to each residential lot in the community.

Any changes to the estimated total development costs subsequent to the initial home or lot closings in a community are generally allocated on a pro-rata basis to the remaining homes or lots in the community associated with the relevant development activity.

Any changes to the estimated total development costs after the initial home or lot closings in a community are generally allocated on a pro-rata basis to the remaining homes or lots in the community associated with the relevant development activity.

Development and construction costs incurred related to the rental operations are recorded as rental property inventory.

Cost of sales related to the rental operations include the specific construction costs and all applicable land acquisition, land development and related costs for each rental project.

When a home is closed, the Company generally has not paid all incurred costs necessary to complete the home.

When a home is closed, the Company generally has not paid all of the incurred costs necessary to complete the home.

A liability and a corresponding charge to cost of sales are recorded for the amount estimated to ultimately be paid related to completed homes that have been closed.

9 unchanged sentences

There are several factors which could lead to changes in the estimates of undiscounted future cash flows for a given community.

The most significant of these includes pricing and incentive levels actually realized by the community, the rate at which the homes are sold and the costs incurred to develop the lots and construct the homes.

The most significant of these includes pricing and incentive levels realized by the community, the rate at which the homes are sold and the costs incurred to develop the lots and construct the homes.

Pricing and incentive levels are often interrelated with sales pace in a community, such that a price reduction is typically expected to increase the sales pace.

18 unchanged sentences

Land purchase contracts can result in the creation of a variable interest in the entity holding the land parcel under contract.

There was one variable interest entity consolidated for $ 118.8 million in the Company’s balance sheet at September 30, 2023.

During fiscal 2024, the Company determined that it no longer controlled the activities that most significantly impacted the variable interest entity’s economic performance, and the variable interest entity is no longer consolidated.

No variable interest entities were consolidated in the Company’s balance sheets at September 30, 2025 or 2024 because, with regard to each entity, the Company determined it did not control the activities that most significantly impact the variable interest entity’s economic performance.

The maximum exposure to losses related to the Company’s unconsolidated variable interest entities is limited to the amounts of the Company’s related deposits.

15 unchanged sentences

There were no material business acquisitions made in fiscal 2025.

In October 2025, the Company acquired the homebuilding operations of SK Builders for approximately $ 80 million in cash.

SK Builders operates in and around Greenville, South Carolina.

The assets acquired included approximately 160 homes in inventory, 260 lots and a sales order backlog of 110 homes.

The Company also obtained control of approximately 1,320 additional lots through land purchase contracts.

The Company records goodwill associated with its acquisitions of businesses when the purchase price of the business exceeds the fair value of the identifiable net assets acquired.

18 unchanged sentences

Warranty Claims

The Company provides its 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 Company typically provides its 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 of the home.

Since the Company subcontracts its construction work to subcontractors who typically provide it with an indemnity and a certificate of insurance prior to receiving payments for their work, claims relating to workmanship and materials are generally the primary responsibility of the subcontractors.

23 unchanged sentences

Changes in the recognition or measurement of uncertain tax positions could result in increases or decreases in the Company’s income tax expense in the period in which the change is made.

The Company had no unrecognized tax benefits at September 30, 2024 and $ 1.4 million of unrecognized tax benefits at September 30, 2023.

The Company had no unrecognized tax benefits at September 30, 2025 or 2024.

AND SUBSIDIARIES

1 unchanged sentence

Earnings Per Share

Basic earnings per share is based on the weighted average number of shares of common stock outstanding during each year.

Diluted earnings per share is based on the weighted average number of shares of common stock and dilutive securities outstanding during each year.

Basic earnings per share are based on the weighted average number of shares of common stock outstanding during each year.

Diluted earnings per share are based on the weighted average number of shares of common stock and dilutive securities outstanding during each year.

Stock-Based Compensation

10 unchanged sentences

Fair value measurements are used for the Company’s mortgage loans held for sale, mortgage servicing rights, interest rate lock commitments and other derivative instruments on a recurring basis and are used for inventories, other mortgage loans and real estate owned on a nonrecurring basis, when events and circumstances indicate that the carrying value is not recoverable.

Pending Accounting Standards

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosures.

1 unchanged sentence

It also requires disclosure of the amount and description of the composition of other segment items and interim disclosures of a reportable segment’s profit or loss and assets.

The standard is effective for the Company’s annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026 on a retrospective basis to all periods presented.

This standard will impact the Company’s disclosures but will not impact its consolidated financial statements.

The Company adopted this standard for the annual reporting period ended September 30, 2025, with retrospective disclosure of prior periods presented.

See Note B for the related disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures.

The standard is effective for the Company beginning October 1, 2025, with early adoption permitted.

The standard is effective for the Company’s annual periods beginning in fiscal 2026.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

7 unchanged sentences

The Company’s reporting segments are its homebuilding reporting segments, its Forestar lot development segment, its financial services segment and its rental operations segment.

The accounting policies of the reporting segments are described throughout Note A.

The homebuilding operating segments are aggregated into six reporting segments.

7 unchanged sentences

Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, New Jersey, Ohio, Pennsylvania, Virginia, West Virginia and Wisconsin

Homebuilding is the Company’s core business, generating 92 %, 90 % and 95 % of consolidated revenues in fiscal 2024, 2023 and 2022, respectively.

Homebuilding is the Company’s core business, generating 92 % of consolidated revenues in fiscal 2025 and 2024 and 90 % of consolidated revenues in fiscal 2023.

The Company’s homebuilding divisions are primarily engaged in the acquisition and development of land and the construction and sale of residential homes, with operations in 126 markets across 36 states.

1 unchanged sentence

The Company’s rental segment consists of single-family and multi-family rental operations.

The single-family rental operations construct and lease single-family homes within a community and then generally market each community for a bulk sale of rental homes.

The multi-family rental operations develop, construct, lease and sell residential rental properties that are primarily apartment communities.

The single-family rental operations construct and lease single-family homes within a community and market each community for a bulk sale of rental homes.

The multi-family rental operations develop, construct, lease and sell residential rental properties, the majority of which are apartment communities.

The Forestar segment is a residential lot development company with operations in 64 markets across 23 states.

10 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The accounting policies of the reporting segments are described throughout Note A.

Financial information relating to the Company’s reporting segments is as follows:

The Company’s Chief Executive Officer, Chief Operating Officer and Chief Financial Officer are its Chief Operating Decision Makers (CODMs).

The CODMs evaluate segment performance primarily based on revenues, pre-tax income and inventories for all reporting segments.

Revenues, pre-tax income and inventories at the segment level are compared to forecasted results to evaluate the performance of each segment and assist in decision making regarding capital allocation between segments.

The tables that follow present financial information pertaining to the Company’s reporting segments.

September 30, 2025

52 unchanged sentences

_______________

(1) Amounts include the balances of the Company’s other businesses, the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments.

(1) Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.

AND SUBSIDIARIES

19 unchanged sentences

24,859.2 1,340.7 1,298.9 — ( 1,364.6 ) 26,134.2

Selling, general and administrative expense 2,553.3 236.2 118.5 672.4 19.1 3,599.5

Selling, general and

administrative expense

2,623.1 245.2 154.4 651.4 17.9 3,692.0

Other (income) expense (3)

( 101.7 ) ( 115.5 ) ( 10.2 ) ( 88.9 ) 0.6 ( 315.7 )

Income before income taxes $ 4,134.9 $ 170.0 $ 219.3 $ 278.7 $ ( 63.0 ) $ 4,739.9

7 unchanged sentences

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.

(3) Other (income) expense primarily includes interest income but also consists of various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.

AND SUBSIDIARIES

19 unchanged sentences

26,061.0 1,321.7 1,150.0 — ( 1,266.7 ) 27,266.0

Selling, general and administrative expense 2,239.9 290.2 97.7 594.9 26.1 3,248.8

Selling, general and

administrative expense

2,553.3 236.2 118.5 672.4 19.1 3,599.5

Other (income) expense (3)

( 107.6 ) ( 101.5 ) ( 29.2 ) ( 101.1 ) ( 9.4 ) ( 348.8 )

Income before income taxes $ 5,455.1 $ 228.7 $ 270.1 $ 311.2 $ 19.6 $ 6,284.7

2 unchanged sentences

$ 79.4 $ 2.4 $ 3.0 $ 1.8 $ 0.5 $ 87.1

Cash provided by operating activities $ 3,078.4 $ 739.2 $ 364.1 $ 13.2 $ 109.2 $ 4,304.1

Cash provided by (used in) operating activities $ 2,239.0 $ ( 231.0 ) $ ( 158.6 ) $ 281.6 $ 58.8 $ 2,189.8

_______________

2 unchanged sentences

AND SUBSIDIARIES

19 unchanged sentences

24,315.8 1,893.5 1,132.9 — ( 1,232.2 ) 26,110.0

Selling, general and administrative expense 2,186.7 91.1 93.6 547.6 14.7 2,933.7

Selling, general and

administrative expense

2,239.9 290.2 97.7 594.9 26.1 3,248.8

Other (income) expense (3)

( 78.8 ) ( 102.4 ) ( 15.3 ) ( 76.7 ) 60.1 ( 213.1 )

Income before income taxes $ 5,266.3 $ 524.2 $ 221.6 $ 283.3 $ 19.3 $ 6,314.7

2 unchanged sentences

$ 64.0 $ 2.4 $ 3.0 $ 2.1 $ 20.1 $ 91.6

Cash provided by (used in) operating activities $ 1,916.7 $ ( 1,391.0 ) $ 108.7 $ ( 10.5 ) $ ( 62.1 ) $ 561.8

Cash provided by operating activities $ 3,078.4 $ 739.2 $ 364.1 $ 13.2 $ 109.2 $ 4,304.1

_______________

2 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Homebuilding Inventories by Reporting Segment (1)

September 30,

Revenues, expenses and pre-tax income of the Company’s homebuilding segment are disaggregated into the individual homebuilding reporting segments in the tables below.

Expenses maintained at the corporate level consist primarily of homebuilding 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.

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.

Homebuilding Results by Reporting Segment Year Ended September 30, 2025

Northwest Southwest South Central Southeast East North Total

(In millions)

Northwest $ 1,935.2 $ 1,907.5

Southwest 3,278.9 3,133.0

South Central 3,728.0 3,810.5

Southeast 4,284.5 3,958.5

East 3,978.2 3,024.7

North 2,551.2 2,078.0

Corporate and unallocated (2)

$ 2,685.7 $ 4,573.7 $ 6,885.4 $ 6,939.4 $ 6,131.1 $ 4,216.7 $ 31,432.0

Land/lot sales and other

0.5 21.6 13.9 31.8 6.9 8.8 83.5

(1) Homebuilding inventories are the only assets included in the measure of homebuilding segment assets used by the Company’s chief operating decision makers.

(2) Corporate and unallocated consists primarily of homebuilding capitalized interest and property taxes.

2,686.2 4,595.3 6,899.3 6,971.2 6,138.0 4,225.5 31,515.5

Cost of sales

Home sales 2,075.7 3,695.4 5,350.7 5,510.1 4,768.1 3,264.9 24,664.9

Land/lot sales and other

0.2 19.9 10.0 9.0 4.8 6.2 50.1

Inventory and land option charges

3.8 16.7 36.7 45.4 29.2 12.4 144.2

2,079.7 3,732.0 5,397.4 5,564.5 4,802.1 3,283.5 24,859.2

Selling, general and

administrative expense

220.0 361.9 558.3 587.8 522.1 373.0 2,623.1

Other (income) expense ( 9.2 ) ( 15.7 ) ( 21.0 ) ( 21.0 ) ( 20.2 ) ( 14.6 ) ( 101.7 )

Income before income taxes $ 395.7 $ 517.1 $ 964.6 $ 839.9 $ 834.0 $ 583.6 $ 4,134.9

Homebuilding Results by Reporting Segment Year Ended September 30, 2024

Northwest Southwest South Central Southeast East North Total

(In millions)

$ 2,744.6 $ 4,913.3 $ 7,639.6 $ 8,853.4 $ 6,070.9 $ 3,681.8 $ 33,903.6

Land/lot sales and other

17.1 1.4 12.5 23.4 2.2 1.6 58.2

2,761.7 4,914.7 7,652.1 8,876.8 6,073.1 3,683.4 33,961.8

Cost of sales

Home sales 2,121.2 3,862.5 5,765.4 6,790.5 4,534.8 2,877.7 25,952.1

Land/lot sales and other

14.8 0.1 8.1 15.9 0.6 0.5 40.0

Inventory and land option charges

4.4 12.7 11.4 18.4 11.9 10.1 68.9

2,140.4 3,875.3 5,784.9 6,824.8 4,547.3 2,888.3 26,061.0

Selling, general and

administrative expense

211.1 354.1 557.0 634.4 484.6 312.1 2,553.3

Other (income) expense ( 10.6 ) ( 18.2 ) ( 21.2 ) ( 23.8 ) ( 18.4 ) ( 15.4 ) ( 107.6 )

Income before income taxes $ 420.8 $ 703.5 $ 1,331.4 $ 1,441.4 $ 1,059.6 $ 498.4 $ 5,455.1

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Homebuilding Results by Reporting Segment Year Ended September 30, 2023

Northwest Southwest South Central Southeast East North Total

(In millions)

Northwest $ 2,761.7 $ 2,582.4 $ 2,658.4

Southwest 4,914.7 4,282.8 4,840.7

South Central 7,652.1 7,612.6 8,192.3

Southeast 8,876.8 8,760.8 7,951.2

East 6,073.1 5,325.3 5,318.1

North 3,683.4 3,179.3 2,962.4

$ 2,574.1 $ 4,246.7 $ 7,598.1 $ 8,756.5 $ 5,323.9 $ 3,141.7 $ 31,641.0

Land/lot sales and other

8.3 36.1 14.5 4.3 1.4 37.6 102.2

2,582.4 4,282.8 7,612.6 8,760.8 5,325.3 3,179.3 31,743.2

Cost of sales

Home sales 2,003.6 3,451.2 5,721.6 6,485.5 3,992.7 2,546.7 24,201.3

Land/lot sales and other

7.1 28.8 10.7 ( 5.1 ) 0.2 12.1 53.8

Inventory and land option charges

Northwest $ 4.4 $ 6.6 $ 7.0

Southwest 12.7 11.3 6.3

South Central 11.4 7.6 9.9

Southeast 18.4 14.6 13.5

East 11.9 8.4 12.1

North 10.1 12.2 8.4

6.6 11.3 7.6 14.6 8.4 12.2 60.7

2,017.3 3,491.3 5,739.9 6,495.0 4,001.3 2,571.0 24,315.8

Selling, general and

administrative expense

182.2 315.3 500.9 574.7 399.5 267.3 2,239.9

Other (income) expense ( 8.2 ) ( 13.1 ) ( 16.5 ) ( 20.0 ) ( 11.2 ) ( 9.8 ) ( 78.8 )

Income before income taxes $ 391.1 $ 489.3 $ 1,388.3 $ 1,711.1 $ 935.7 $ 350.8 $ 5,266.3

The Company’s total inventories are disaggregated into the individual reporting segments in the table below.

Inventories are the only assets included in the measure of segment assets used by the Company’s chief operating decision makers.

Inventories by Reporting Segment September 30,

2025 2024 2023

(In millions)

Northwest $ 1,891.8 $ 1,935.2 $ 1,907.5

4 unchanged sentences

North 2,637.6 2,551.2 2,078.0

Corporate and unallocated (1)

327.2 275.0 243.6

Total Homebuilding 20,316.5 20,031.0 18,155.8

Rental 2,710.4 2,902.4 2,708.4

Forestar 2,645.1 2,266.2 1,790.3

Eliminations and other (2) ( 384.7 ) ( 296.4 ) ( 281.2 )

Consolidated inventories $ 25,287.3 $ 24,903.2 $ 22,373.3

_______________

(1) Expenses maintained at the corporate level consist primarily of homebuilding 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.

(1) Corporate and unallocated consists primarily of homebuilding capitalized interest and property taxes.

(2) Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.

AND SUBSIDIARIES

3 unchanged sentences

As of September 30, 2025, the Company performed detailed impairment evaluations of communities and land inventories and determined that communities with a combined carrying value of $ 74.8 million were impaired.

As a result, impairment charges of $ 8.3 million were recorded during the three months ended September 30, 2024 to reduce the carrying value of the related inventory to fair value.

As a result, impairment charges of $ 8.5 million were recorded during the three months ended September 30, 2025 to reduce the carrying value of the related inventories to fair value.

During fiscal 2025, impairment charges totaled $ 33.0 million compared to $ 14.0 million and $ 19.0 million in fiscal 2024 and 2023, respectively.

13 unchanged sentences

4.85 % senior notes due 2030 (1)

5.0 % senior notes due 2034 (1)

5.5 % senior notes due 2035 (1)

3,154.4 2,926.8

4 unchanged sentences

5.0 % senior notes due 2028 (2)

6.5 % senior notes due 2033 (2)

Other notes 9.9 9.9

8 unchanged sentences

(2) Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $ 7.2 million and $ 3.5 million at September 30, 2025 and 2024, respectively.

As of September 30, 2024, maturities of consolidated notes payable, assuming the mortgage repurchase facility is not extended or renewed, are $ 2.2 billion in fiscal 2025, $ 910.3 million in fiscal 2026, $ 600.4 million in fiscal 2027, $ 1.5 billion in fiscal 2028, $ 17.5 million in fiscal 2029 and $ 700 million thereafter.

As of September 30, 2025, maturities of consolidated notes payable, assuming the mortgage repurchase facility is not extended or renewed, are $ 1.6 billion in fiscal 2026, $ 604.7 million in fiscal 2027, $ 1.4 billion in fiscal 2028, $ 17.5 million in fiscal 2029, none in fiscal 2030 and $ 2.4 billion thereafter.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has a $ 2.19 billion senior unsecured homebuilding revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $ 3.0 billion, subject to certain conditions and availability of additional bank commitments.

The Company has a senior unsecured homebuilding revolving credit facility that was amended in December 2024 to increase its capacity from $ 2.19 billion to $ 2.23 billion.

The facility includes an uncommitted accordion feature that allows for an increase in its size to $ 3.0 billion, subject to certain conditions and availability of additional bank commitments.

In June 2025, the Company utilized this accordion feature, increasing the facility’s size to $ 2.305 billion through an additional commitment.

Of the total commitments, $ 2.04 billion mature on December 18, 2029, and $ 265 million mature on October 28, 2027.

The facility also provides for the issuance of letters of credit with a sublimit equal to 100 % of the total revolving credit commitments.

Letters of credit issued under the facility reduce the available borrowing capacity.

The maturity date of the facility is October 28, 2027.

At September 30, 2025, there were no borrowings outstanding and $ 231.2 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 2.07 billion.

2 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.

The credit agreement governing the facility and the indenture governing the senior notes also impose restrictions on the creation of secured debt and liens.

At September 30, 2024, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations.

Horton has an automatically effective universal shelf registration statement filed with the SEC in July 2024, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.

In August 2024, the Company issued $ 700 million principal amount of 5.0 % senior notes due October 15, 2034 , with interest payable semi-annually.

The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 5.2 %.

The key terms of the Company’s homebuilding senior unsecured notes outstanding as of September 30, 2024 are summarized below.

The credit agreement governing the facility imposes restrictions on the creation of secured debt and liens.

Horton has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in July 2024, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.

In February 2025, the Company issued $ 700 million principal amount of 5.5 % senior notes due October 15, 2035 , and in May 2025, the Company issued $ 500 million principal amount of 4.85 % senior notes due October 15, 2030 .

The indenture governing the senior notes imposes restrictions on the creation of secured debt and liens.

In October 2024, the Company repaid $ 500 million principal amount of its 2.5 % senior notes at maturity.

In September 2025, the Company redeemed $ 500 million principal amount of its 2.6 % senior notes due October 15, 2025 for $ 505.9 million, which included $ 5.9 million of accrued and unpaid interest.

The key terms of the Company’s homebuilding senior notes outstanding as of September 30, 2025 are summarized below.

Notes Payable Principal Amount Date Issued Date Due Redeemable

2 unchanged sentences

(In millions)

2.5% senior notes $ 500 October 2019 October 15, 2024 Yes 2.7 %

2.6% senior notes $ 500 May 2020 October 15, 2025 Yes 2.8 %

1.3% senior notes $ 600 August 2021 October 15, 2026 Yes 1.5 %

1.4% senior notes $ 500 October 2020 October 15, 2027 Yes 1.6 %

4.85% senior notes $ 500 May 2025 October 15, 2030 Yes 5.1 %

5.0% senior notes $ 700 August 2024 October 15, 2034 Yes 5.2 %

5.5% senior notes $ 700 February 2025 October 15, 2035 Yes 5.6 %

_______________

(1) The Company may redeem the notes in whole at any time or in part from time to time, at a redemption price equal to the greater of 100 % of their principal amount or the present value of the remaining scheduled payments discounted to the redemption date, plus accrued and unpaid interest.

In October 2024, the Company repaid $ 500 million principal amount of its 2.5 % senior notes at maturity.

The 1.3 % senior notes and the 4.85 % senior notes are redeemable at a redemption price of 100 % of their principal amount, plus accrued and unpaid interest, on or after the date that is one month prior to the final maturity date of the notes.

The 1.4 % senior notes are redeemable at a redemption price of 100 % of their principal amount, plus accrued and unpaid interest, on or after the date that is two months prior to the final maturity of the notes.

The 5.0 % senior notes are redeemable at a redemption price of 100 % of their principal amount, plus accrued and unpaid interest, on or after the date that is three months prior to the final maturity of the notes.

The 5.0 % senior notes and the 5.5 % senior notes are redeemable at a redemption price of 100 % of their principal amount, plus accrued and unpaid interest, on or after the date that is three months prior to the final maturity of the notes.

(2) Interest is payable semi-annually on each of the series of senior notes.

6 unchanged sentences

Also, a change of control as defined in the revolving credit facility would constitute an event of default under the revolving credit facility, which could result in the acceleration of any borrowings outstanding under the facility and the termination of the commitments thereunder.

The Company’s homebuilding revolving credit facility and homebuilding senior unsecured notes are guaranteed by D.R.

At September 30, 2025, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations.

The Company’s homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R.

Horton, Inc.’s significant wholly owned homebuilding subsidiaries.

6 unchanged sentences

The maturity date of the facility is October 10, 2027.

Borrowings and repayments under the facility totaled $ 1.4 billion and $ 1.1 billion, respectively, during fiscal 2024.

At September 30, 2025, there were $ 600 million of borrowings outstanding at a 6.2 % annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $ 450 million.

7 unchanged sentences

or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, Forestar or financial services operations.

Forestar has a $ 410 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $ 600 million, subject to certain conditions and availability of additional bank commitments.

As of September 30, 2025, Forestar had a senior unsecured revolving credit facility that was amended in December 2024 to increase its capacity from $ 410 million to $ 640 million and to raise the uncommitted accordion feature that could increase the size of the facility to $ 1.0 billion, subject to certain conditions and availability of additional bank commitments.

The amendment also extended the maturity date of the facility.

Of the total commitments, $ 575 million mature on December 18, 2029 , and $ 65 million mature on October 28, 2026 .

In October 2025, Forestar utilized the accordion feature and increased the size of its revolving credit facility to $ 665 million through an additional $ 25 million commitment that matures on December 18, 2029 .

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 total revolving credit commitments.

Borrowings under the revolving credit facility are subject to a borrowing base calculation based on the book value of Forestar’s real estate assets and unrestricted cash.

Letters of credit issued under the facility reduce the available borrowing capacity.

The maturity date of the facility is October 28, 2026.

At September 30, 2024, there were no borrowings outstanding and $ 32.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 377.2 million.

Borrowings under the revolving credit facility are subject to a borrowing base calculation based on the book value of Forestar’s real estate

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

assets and unrestricted cash.

Letters of credit issued under the facility reduce the available borrowing capacity.

At September 30, 2025, there were no borrowings outstanding and $ 51.1 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 588.9 million.

As of September 30, 2025, Forestar had $ 800 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, which represent unsecured obligations of Forestar.

These notes include $ 400 million principal amount of 3.85 % senior notes that mature May 15, 2026 and $ 300 million principal amount of 5.0 % senior notes that mature March 1, 2028.

The annual effective interest rate of the notes after giving effect to the amortization of financing costs is 4.1 % and 5.2 %, respectively.

The key terms of Forestar’s senior notes are summarized below.

Notes Payable Principal Amount Date Issued Date Due Redeemable

Maturity (1) Effective

Interest Rate (2)

(In millions)

5.0% senior notes $ 300 February 2020 March 1, 2028 Yes 5.2 %

6.5% senior notes $ 500 March 2025 March 15, 2033 Yes 6.7 %

_______________

(1) Forestar’s senior notes may be redeemed prior to maturity, subject to certain limitations and premiums defined in the indenture agreements.

The Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.

(2) Interest is payable semi-annually on each of the series of senior notes.

The annual effective interest rate is calculated after giving effect to the amortization of debt issuance costs.

The net proceeds from the 6.5 % senior notes issued in March 2025 were primarily used to fund Forestar’s tender offer to purchase any and all of its outstanding $ 400 million principal amount of 3.85 % senior notes due 2026 (of which $ 329.4 million aggregate principal amount was tendered).

The repurchase price of $ 333.4 million included accrued and unpaid interest of $ 4.2 million.

In September 2025, Forestar redeemed the remaining $ 70.6 million principal amount of its 3.85 % senior notes for $ 71.6 million, which included $ 1.0 million of accrued and unpaid interest.

In fiscal 2025, Forestar recognized a $ 1.2 million loss on extinguishment of debt related to the repurchase and redemption of the notes.

Forestar’s revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.

The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio.

2 unchanged sentences

At September 30, 2025, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.

Forestar’s revolving credit facility and its senior unsecured notes are guaranteed by Forestar’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

Forestar’s revolving credit facility and its senior notes are guaranteed by Forestar’s wholly owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

They are not guaranteed by D.R.

5 unchanged sentences

The Company’s mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties.

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 in accordance with the terms of the mortgage repurchase facilities.

In August 2024, the committed mortgage repurchase facility was amended to extend its maturity date to May 9, 2025.

The facility has a total capacity of $ 1.6 billion, which can be increased to $ 2.0 billion subject to the availability of additional commitments.

DHI Mortgage then has the right and obligation to repurchase the loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In May 2025, the committed mortgage repurchase facility was amended to reduce its capacity to $ 1.4 billion and extend its maturity date to May 6, 2026.

The capacity of the facility can be increased to $ 2.0 billion subject to the availability of additional commitments.

At September 30, 2025, DHI Mortgage had an obligation of $ 1.1 billion under the committed mortgage repurchase facility at a 5.8 % annual interest rate.

At September 30, 2025, the uncommitted mortgage repurchase facility had a borrowing capacity of $ 500 million, of which DHI Mortgage had an obligation of $ 304.8 million at a 5.4 % annual interest rate.

As of September 30, 2024, $ 2.09 billion of mortgage loans held for sale with a collateral value of $ 2.05 billion were pledged under the committed mortgage repurchase facility, and $ 322.3 million of mortgage loans held for sale with a collateral value of $ 310.8 million were pledged under the uncommitted mortgage repurchase facility.

At September 30, 2025, $ 2.23 billion of mortgage loans held for sale with a collateral value of $ 2.19 billion were pledged under the committed mortgage repurchase facility, and $ 332.6 million of mortgage loans held for sale with a collateral value of $ 312.9 million were pledged under the uncommitted mortgage repurchase facility.

The facilities contain financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable indebtedness to tangible net worth ratio and its minimum required liquidity.

At September 30, 2025, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

These mortgage repurchase facilities are not guaranteed by D.R.

The mortgage repurchase facilities are not guaranteed by D.R.

or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, rental or Forestar operations.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE E – CAPITALIZED INTEREST

9 unchanged sentences

_______________

(1) Interest incurred in fiscal 2024, 2023 and 2022 includes interest on the Company's mortgage repurchase facilities of $ 58.6 million, $ 45.9 million and $ 18.9 million, respectively, and Forestar interest of $ 32.7 million, $ 32.8 million and $ 32.9 million, respectively.

Interest incurred in fiscal 2024 and 2023 also includes interest on the rental revolving credit facility of $ 61.9 million and $ 56.0 million, respectively.

(1) Interest incurred in fiscal 2025, 2024 and 2023 includes interest on the Company's mortgage repurchase facilities of $ 33.9 million, $ 58.6 million and $ 45.9 million, respectively, Forestar interest of $ 45.5 million, $ 32.7 million and $ 32.8 million, respectively, and interest on the rental revolving credit facility of $ 59.2 million, $ 61.9 million and $ 56.0 million, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE F – PROPERTY AND EQUIPMENT

14 unchanged sentences

Depreciation expense was $ 90.9 million, $ 78.5 million and $ 82.9 million in fiscal 2025, 2024 and 2023, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE G – MORTGAGE LOANS

11 unchanged sentences

The Company does not enter into or hold derivatives for trading or speculative purposes.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Newly originated loans that have been closed but not committed to third-party purchasers are hedged to mitigate the risk of changes in their fair value.

1 unchanged sentence

The notional amounts of the hedging instruments used to hedge mortgage loans held for sale may vary in relationship to the underlying loan amounts, depending on the movements in the value of each hedging instrument relative to the value of the underlying mortgage loans.

The fair value change related to the hedging instruments generally offsets the fair value change in the mortgage loans held for sale.

The fair value change related to hedging instruments generally offsets the fair value change in the mortgage loans held for sale.

The net fair value change, which for the years ended September 30, 2025, 2024 and 2023 was not significant, is recognized in revenues in the consolidated statements of operations.

1 unchanged sentence

The Company also uses hedging instruments as part of a program to offer below market interest rate financing to its homebuyers.

At September 30, 2024 and 2023, the Company had MBS totaling $ 637.9 million and $ 1.1 billion, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned and recorded an asset of $ 2.4 million and $ 15.7 million, respectively, for the fair value of such MBS position.

At September 30, 2025 and 2024, the Company had MBS totaling $ 677.5 million and $ 637.9 million, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned.

The Company recorded an asset of $ 1.9 million and $ 2.4 million at September 30, 2025 and 2024, respectively, for the fair value of such MBS position.

Loan Commitments and Related Derivatives

4 unchanged sentences

At September 30, 2025 and 2024, the notional amount of best-efforts whole loan delivery commitments totaled $ 27.4 million and $ 11.5 million, respectively, and the notional amount of hedging instruments related to the remaining IRLCs totaled $ 1.93 billion and $ 1.90 billion, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Mortgage Loans and Loss Reserves

2 unchanged sentences

The Company generally does not retain any other continuing interest related to mortgage loans sold in the secondary market.

The majority of other mortgage loans consists of loans repurchased due to these limited recourse obligations.

The majority of other mortgage loans consist of loans repurchased due to these limited recourse obligations.

Typically, these loans are impaired, and some result in real estate owned through the foreclosure process.

At September 30, 2024 and 2023, the Company’s total other mortgage loans and real estate owned, before loss reserves, totaled $ 18.9 million and $ 14.9 million, respectively.

At September 30, 2025 and 2024, the Company’s total other mortgage loans and real estate owned, before the related loss reserves, totaled $ 15.7 million and $ 18.9 million, respectively.

The Company has recorded reserves for estimated losses on other mortgage loans, real estate owned and future loan repurchase obligations due to the limited recourse provisions, all of which are recorded as reductions of revenue.

The loss reserve for loan repurchase and settlement obligations is estimated based on historical experience, analysis of the volume of mortgages originated, discussions with mortgage purchasers and current housing and credit market conditions, as well as known and projected mortgage loan repurchase requests.

The reserve balances at September 30, 2024 and 2023 totaled $ 12.3 million and $ 9.9 million, respectively.

The loss reserves for other mortgage loans, real estate owned and estimated future loan repurchase obligations totaled $ 16.2 million and $ 12.3 million at September 30, 2025 and 2024, respectively.

Other mortgage loans and real estate owned, net of the related loss reserves, are included in other assets, while loan repurchase obligations are included in accrued expenses and other liabilities in the Company’s consolidated balance sheets.

17 unchanged sentences

The Company’s effective tax rate was 23.6 %, 23.5 % and 24.1 % in fiscal 2025, 2024 and 2023, respectively.

The effective tax rates for all years include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.

The effective tax rates for all years include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient home tax credits.

Reconciliation of Expected Income Tax Expense

44 unchanged sentences

Forestar has $ 0.7 million of tax benefits for state NOL carryforwards that expire at various times depending on the tax jurisdiction.

Forestar has $ 16.5 million of federal corporate alternative minimum tax credit carryforwards that do not expire.

The accounting for deferred taxes is based upon estimates of future results.

9 unchanged sentences

Unrecognized tax benefits are the differences between tax positions taken or expected to be taken in a tax return and the benefits recognized in the financial statements.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for fiscal 2024 and 2023 is as follows:

Year Ended September 30,

(In millions)

Unrecognized tax benefits, beginning of year $ 1.4 $ 2.9

Decreases for tax positions taken in the current or prior years ( 1.4 ) —

Settlements — ( 1.5 )

Unrecognized tax benefits, end of year $ — $ 1.4

All $ 1.4 million of the unrecognized tax benefits recognized in fiscal 2024 impacted the effective tax rate.

The Company had no accrued interest or penalties related to unrecognized tax benefits in fiscal 2024 or 2023.

The Company had no unrecognized tax benefits and no accrued interest or penalties related to unrecognized tax benefits at September 30, 2025 or 2024.

The Company classifies interest expense and penalties on income taxes as income tax expense.

1 unchanged sentence

Horton is subject to federal income tax and state income tax in multiple jurisdictions.

The statute of limitations for D.R.

Horton’s major tax jurisdictions remains open for examination for fiscal years 2019 and 2021 through 2024.

Fiscal year 2019 is open with respect to a federal refund claim related to additional energy efficient tax credits.

This refund claim is currently under audit by the Internal Revenue Service.

The statute of limitations for the majority of D.R.

Horton’s tax jurisdictions remains open for examination for fiscal years 2022 through 2025.

Horton is not currently under audit for federal income taxes.

Horton is under audit by various states;

1 unchanged sentence

Forestar is subject to federal income tax and state income tax in multiple jurisdictions.

The statute of limitations for Forestar’s federal income tax remains open for examination for fiscal years 2021 through 2024.

The statute of limitations for Forestar’s major state tax jurisdictions generally remains open for examination for fiscal years 2019 through 2024.

The statute of limitations for the majority of Forestar’s tax jurisdictions remains open for examination for fiscal years 2022 through 2025.

Forestar is not currently under audit for federal income taxes.

1 unchanged sentence

however, Forestar is not aware of any significant findings by the state taxing authorities.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law (the new law).

The new law terminates the energy efficient home tax credit for homes closing after June 30, 2026 and enacts certain other tax provisions that will impact the Company’s financial statements.

The Company’s tax benefits related to the energy efficient home tax credit were $ 39.5 million and $ 70.4 million in fiscal 2025 and 2024, respectively.

None of the other tax provisions enacted by the new law have a significant impact on the Company’s financial statements.

AND SUBSIDIARIES

4 unchanged sentences

2025 2024 2023

(In millions)

(In millions, except per share data)

Net income attributable to D.R.

$ 3,585.2 $ 4,756.4 $ 4,745.7

Denominator for basic earnings per share — weighted average common shares 329.5 340.7 351.7

Denominator for basic earnings per share —

weighted average shares

308.5 329.5 340.7

Effect of dilutive securities:

Employee stock awards 1.4 2.1 2.6

Denominator for diluted earnings per share — adjusted weighted average common shares 331.6 343.3 354.8

Basic net income per common share attributable to D.R.

Denominator for diluted earnings per share —

adjusted weighted average shares

309.9 331.6 343.3

Diluted net income per common share attributable to D.R.

Basic net income per share attributable to D.R.

$ 11.62 $ 14.44 $ 13.93

Diluted net income per share attributable to D.R.

$ 11.57 $ 14.34 $ 13.82

NOTE J – STOCKHOLDERS’ EQUITY

2 unchanged sentences

No shares of preferred stock were issued or outstanding.

In July 2024, the Board of Directors authorized the repurchase of up to $ 4.0 billion of the Company’s common stock, replacing the previous authorization.

In April 2025, the Board of Directors authorized the repurchase of up to $ 5.0 billion of the Company’s common stock, replacing the previous authorization.

The authorization has no expiration date.

During fiscal 2024, the Company repurchased 12.5 million shares of its common stock at a total cost, including commissions and excise taxes, of $ 1.8 billion, of which $ 1.4 billion was repurchased under previous authorizations.

During fiscal 2025, the Company repurchased 30.7 million shares of its common stock at a total cost, including commissions and excise taxes, of $ 4.3 billion, of which $ 2.6 billion was repurchased under the previous authorization.

At September 30, 2025, there was $ 3.3 billion remaining on the repurchase authorization.

The Board of Directors approved and the Company paid quarterly cash dividends of $ 0.30 per common share in fiscal 2024 and $ 0.25 per common share in fiscal 2023.

In October 2024, the Board approved a quarterly cash dividend of $ 0.40 per common share, payable on November 19, 2024 to stockholders of record on November 12, 2024.

The Board of Directors approved and the Company paid quarterly cash dividends of $ 0.40 per share in fiscal 2025 and $ 0.30 per share in fiscal 2024.

Cash dividends declared and paid in fiscal 2025 totaled $ 494.8 million.

Forestar had an effective shelf registration statement, filed with the SEC in October 2021, registering $ 750 million of equity securities, of which $ 300 million was reserved for sales under an at-the-market equity offering (ATM) program.

During fiscal 2024, Forestar issued 546,174 shares of common stock under its ATM program for proceeds of $ 19.7 million, net of commissions and other issuance costs totaling $ 0.4 million.

In September 2024, Forestar filed a new shelf registration statement, which became effective in October 2024, registering $ 750 million of equity securities.

At the time of filing the new registration statement, $ 728.1 million of equity securities remained available for issuance under Forestar’s prior registration statement, which has since expired.

Forestar’s ATM program expired in October 2024, and Forestar anticipates entering into a new ATM program under its September 2024 shelf registration statement.

In October 2025, the Board approved a quarterly cash dividend of $ 0.45 per share, payable on November 20, 2025 to stockholders of record on November 13, 2025.

Forestar has an effective shelf registration statement, filed with the SEC in September 2024, registering $ 750 million of equity securities, of which $ 300 million is reserved for sales under its at-the-market equity offering (ATM) program that was entered into in November 2024.

During fiscal 2025, there were no shares issued under the ATM program.

At September 30, 2025, the full $ 750 million remained available for issuance under Forestar’s shelf registration statement, with $ 300 million reserved for sales under the ATM program.

AND SUBSIDIARIES

16 unchanged sentences

The Company records as SG&A expense the amount that the employee contributions would have earned had the funds been invested in the designated investments.

Related to this plan, the Company recorded a charge to expense of $ 36.5 million and $ 17.0 million in fiscal 2024 and 2023, respectively, and a credit to expense of $ 24.0 million in fiscal 2022.

The Company recorded $ 18.1 million, $ 36.5 million and $ 17.0 million of expense for this plan in fiscal 2025, 2024 and 2023, respectively.

Employee Stock Purchase Plan

11 unchanged sentences

Stock-Based Compensation

The Company’s Stock Incentive Plan provides for the granting of stock options and restricted stock units to executive officers, other key employees and non-management directors.

Restricted stock unit (RSU) awards may be based on service over a requisite time period (time-based) or on performance (performance-based).

RSU equity awards represent the contingent right to receive one share of the Company’s common stock per RSU if the vesting conditions and/or performance criteria are satisfied.

The RSUs have no dividend or voting rights until vested.

During fiscal 2024, the Board of Directors and the Company’s stockholders authorized an increase of 18.9 million shares to the common stock reserved for issuance under the Stock Incentive Plan.

The Company’s Stock Incentive Plan provides for the granting of equity awards, such as stock options, performance stock units (PSUs) and restricted stock units (RSUs), to executive officers, other key employees and non-management directors.

PSUs are earned by achieving key performance goals, and RSUs are earned through continued employment with the Company over a requisite time period.

Each stock unit represents the contingent right to receive one share of the Company’s common stock if the performance criteria and/or vesting conditions are satisfied.

The stock units have no dividend or voting rights until vested.

At September 30, 2025, the Company had 22.1 million shares of common stock reserved for issuance and 20.2 million shares available for future grants under the Stock Incentive Plan.

Time-Based Restricted Stock Unit Equity Awards

During fiscal 2024, 2023 and 2022, time-based RSUs were granted to the Company’s executive officers, other key employees and non-management directors (collectively, approximately 1,470 , 1,380 and 1,200 recipients, respectively).

Restricted Stock Unit (RSU) Equity Awards

During fiscal 2025, 2024 and 2023, RSUs were granted to the Company’s executive officers, other key employees and non-management directors (collectively, approximately 1,600 , 1,470 and 1,380 recipients, respectively).

These awards vest annually in equal installments over periods of three to five years .

The following table provides additional information related to time-based RSU activity during fiscal 2024, 2023 and 2022.

The following table provides additional information related to RSU activity during fiscal 2025, 2024 and 2023.

The number of RSUs vested includes shares of common stock withheld by the Company on behalf of employees to satisfy the tax withholding requirements.

13 unchanged sentences

The total fair value of shares vested on the vesting date during fiscal 2025, 2024 and 2023 was $ 114.8 million, $ 184.7 million and $ 115.2 million, respectively.

For fiscal 2024, 2023 and 2022, compensation expense related to time-based RSUs was $ 77.3 million, $ 65.7 million and $ 63.6 million, respectively.

At September 30, 2024, there was $ 170.1 million of unrecognized compensation expense related to unvested time-based RSU awards.

For fiscal 2025, 2024 and 2023, compensation expense related to RSUs was $ 80.6 million, $ 77.3 million and $ 65.7 million, respectively.

At September 30, 2025, there was $ 170.3 million of unrecognized compensation expense related to unvested RSU awards.

This expense is expected to be recognized over a weighted average period of 2.6 years.

Performance-Based Restricted Stock Unit Equity Awards

During fiscal 2024, 2023 and 2022, performance-based RSU equity awards that vest at the end of three-year performance periods were granted to the Company’s executive officers.

Performance Stock Unit (PSU) Equity Awards

During fiscal 2025, 2024 and 2023, PSUs that vest at the end of three-year performance periods were granted to the Company’s executive officers and other key employees.

The number of units that ultimately vest depends on the Company’s relative position as compared to its peers in achieving certain performance criteria and can range from 0 % to 300 % of the number of units granted.

The performance criteria for the awards issued in fiscal 2022 and 2023 were total shareholder return, return on investment, SG&A expense containment and homebuilding gross profit.

The performance criteria for the awards issued in fiscal 2024 were total shareholder return, return on assets and operating margin.

Compensation expense related to these grants is based on the Company’s performance against a market index or its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

The performance criteria for the awards issued in fiscal 2023 were total shareholder return compared to the S&P 500 and return on investment, SG&A expense containment and homebuilding gross profit compared to homebuilding peers.

The performance criteria for the awards issued in fiscal 2024 were total shareholder return compared to the S&P 500 and return on assets and operating margin compared to homebuilding peers.

The performance criteria for the awards issued in fiscal 2025 were total shareholder return and return on assets compared to the S&P 500, pre-tax return on assets compared to homebuilding peers and earnings per share growth.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides additional information related to the performance-based RSUs outstanding at September 30, 2024.

Grant Date Vesting Date Target Number of Performance Units Grant Date Fair Value per Unit Compensation Expense

The following table provides additional information related to the PSUs outstanding at September 30, 2025.

Grant Date Vesting Date Target Number of Performance Stock Units Grant Date Fair Value per Unit Compensation Expense

Year Ended September 30,

6 unchanged sentences

_______________

(1) The performance RSUs granted in October 2021 totaled 390,000 ;

however, in March 2022, the Compensation Committee approved an amendment and restatement of this award to increase the RSUs granted from 390,000 to 430,000 .

Concurrent with this change, the Compensation Committee amended the executive officer short-term performance bonus plan to reduce the amount of the award that could be earned.

(2) The performance RSUs granted in October 2023 were subsequently modified in December 2023 to change the performance criteria to total shareholder return, return on assets and operating margin.

In October 2024, the Compensation Committee approved the issuance of the performance-based RSUs that vested in September 2024 in the form of 545,558 shares of common stock to satisfy the awards.

(1) The PSUs granted in October 2023 were subsequently modified in December 2023 to change the performance criteria to total shareholder return, return on assets and operating margin.

In October 2025, the Compensation Committee approved the issuance of the PSUs that vested in September 2025 in the form of 484,492 shares of common stock to satisfy the awards.

Stock Options

1 unchanged sentence

The Company has not granted stock options in recent years and there were no options outstanding as of September 30, 2025.

The following table provides additional information related to stock option activity during fiscal 2024, 2023 and 2022.

Year Ended September 30,

2024 2023 2022

Stock Options Weighted Average

Exercise Price Stock Options Weighted Average

Exercise Price

Outstanding at beginning of year 219,663 $ 23.86 823,486 $ 23.84 1,115,776 $ 23.84

Exercised ( 219,663 ) 23.86 ( 603,823 ) 23.83 ( 292,290 ) 23.83

Cancelled or expired — — — — — —

Outstanding at end of year — $ — 219,663 $ 23.86 823,486 $ 23.84

Exercisable at end of year — $ — 219,663 $ 23.86 823,486 $ 23.84

The aggregate intrinsic value of options exercised during fiscal 2024, 2023 and 2022 was $ 26.5 million, $ 47.2 million and $ 23.0 million, respectively.

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the option exercise price.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE L – COMMITMENTS AND CONTINGENCIES

Warranty Claims

The Company provides its homebuyers with warranties for defects in structural elements, mechanical systems and other construction components of the home.

The Company typically provides its homebuyers with warranties for defects in structural elements, mechanical systems and other construction components of the home.

Warranty liabilities are established by charging cost of sales for each home delivered based on management’s estimate of expected warranty-related costs and by accruing for existing warranty claims.

10 unchanged sentences

Warranty liability, end of year $ 566.2 $ 566.9

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Legal Claims and Insurance

2 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.

The estimated liabilities for these contingencies were $ 949.6 million and $ 858.9 million at September 30, 2024 and 2023, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets.

Approximately 97 % of these reserves related to construction defect matters at both September 30, 2024 and 2023.

The estimated liabilities for these contingencies were $ 1.1 billion and $ 949.6 million at September 30, 2025 and 2024, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets.

Approximately 98 % and 97 % of these reserves related to construction defect matters at September 30, 2025 and 2024, respectively.

Expenses related to the Company’s legal contingencies were $ 240.1 million, $ 164.0 million and $ 139.7 million in fiscal 2025, 2024 and 2023, respectively.

6 unchanged sentences

Adjustments to estimated reserves are recorded in the accounting period in which the change in estimate occurs.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Historical trends in construction defect claims have been inconsistent, and the Company believes they may continue to fluctuate.

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The Company’s estimated insurance receivables from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $ 167.0 million and $ 156.8 million at September 30, 2025 and 2024, respectively, and are included in other assets in the consolidated balance sheets.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In some states where the Company believes it is too difficult or expensive for its subcontractors to obtain general liability insurance, the Company has waived its normal subcontractor general liability insurance requirements to obtain lower costs from subcontractors.

6 unchanged sentences

Due to the high degree of judgment required in establishing reserves for these contingencies, actual future costs and recoveries from insurance could differ significantly from current estimated amounts, and it is not possible for the Company to make a reasonable estimate of the possible loss or range of loss in excess of its reserves.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Land and Lot Purchase Contracts

26 unchanged sentences

Water rights and other water-related assets 333.0 319.1

Pledged reimbursements asset (1)

Insurance receivables 167.0 156.8

2 unchanged sentences

Contract assets - insurance agency commissions 127.9 117.5

Margin deposits related to hedging instruments 71.3 —

Lease right of use assets 63.0 51.4

Margin deposits related to hedging instruments 47.9 71.3

Interest rate lock commitments 42.7 44.5

10 unchanged sentences

Inventory related accruals 497.3 451.2

Customer deposits 99.7 147.1

Pledged reimbursements liability (1)

Accrued property taxes 82.7 77.6

Mortgage hedging instruments and commitments 63.0 15.7

Customer deposits 81.5 99.7

Lease liabilities 65.6 53.3

Accrued interest 60.5 34.8

Mortgage hedging instruments and commitments 34.1 63.0

Federal and state income tax liabilities 19.0 27.7

Broker deposits related to hedging instruments — 118.9

Interest rate lock commitments — 33.9

Other 141.0 123.2

$ 3,541.6 $ 3,016.7

_______________

(1) In certain projects, the Company has entered into agreements to be reimbursed for eligible infrastructure costs from municipal districts as funds are available to the district.

The Company has pledged certain of these future reimbursements as collateral to a third party, and the third party issued bonds against this collateral.

The Company received the cash proceeds from the third-party bond issuance.

The Company has no future performance obligations related to the cash proceeds received, no obligations related to any future interest or principal payments to the third-party bondholders, and the third party has no recourse against the Company for the reimbursement of these funds.

However, under the applicable accounting rules, since the Company pledged only certain reimbursements and not the entire amount, the Company recorded a non-cash transaction to increase assets and a related liability for the amount of the unpaid balance of the third-party bonds.

The asset and liability will be reduced as the third-party bonds are repaid by the municipal district.

AND SUBSIDIARIES

32 unchanged sentences

◦ Inventory held and used - In assessing impairment indicators of its inventory held and used, the Company performs an analysis of the undiscounted cash flows estimated to be generated by those assets.

The most significant factors used to estimate undiscounted future cash flows include pricing and incentive levels actually realized by the community, the rate at which the homes are sold and the costs incurred to develop the lots and construct the homes.

The most significant factors used to estimate undiscounted future cash flows include pricing and incentive levels realized by the community, the rate at which the homes are sold and the costs incurred to develop the lots and construct the homes.

Inventory held and used measured at fair value represents those communities for which the estimated undiscounted cash flows are less than their carrying amounts and therefore, the Company recorded impairments during the period to record the inventory at fair value calculated based on its discounted estimated future cash flows.

15 unchanged sentences

Derivatives not designated as hedging instruments (3):

Interest rate lock commitments (4) Other assets — — 44.5 44.5

Interest rate lock commitments (4) Other assets and other liabilities — — 42.4 42.4

Mortgage hedging instruments and commitments (5) Other assets and other liabilities — ( 33.5 ) — ( 33.5 )

5 unchanged sentences

Derivatives not designated as hedging instruments (3):

Interest rate lock commitments (4) Other assets and other liabilities — — ( 31.6 ) ( 31.6 )

Interest rate lock commitments (4) Other assets — — 44.5 44.5

Mortgage hedging instruments and commitments (5) Other assets and other liabilities — ( 60.2 ) — ( 60.2 )

19 unchanged sentences

Mortgage loans held for sale valued using Level 3 inputs at September 30, 2025 and 2024 include $ 8.6 million and $ 10.6 million, respectively, of loans for which the Company elected the fair value option upon origination and did not sell into the secondary market.

Mortgage loans held for sale totaling $ 0.2 million were transferred out of Level 3 to Level 2 during fiscal 2024 due to significant observable inputs used in determining the fair value of these loans.

Mortgage loans held for sale totaling $ 17.6 million were transferred to Level 3 during fiscal 2025 due to significant unobservable inputs used in determining the fair value of these loans.

Mortgage loans held for sale totaling $ 0.2 million were transferred from Level 3 to Level 2 during fiscal 2024 due to significant observable inputs used in determining the fair value of these loans.

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.

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(4) The fair value of interest rate lock commitments at September 30, 2024 reflects a $ 44.5 million change in fair value in other assets.

(4) The fair value of interest rate lock commitments at September 30, 2025 reflects a $ 42.7 million change in fair value in other assets and a $ 0.3 million change in fair value in other liabilities.

The fair value of interest rate lock commitments at September 30, 2024 reflects a $ 44.5 million change in fair value in other assets.

(5) The fair value of mortgage hedging instruments and commitments at September 30, 2025 reflects a $ 0.6 million change in fair value in other assets and a $ 34.1 million change in fair value in other liabilities.

43 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data