What changed in this filing

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Item 1. Financial Statements

2020-07-29 compared with 2020-04-29 · 113 added, 79 removed, 355 unchanged (35% of the section changed)

13 unchanged sentences

Accounts payable $ 26.0 $ 16.8

Earnest money deposits on sales contracts 100.6 89.9

Earnest money on sales contracts 98.9 89.9

Accrued expenses and other liabilities 73.0 79.6

3 unchanged sentences

Common stock, par value $ 1.00 per share, 200,000,000 authorized shares,

48,025,359 and 47,997,366 shares issued and outstanding at March 31, 2020

48,059,921 and 47,997,366 shares issued and outstanding at June 30, 2020

and September 30, 2019, respectively

9 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2020 2019 2020 2019

3 unchanged sentences

Selling, general and administrative expense 11.2 7.9 32.8 19.8

Equity in earnings of unconsolidated ventures ( 0.3 ) — ( 0.8 ) ( 0.6 )

Equity in loss (earnings) of unconsolidated ventures 0.1 — ( 0.6 ) ( 0.5 )

Gain on sale of assets — ( 1.5 ) ( 0.1 ) ( 2.4 )

18 unchanged sentences

Balances at September 30, 2019 ( 47,997,366 shares)

$ 48.0 $ 602.2 $ 158.1 $ 0.6 $ 808.9

Net income (loss)

9 unchanged sentences

$ 48.0 $ 602.5 $ 175.0 $ 0.1 $ 825.6

— — 9.6 0.8 10.4

Stock-based compensation expense

1 unchanged sentence

Balances at March 31, 2020 ( 48,025,359 shares)

$ 48.0 $ 603.3 $ 184.6 $ 0.9 $ 836.8

— — 10.1 — 10.1

Stock issued under employee benefit plans ( 34,562 shares)

0.1 — — — 0.1

Cash paid for shares withheld for taxes

— ( 0.1 ) — — ( 0.1 )

Stock-based compensation expense

— 0.3 — — 0.3

Distributions to noncontrolling interests

— — — ( 0.3 ) ( 0.3 )

Balances at June 30, 2020 ( 48,059,921 shares)

$ 48.1 $ 603.5 $ 194.7 $ 0.6 $ 846.9

Common Stock Additional Paid-in Capital Retained Earnings Non-controlling Interests Total Equity

2 unchanged sentences

$ 41.9 $ 506.3 $ 125.1 $ 1.2 $ 674.5

— — 3.3 0.6 3.9

Stock issued under employee benefit plans ( 20,463 shares)

8 unchanged sentences

$ 42.0 $ 506.3 $ 128.4 $ 1.3 $ 678.0

— — 10.1 2.7 12.8

Stock-based compensation expense

3 unchanged sentences

Balances at March 31, 2019 ( 41,959,866 shares)

$ 42.0 $ 506.4 $ 138.5 $ 0.9 $ 687.8

— — 6.9 — 6.9

Stock-based compensation expense

— 0.9 — — 0.9

Distributions to noncontrolling interests

— — — ( 0.3 ) ( 0.3 )

Balances at June 30, 2019 ( 41,959,866 shares)

$ 42.0 $ 507.3 $ 145.4 $ 0.6 $ 695.3

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31,

Nine Months Ended June 30,

(In millions)

13 unchanged sentences

Increase in earnest money deposits on sales contracts 2.9 35.4

Decrease in income taxes receivable 0.7 1.9

(Increase) decrease in income taxes receivable ( 5.7 ) 1.1

Net cash used in operating activities ( 205.7 ) ( 450.1 )

11 unchanged sentences

Net cash provided by financing activities 175.4 339.1

Net increase (decrease) in cash and cash equivalents 55.4 ( 252.9 )

Net decrease in cash and cash equivalents ( 27.2 ) ( 111.8 )

Cash and cash equivalents at beginning of period 382.8 335.0

22 unchanged sentences

Horton is considered a related party of Forestar under GAAP.

At March 31, 2020, D.R.

At June 30, 2020, D.R.

Horton owned approximately 65 % of the Company's outstanding common stock.

11 unchanged sentences

The guidance is effective for the Company beginning October 1, 2021, although early adoption is permitted.

The Company is currently evaluating the impact of this guidance, and it is not expected to have a material impact on its consolidated financial position, results of operations and cash flows.

The Company is currently evaluating the impact of this guidance, and it is not expected to have a material impact on its consolidated financial position, results of operations or cash flows.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform,” which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.

The guidance was effective beginning March 12, 2020 and the Company may elect to apply the amendments prospectively through December 31, 2022.

This guidance has not and is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.

The Company will adopt this standard when LIBOR is discontinued and does not expect it to have a material impact on its consolidated financial statements and related disclosures.

Note 2— Segment Information

The Company manages its operations through its real estate segment.

The Company's real estate segment is its core business and generates substantially all of the Company’s revenues.

The real estate segment primarily acquires land and develops infrastructure for single-family residential communities.

The Company's real estate segment generates its revenues principally from sales of residential single-family finished lots to local, regional and national homebuilders.

The Company has other business activities for which the related assets and results of operations are immaterial and therefore are included within the Company's real estate segment.

The Company manages its operations through its real estate segment which is its core business and generates substantially all of its revenues.

The real estate segment primarily acquires land and develops infrastructure for single-family residential communities and its revenues generally come from sales of residential single-family finished lots to local, regional and national homebuilders.

The Company has other business activities for which the related assets and operating results are immaterial, and therefore, are included within the Company's real estate segment.

Note 3— Real Estate

5 unchanged sentences

$ 1,287.1 $ 1,028.9

In the six months ended March 31, 2020, the Company invested $ 283.5 million for the acquisition of residential real estate and $ 223.5 million for the development of residential real estate.

At March 31, 2020 and September 30, 2019, undeveloped land primarily consists of undeveloped land which the Company has the contractual right to sell to D.R.

In the nine months ended June 30, 2020, the Company invested $ 385.3 million for the acquisition of residential real estate and $ 348.6 million for the development of residential real estate.

At June 30, 2020 and September 30, 2019, undeveloped land primarily consists of undeveloped land which the Company has the contractual right to sell to D.R.

Horton within approximately one year of its purchase or, if D.R.

Horton elects, at an earlier date, at a sales price equal to the carrying value of the land at the time of sale plus additional consideration which ranges from 12 % to 16 % per annum.

During the latter part of March and to date in April, the impacts of COVID-19 and the related widespread reductions in economic activity have affected the Company’s business operations and the demand for residential lots.

The Company’s lot sales pace has declined as homebuilders have slowed their purchases of lots to adjust to lower levels of home sales orders as a result of the pandemic.

There is uncertainty regarding the extent and timing of disruption that COVID-19 and related government directives, actions and economic relief efforts will have on the U.S.

economy, capital markets and demand for our lots.

The extent to which COVID-19 impacts the Company’s operational and financial performance will depend on future developments, including the duration and spread of COVID-19 and the impact on the Company’s customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.

If economic and housing market conditions are adversely affected for a prolonged period, the Company may be required evaluate its real estate for potential impairment.

Horton elects, at an earlier date, at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 16 % per annum.

Each quarter the Company reviews the performance and outlook for all of its real estate for indicators of potential impairment and performs detailed impairment evaluations and analyses when necessary.

As a result of this process, no real estate impairment charges were recorded for any period presented in the consolidated statements of operations.

Real estate impairments, if any, and the land option charges discussed below are included in cost of sales in the consolidated statements of operations.

During the three and nine months ended June 30, 2020, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 0.1 million and $ 0.5 million, respectively, compared to $ 0.1 million in both periods of fiscal 2019.

During the latter part of March and in April, the impacts of COVID-19 (C-19) and the related widespread reductions in economic activity affected the Company’s business operations and the demand for residential lots.

The Company’s lot sales pace declined as homebuilders slowed their purchases of lots to adjust to expected lower levels of home sales orders as a result of the pandemic.

However, as economic activity and housing market conditions began to improve during the latter part of the quarter, the lot sales pace increased.

There is significant uncertainty regarding the extent to which and how long C-19 and its related effects will impact the U.S.

economy, capital markets and demand for the Company's lots.

The extent to which C-19 impacts the Company’s operational and financial performance will depend on future developments, including the duration and spread of C-19 and the impact on the Company’s customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.

If economic and housing market conditions are adversely affected for a prolonged period, the Company may be required to evaluate its real estate for potential impairment.

These evaluations could result in impairment charges which could be significant.

1 unchanged sentence

Revenues consist of:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

9 unchanged sentences

During periods in which the Company’s active real estate is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred.

During the first six months of fiscal 2020 and fiscal year 2019, the Company’s active real estate exceeded its debt level, and all interest incurred was capitalized to real estate.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and six months ended March 31, 2020 and 2019.

Three Months Ended March 31, Six Months Ended March 31,

During the first nine months of fiscal 2020 and fiscal year 2019, the Company’s active real estate exceeded its debt level, and all interest incurred was capitalized to real estate.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and nine months ended June 30, 2020 and 2019.

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

5 unchanged sentences

Note 6— Investment in Unconsolidated Ventures

At March 31, 2020, the Company had ownership interests in four ventures that it accounted for using the equity method.

At June 30, 2020, the Company had ownership interests in four ventures that it accounted for using the equity method.

Combined summarized balance sheet and income statement information for these unconsolidated ventures follows:

10 unchanged sentences

Forestar's investment in unconsolidated ventures $ 5.5 $ 7.3

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

1 unchanged sentence

Revenues $ — $ 0.1 $ 3.0 $ 1.9

Earnings $ 0.6 $ — $ 2.0 $ 1.4

Forestar's equity in earnings of unconsolidated ventures $ 0.3 $ — $ 0.8 $ 0.6

(Loss) earnings $ ( 0.1 ) $ ( 0.1 ) $ 1.9 $ 1.3

Forestar's equity in (loss) earnings of unconsolidated ventures $ ( 0.1 ) $ — $ 0.6 $ 0.5

Note 7— Other Assets, Accrued Expenses and Other Liabilities

The Company's other assets at March 31, 2020 and September 30, 2019 were as follows:

The Company's other assets at June 30, 2020 and September 30, 2019 were as follows:

2020 September 30,

1 unchanged sentence

Receivables, net $ 0.8 $ 1.1

Earnest money notes receivable on sales contracts 6.5 —

Lease right of use assets 3.2 —

3 unchanged sentences

$ 27.1 $ 13.7

The Company's accrued expenses and other liabilities at March 31, 2020 and September 30, 2019 were as follows:

The Company's accrued expenses and other liabilities at June 30, 2020 and September 30, 2019 were as follows:

2020 September 30,

10 unchanged sentences

$ 73.0 $ 79.6

The Company's notes payable at their principal amounts, net of unamortized discounts and debt issuance costs, consist of the following:

The Company's notes payable at their carrying amounts consist of the following:

2020 September 30,

6 unchanged sentences

______________

(1) Debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 9.9 million and $ 6.2 million at March 31, 2020 and September 30, 2019, respectively.

(1) Debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 9.4 million and $ 6.2 million at June 30, 2020 and September 30, 2019, respectively.

Bank Credit Facility

1 unchanged sentence

The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $ 100 million and 50 % of the revolving credit commitment.

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

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

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

At March 31, 2020, there were no borrowings outstanding and $ 31.0 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 349.0 million.

There were no borrowings or repayments under the facility during the six months ended March 31, 2020.

At June 30, 2020, there were no borrowings outstanding and $ 31.6 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 348.4 million.

There were no borrowings or repayments under the facility during the nine months ended June 30, 2020.

In October 2019, the revolving credit facility was amended to extend its maturity date to October 2, 2022.

4 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.

At March 31, 2020, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

In February 2020, the Company issued $ 300 million principal amount of 5.0 % senior notes due 2028 pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (Securities Act).

At June 30, 2020, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

In February 2020, the Company issued $ 300 million principal amount of 5.0 % senior notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (Securities Act).

The notes mature March 1, 2028 with interest payable semi-annually and represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness.

1 unchanged sentence

On or after March 1, 2023, the notes may be redeemed at 102.5 % of their principal amount plus any accrued and unpaid interest.

The redemption price decreases annually on a ratable basis to par by March 1, 2026 in accordance with the indenture.

In accordance with the indenture, the redemption price decreases annually thereafter and the notes can be redeemed at par on or after March 1, 2026 through maturity.

The notes are guaranteed by each of the Company's subsidiaries to the extent such subsidiaries guarantee the Company's revolving credit facility.

2 unchanged sentences

In March 2020, the Company repaid $ 118.9 million principal amount of its 3.75 % convertible senior notes in cash at maturity.

The indentures governing the senior notes require that, upon the occurrence of both a change of control and a rating decline (each as defined in the indenture), the Company offer to purchase the notes at 101% of their principal amount.

The indentures governing the senior notes require that, upon the occurrence of both a change of control and a rating decline (each as defined in the indentures), the Company offer to purchase the notes at 101% of their principal amount.

If the Company or its restricted subsidiaries dispose of assets, under certain circumstances, the Company will be required to either invest the net cash proceeds from such asset sales in its business within a specified period of time, repay certain senior secured debt or debt of its non-guarantor subsidiaries, or make an offer to purchase a principal amount of the notes equal to the excess net cash proceeds at a purchase price of 100% of their principal amount.

5 unchanged sentences

and allow to exist certain restrictions on the ability of subsidiaries to pay dividends or make other payments.

At March 31, 2020, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

On April 20, 2020, the Board of Directors authorized the repurchase of up to $ 30 million of the Company’s

debt securities.

The authorization becomes effective on April 30, 2020 and has no expiration date.

At June 30, 2020, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

Effective April 30, 2020, the Board of Directors authorized the repurchase of up to $ 30 million of the Company’s debt securities.

The authorization has no expiration date.

All of the $ 30 million authorization was remaining at June 30, 2020.

Note 9— Fair Value Measurements

8 unchanged sentences

The Company elected not to use the fair value option for cash and cash equivalents and debt.

For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at March 31, 2020 and September 30, 2019.

Fair Value at March 31, 2020

For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at June 30, 2020 and September 30, 2019.

Fair Value at June 30, 2020

Carrying Value Level 1 Level 2 Level 3 Total

11 unchanged sentences

(a) The fair values of cash and cash equivalents approximate their carrying values due to their short-term nature and are classified as Level 1 within the fair value hierarchy.

(b) At March 31, 2020 and September 30, 2019, debt consisted of the Company's senior notes.

(b) At June 30, 2020 and September 30, 2019, debt consisted of the Company's senior notes.

The fair value of the senior notes is determined based on quoted prices, which is classified as Level 2 within the fair value hierarchy.

Non-financial assets measured at fair value on a non-recurring basis principally include real estate assets which the Company reviews for indicators of potential impairment and performs impairment evaluations when necessary.

Real estate impairment charges are included in cost of sales in the Company's consolidated statements of operations.

For the three and six months ended March 31, 2020, the Company recorded land option charges of $ 0.1 million and $ 0.4 million.

Non-financial assets measured at fair value on a non-recurring basis primarily include real estate assets which the Company reviews for indicators of potential impairment and performs impairment evaluations when necessary.

Note 10— Earnings per Share

The computations of basic and diluted earnings per share are as follows:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

5 unchanged sentences

Total weighted average shares outstanding — diluted 48,075,210 42,010,221 48,074,860 41,978,339

Anti-dilutive awards excluded from diluted weighted average shares — — — —

Basic net income per common share attributable to Forestar Group Inc.

5 unchanged sentences

Note 11— Income Taxes

The Company’s income tax expense for the three and six months ended March 31, 2020 was $ 3.3 million and $ 8.7 million compared to $ 3.6 million and $ 4.6 million in the prior year periods.

The effective tax rate was 24.1 % and 24.3 % for the three and six months ended March 31, 2020 compared to 22.0 % and 21.6 % in the prior year periods.

The Company’s income tax expense for the three and nine months ended June 30, 2020 was $ 0.2 million and $ 8.9 million compared to $ 1.5 million and $ 6.0 million in the prior year periods.

The effective tax rate was 1.9 % and 19.3 % for the three and nine months ended June 30, 2020 compared to 17.9 % and 20.3 % in the prior year periods.

The effective tax rate for the three and nine months ended June 30, 2020 includes a tax benefit of $ 2.3 million related to the net operating loss (NOL) carryback provisions of the recently enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which allows the Company to carryback a portion of its 2018 NOL.

The carryback provisions result in the recognition of previously unrecognized tax benefits and the revaluation of deferred tax assets due to the utilization of NOLs at a higher tax rate in the carryback period.

The Company's effective tax rate for all periods includes an expense for state income taxes and nondeductible expenses and a benefit related to noncontrolling interests.

At March 31, 2020 and September 30, 2019, deferred tax assets, net of deferred tax liabilities, were $ 11.3 million and $ 20.7 million, offset by a valuation allowance of $ 3.3 million at both dates for the portion of the deferred tax assets that the Company has determined is more likely than not to be unrealizable.

The valuation allowance was recorded because it is more likely than not that a portion of the Company's state deferred tax assets, primarily net operating loss (NOL) carryforwards, will not be realized because the Company is no longer operating in some states or the NOL carryforward periods are too brief to realize the related deferred tax asset.

At June 30, 2020, the Company had deferred tax assets, net of deferred tax liabilities, of $ 3.2 million.

The deferred tax assets were offset by a valuation allowance of $ 3.3 million, resulting in a net deferred tax liability of $ 0.1 million, which is included in accrued expenses and other liabilities on its consolidated balance sheets.

At September 30, 2019, deferred tax assets, net of deferred tax liabilities, were $ 20.7 million, partially offset by a valuation allowance of $ 3.3 million.

The valuation allowance for both periods was recorded because it is more likely than not that a portion of the Company's state deferred tax assets, primarily NOL carryforwards, will not be realized because the Company is no longer operating in some states or the NOL carryforward periods are too brief to realize the related deferred tax asset.

The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance on its deferred tax assets.

Any reversal of the valuation allowance in future periods will impact the effective tax rate.

The Company's unrecognized tax benefits totaled $ 1.6 million at March 31, 2020, all of which would affect its effective tax rate, if recognized.

The Company had no unrecognized tax benefits at June 30, 2020 as a result of the recognition of $ 1.6 million of previously unrecognized tax benefits during the three months ended June 30, 2020.

All of the $ 1.6 million of recognized tax benefits affected the Company’s effective tax rate and was attributable to the NOL carryback provisions of the CARES Act allowing previously uncertain tax attributes to be recognized.

Note 12 — Stockholders' Equity and Stock-Based Compensation

1 unchanged sentence

The Company has an effective shelf registration statement filed with the Securities and Exchange Commission (SEC) in September 2018 registering $ 500 million of equity securities.

At March 31, 2020, $ 394.3 million remains available for issuance under the shelf registration statement.

At June 30, 2020, $ 394.3 million remains available for issuance under the shelf registration statement.

Restricted Stock Units (RSUs)

1 unchanged sentence

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

Performance-based and time-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 voting rights until vested.

During the three months ended March 31, 2020, a total of 175,325 time-based RSUs were granted.

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 and have no voting rights during the vesting period.

During the nine months ended June 30, 2020, a total of 175,325 time-based RSUs were granted.

The weighted average grant date fair value of these equity awards was $ 16.01 per unit, and they vest annually in equal installments over periods of three to five years.

Total stock-based compensation expense related to the Company's restricted stock units for the three and six months ended March 31, 2020 was $ 0.8 million and $ 1.3 million, respectively, and in both periods includes $ 0.5 million of stock-based compensation expense related to employees that were retirement eligible on the date of grant.

Total stock-based compensation expense related to the Company's restricted stock units for the three and nine months ended June 30, 2020 was $ 0.3 million and $ 1.6 million, respectively, and the nine month period includes $ 0.5 million of expense recognized for employees that were retirement eligible on the date of grant.

Total stock-based compensation expense for the three and nine months ended June 30, 2019 was $ 0.9 million and $ 1.1 million, respectively, and both periods include $ 0.6 million of expense recognized for employees that were retirement eligible on the date of grant.

Note 13— Commitments and Contingencies

1 unchanged sentence

In support of the Company's residential lot development business, it issues letters of credit under the revolving credit facility and has a surety bond program that provides financial assurance to beneficiaries related to the execution and performance of certain development obligations.

At March 31, 2020, the Company had outstanding letters of credit of $ 31.0 million under the revolving credit facility and surety bonds of $ 174.6 million, issued by third parties to secure performance under various contracts.

At June 30, 2020, the Company had outstanding letters of credit of $ 31.6 million under the revolving credit facility and surety bonds of $ 206.2 million, issued by third parties to secure performance under various contracts.

The Company expects that its performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms.

8 unchanged sentences

Horton provides the Company with certain administrative, compliance, operational and procurement services.

During the six months ended March 31, 2020 and 2019, the Company paid D.R.

During the nine months ended June 30, 2020 and 2019, the Company paid D.R.

Horton $ 3.8 million and $ 1.6 million for these shared services and $ 1.9 million and $ 1.1 million for the cost of health insurance and other employee benefits.

2 unchanged sentences

Horton, both companies identify land development opportunities to expand Forestar's portfolio of assets.

At March 31, 2020 and September 30, 2019, the Company owned or controlled through option purchase contracts approximately 52,300 and 38,300 residential lots, of which D.R.

At June 30, 2020 and September 30, 2019, the Company owned or controlled through purchase contracts approximately 50,700 and 38,300 residential lots, of which D.R.

Horton had the following involvement.

7 unchanged sentences

Horton for lots under contract $ 91.0 $ 88.7

Earnest money notes from D.R.

Horton for lots under contract $ 6.5 $ —

Remaining purchase price of lots under contract with D.R.

Horton $ 1,016.4 $ 953.8

In the three months ended March 31, 2020 and 2019, the Company's residential lot sales totaled 1,951 and 548 , and lot sales revenues were $ 156.4 million and $ 49.3 million.

In the six months ended March 31, 2020 and 2019, the Company's residential lot sales totaled 4,373 and 1,066 , and lot sales revenues were $ 373.5 million and $ 84.0 million.

In the three months ended June 30, 2020 and 2019, the Company's residential lot sales totaled 2,023 and 1,158 , and lot sales revenues were $ 164.4 million and $ 87.6 million.

In the nine months ended June 30, 2020 and 2019, the Company's residential lot sales totaled 6,396 and 2,224 , and lot sales revenues were $ 537.9 million and $ 171.6 million.

Lot and land sales to D.R.

Horton during those periods were as follows.

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

9 unchanged sentences

In addition, a decrease in contract liabilities increased revenues on lot sales to D.R.

Horton by $ 0.8 million and $ 2.1 million in the three months ended March 31, 2020 and 2019 and an increase in contract liabilities decreased revenues on lot sales to D.R.

Horton by $ 0.6 million and $ 1.5 million in the six months ended March 31, 2020 and 2019.

During the three and six months ended March 31, 2020, the Company reimbursed D.R.

Horton by $ 2.8 million and $ 2.1 million in the three and nine months ended June 30, 2020 and an increase in contract liabilities decreased revenues on lot sales to D.R.

Horton by $ 2.0 million and $ 3.6 million in the three and nine months ended June 30, 2019.

During the three and nine months ended June 30, 2020, the Company reimbursed D.R.

Horton approximately $ 7.0 million and $ 23.2 million for previously paid earnest money and $ 12.9 million and $ 26.2 million for pre-acquisition and other due diligence and development costs related to land purchase contracts whereby D.R.

Horton assigned its rights under these land purchase contracts to the Company.

During the three and six months ended March 31, 2019, the Company reimbursed D.R.

During the three and nine months ended June 30, 2019, the Company reimbursed D.R.

Horton approximately $ 10.8 million and $ 27.6 million for previously paid earnest money and $ 4.7 million and $ 8.4 million for pre-acquisition and other due diligence and development costs.

During the three and six months ended March 31, 2020, the Company paid D.R.

During the three and nine months ended June 30, 2020, the Company paid D.R.

Horton $ 1.0 million and $ 3.9 million for land development services compared to $ 0.6 million and $ 1.4 million for these services in the prior year periods.

These amounts are included in cost of sales in the Company’s consolidated statements of operations.

At March 31, 2020 and September 30, 2019, undeveloped land was $ 28.2 million and $ 17.1 million.

At June 30, 2020 and September 30, 2019, undeveloped land was $ 15.4 million and $ 17.1 million.

Undeveloped land primarily consists of undeveloped land which the Company has the contractual right to sell to D.R.

Horton within approximately one year of its purchase or, if D.R.

Horton elects, at an earlier date, at a sales price equal to the carrying value of the land at the time of sale plus additional consideration which ranges from 12 % to 16 % per annum.

At March 31, 2020 and September 30, 2019, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 4.8 million and $ 2.2 million owed to D.R.

Horton elects, at an earlier date, at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 16 % per annum.

At June 30, 2020 and September 30, 2019, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 3.0 million and $ 2.2 million owed to D.R.

Horton for any accrued and unpaid shared service charges, land purchase contract deposits and due diligence and other development cost reimbursements.

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-Q

Item 1. Financial Statements