What changed in this filing

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Item 1. Financial Statements

2021-04-23 compared with 2021-01-27 · 119 added, 74 removed, 312 unchanged (38% of the section changed)

19 unchanged sentences

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

48,076,643 and 48,061,921 shares issued and outstanding at December 31, 2020

49,124,801 and 48,061,921 shares issued and outstanding at March 31, 2021

and September 30, 2020, respectively

9 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2021 2020 2021 2020

(In millions, except per share amounts)

3 unchanged sentences

Equity in earnings of unconsolidated ventures ( 0.1 ) ( 0.3 ) ( 0.3 ) ( 0.8 )

Loss on sale of assets — 0.1

Gain on sale of assets — ( 0.3 ) — ( 0.1 )

Interest and other income ( 0.5 ) ( 1.8 ) ( 0.8 ) ( 3.4 )

2 unchanged sentences

Net income 28.4 10.4 50.5 27.1

Net income (loss) attributable to noncontrolling interests 0.1 ( 0.1 )

Net income attributable to noncontrolling interests — 0.8 0.1 0.7

Net income attributable to Forestar Group Inc.

21 unchanged sentences

$ 48.1 $ 604.1 $ 240.9 $ 1.0 $ 894.1

— — 28.4 — 28.4

Issuance of common stock ( 1,018,503 shares)

1.0 22.3 — — 23.3

Purchase of noncontrolling interest, net — ( 1.7 ) — ( 0.2 ) ( 1.9 )

Stock issued under employee benefit plans ( 29,655 shares)

Cash paid for shares withheld for taxes

— ( 0.3 ) — — ( 0.3 )

Stock-based compensation expense

— 0.9 — — 0.9

Balances at March 31, 2021 ( 49,124,801 shares)

$ 49.1 $ 625.3 $ 269.3 $ 0.8 $ 944.5

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

12 unchanged sentences

$ 48.0 $ 602.5 $ 175.0 $ 0.1 $ 825.6

Net income — — 9.6 0.8 10.4

Stock-based compensation expense

— 0.8 — — 0.8

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

$ 48.0 $ 603.3 $ 184.6 $ 0.9 $ 836.8

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended December 31,

Six Months Ended March 31,

(In millions)

6 unchanged sentences

Land option charges 0.9 0.4

Loss on sale of assets — 0.1

Gain on sale of assets — ( 0.1 )

Changes in operating assets and liabilities:

Increase in real estate ( 377.3 ) ( 170.7 )

Decrease (increase) in income taxes receivable 4.2 ( 0.6 )

Decrease in income taxes receivable 6.3 0.7

Increase in other assets ( 6.5 ) ( 4.5 )

Increase in accounts payable and other accrued liabilities 11.6 3.4

Increase (decrease) in earnest money on sales contracts 21.1 ( 0.2 )

Increase (decrease) in accounts payable and other accrued liabilities 29.2 ( 1.0 )

Increase in earnest money on sales contracts 42.8 11.0

Net cash used in operating activities ( 249.5 ) ( 123.8 )

INVESTING ACTIVITIES

Expenditures for property, equipment, software and other ( 0.1 ) —

Expenditures for property, equipment and other ( 0.2 ) ( 0.2 )

Return of investment in unconsolidated ventures 2.2 2.4

2 unchanged sentences

FINANCING ACTIVITIES

Proceeds from debt — 300.0

Repayments of debt — ( 118.9 )

Deferred financing fees — ( 4.8 )

Issuance of common stock 23.3 —

Purchase of noncontrolling interest ( 2.4 ) —

Distributions to noncontrolling interests, net ( 0.1 ) ( 0.4 )

Cash paid for shares withheld for taxes ( 0.4 ) ( 0.2 )

Net cash used in financing activities ( 0.2 ) ( 1.0 )

Net decrease in cash and cash equivalents ( 156.9 ) ( 9.5 )

Net cash provided by financing activities 20.4 175.7

Net (decrease) increase in cash and cash equivalents ( 227.1 ) 55.4

Cash and cash equivalents at beginning of period 394.3 382.8

17 unchanged sentences

These financial statements, including the consolidated balance sheet as of September 30, 2020, which was derived from audited financial statements, do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2020.

Certain items have been reclassified in the prior year financial statements to conform to the presentation and classifications used in the current year.

In October 2017, Forestar became a majority-owned subsidiary of D.R.

5 unchanged sentences

Horton is considered a related party of Forestar under GAAP.

At December 31, 2020, D.R.

At March 31, 2021, D.R.

Horton owned approximately 64 % of the Company's outstanding common stock.

23 unchanged sentences

$ 1,698.6 $ 1,309.7

In the three months ended December 31, 2020, the Company invested $ 295.1 million for the acquisition of residential real estate and $ 181.9 million for the development of residential real estate.

At December 31, 2020 and September 30, 2020, 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 of 12 % to 16 % per annum.

In the six months ended March 31, 2021, the Company invested $ 484.6 million for the acquisition of residential real estate and $ 369.4 million for the development of residential real estate.

At March 31, 2021 and September 30, 2020, undeveloped land primarily consists of undeveloped land which the Company has the contractual right to sell to D.R.

Horton at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 12 % to 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, there were no real estate impairment charges recorded for either period presented in the consolidated statements of operations.

During the three months ended December 31, 2020 and 2019, pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 0.4 million and $ 0.3 million, respectively.

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

During the three and six months ended March 31, 2021, pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 0.6 million and $ 0.9 million, respectively, compared to $ 0.1 million and $ 0.4 million in the prior year periods.

Real estate impairments and land option charges are included in cost of sales in the consolidated statements of operations.

1 unchanged sentence

Revenues consist of:

Three Months Ended December 31,

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

2021 2020 2021 2020

(In millions)

Residential lot sales $ 280.2 $ 156.4 $ 587.1 $ 373.5

Residential tract sales — 30.0

Other 0.1 0.1

Tract sales and other 6.9 2.7 7.1 32.9

$ 287.1 $ 159.1 $ 594.2 $ 406.4

3 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 three months of fiscal 2021 and fiscal year 2020, 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 months ended December 31, 2020 and 2019.

Three Months Ended December 31,

During the first six months of fiscal 2021 and fiscal year 2020, 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, 2021 and 2020.

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

2021 2020 2021 2020

(In millions)

4 unchanged sentences

Note 6— Other Assets, Accrued Expenses and Other Liabilities

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

The Company's other assets at March 31, 2021 and September 30, 2020 were as follows:

2021 September 30,

7 unchanged sentences

$ 30.2 $ 24.9

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

The Company's accrued expenses and other liabilities at March 31, 2021 and September 30, 2020 were as follows:

2021 September 30,

6 unchanged sentences

Deferred income 9.3 9.3

State income taxes payable 1.3 0.5

Income taxes payable 2.8 0.5

Accrued development costs 68.2 44.4

5 unchanged sentences

(In millions)

Revolving credit facility $ — $ —

8.0 % senior notes due 2024 (1)

$ 345.5 $ 345.2

5.0 % senior notes due 2028 (1)

Revolving credit facility — —

Other note payable 12.5 —

1 unchanged sentence

______________

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 8.4 million and $ 8.9 million at December 31, 2020 and September 30, 2020, respectively.

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 7.9 million and $ 8.9 million at March 31, 2021 and September 30, 2020, respectively.

Bank Credit Facility

3 unchanged sentences

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

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

At December 31, 2020, there were no borrowings outstanding and $ 40.5 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 339.5 million.

The maturity date of the facility is October 2, 2022, which can be extended by up to one year on up to two additional occasions, subject to the approval of lenders holding a majority of the commitments.

The maturity date of the facility is October 2, 2022.

There were no borrowings or repayments under the facility during the six months ended March 31, 2021.

At March 31, 2021, there were no borrowings outstanding and $ 46.0 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 334.0 million.

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

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.

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

At March 31, 2021, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

In April 2021, the revolving credit facility was amended to extend its maturity date from October 2, 2022 to April 16, 2025.

The maturity date may be extended subject to the approval of lenders holding a majority of the commitments.

The revolving credit facility size was increased to $ 410 million 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.

The Company has outstanding senior notes as described below that were issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.

1 unchanged sentence

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

The Company's $ 300 million principal amount of 5.0 % senior notes mature March 1, 2028 with interest payable semi-annually.

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

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

The Company's $ 350 million principal amount of 8.0 % senior notes mature April 15, 2024 with interest payable semi-annually.

2 unchanged sentences

The annual effective interest rate of the notes after giving effect to the amortization of financing costs is 8.5 %.

The Company's $ 300 million principal amount of 5.0 % senior notes mature March 1, 2028 with interest payable semi-annually.

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

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.

In April 2021, the Company issued $ 400 million principal amount of 3.85 % senior notes that mature May 15, 2026 with interest payable semi-annually.

On or after May 15, 2023, the notes may be redeemed at 101.925 % of their principal amount plus any accrued and unpaid interest.

In accordance with the indenture, the redemption price decreases annually thereafter and the notes can be redeemed at par on or after May 15, 2025 through maturity.

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

A portion of the net proceeds from the issuance of the notes will be used to redeem the $ 350 million principal amount of 8.0 % senior notes due April 15, 2024 in full, and the remainder of the proceeds will be used for general corporate purposes.

In April 2021, the Company delivered notice for the full redemption of its $ 350 million principal amount of 8.0 % senior notes outstanding.

The redemption price of $ 365.6 million includes a call premium of $ 14.0 million and accrued and unpaid interest of $ 1.6 million.

The Company expects to recognize a loss on extinguishment of debt upon the redemption of the notes.

The notes are scheduled to be redeemed May 7, 2021.

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 respective indenture), the Company offer to purchase the notes at 101% of their principal amount.

6 unchanged sentences

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

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

At March 31, 2021, 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 December 31, 2020.

All of the $ 30 million authorization was remaining at March 31, 2021.

Other Note Payable

The Company's other note payable of $ 12.5 million was issued as part of a transaction to acquire real estate for development.

The Company also has a note payable of $ 12.5 million that was issued as part of a transaction to acquire real estate for development.

The note is non-recourse and is secured by the underlying real estate, accrues interest at 4.0 % per annum and matures in October 2023.

1 unchanged sentence

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

Three Months Ended December 31,

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

2021 2020 2021 2020

(In millions, except share and per share amounts)

9 unchanged sentences

Note 9— Income Taxes

The Company’s income tax expense for the three months ended December 31, 2020 and 2019 was $ 7.1 million and $ 5.4 million, respectively, and the effective tax rate was 24.3 % in both periods.

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

At December 31, 2020, the Company had deferred tax liabilities, net of deferred tax assets, of $ 6.4 million.

The Company’s income tax expense for the three and six months ended March 31, 2021 was $ 9.2 million and $ 16.3 million compared to $ 3.3 million and $ 8.7 million in the prior year periods.

The effective tax rate was 24.5 % and 24.4 % for the three and six months ended March 31, 2021 compared to 24.1 % and 24.3 % in the prior year periods.

The 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, 2021, the Company had deferred tax liabilities, net of deferred tax assets, of $ 6.1 million.

The deferred tax assets were partially offset by a valuation allowance of $ 1.3 million, resulting in a net deferred tax liability of $ 7.4 million.

6 unchanged sentences

Stockholders' Equity

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 December 31, 2020, $ 394.3 million remained available for issuance under the shelf registration statement, $ 100 million of which is reserved for sales under the Company's at-the-market equity offering program.

As of December 31, 2020, no shares had been issued under the at-the-market equity offering program.

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, of which $ 100 million is reserved for sales under its at-the-market equity offering program that became effective in August 2020.

During the three months ended March 31, 2021, the Company issued 1.0 million shares of common stock under its at-the-market equity offering program for proceeds of $ 23.3 million, net of commissions and other issuance costs.

At March 31, 2021, $ 370.6 million remained available for issuance under the shelf registration statement, of which $ 76.3 million is reserved for sales under the Company's at-the-market equity offering program.

Restricted Stock Units (RSUs)

During the three months ended December 31, 2020, a total of 24,000 time-based RSUs were granted.

The weighted average grant date fair value of these equity awards was $ 17.08 per unit, and they vest annually in equal installments over a period of three years.

Total stock-based compensation expense related to the Company's restricted stock units for the three months ended December 31, 2020 and 2019 was $ 0.3 million and $ 0.5 million, respectively.

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 awards may be based on performance (performance-based) or on service over a requisite time period (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 six months ended March 31, 2021, a total of 232,320 time-based RSUs were granted.

The weighted average grant date fair value of these equity awards was $ 23.12 per unit, and they vest annually in equal installments over a period 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, 2021 was $ 0.9 million and $ 1.2 million compared to $ 0.8 million and $ 1.3 million in the prior year periods.

Stock-based compensation expense related to employees that were retirement eligible on the date of grant in the six months ended March 31, 2021 and 2020 was $ 0.7 million and $ 0.5 million, respectively.

Note 11— 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 December 31, 2020, the Company had outstanding letters of credit of $ 40.5 million under the revolving credit facility and surety bonds of $ 293.8 million issued by third parties to secure performance under various contracts.

At March 31, 2021, the Company had outstanding letters of credit of $ 46.0 million under the revolving credit facility and surety bonds of $ 368.6 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 three months ended December 31, 2020 and 2019, selling, general and administrative expense in the consolidated statements of operations includes $ 1.1 million and $ 1.3 million for these shared services, $ 1.0 million and $ 0.6 million for the cost of health insurance and other employee benefits and $ 1.1 million and $ 1.0 million for other corporate and administrative expenses paid by D.R.

During the six months ended March 31, 2021 and 2020, selling, general and administrative expense in the consolidated statements of operations includes $ 2.0 million and $ 2.6 million for these shared services, $ 1.8 million and $ 1.0 million for the cost of health insurance and other employee benefits and $ 1.4 million and $ 1.3 million for other corporate and administrative expenses paid by D.R.

Horton on behalf of the Company.

1 unchanged sentence

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

At December 31, 2020 and September 30, 2020, the Company owned or controlled through purchase contracts approximately 77,500 and 60,500 residential lots, of which D.R.

At March 31, 2021 and September 30, 2020, the Company owned or controlled through purchase contracts approximately 84,500 and 60,500 residential lots, of which D.R.

Horton had the following involvement.

11 unchanged sentences

Horton $ 1,505.3 $ 1,022.2

In the three months ended December 31, 2020 and 2019, the Company's residential lot sales totaled 3,567 and 2,422 , and lot sales revenues were $ 307.0 million and $ 217.1 million.

In the three months ended March 31, 2021 and 2020, the Company's residential lot sales totaled 3,588 and 1,951 , and lot sales revenues were $ 280.2 million and $ 156.4 million.

In the six months ended March 31, 2021 and 2020, the Company's residential lot sales totaled 7,155 and 4,373 , and lot sales revenues were $ 587.1 million and $ 373.5 million.

Lot and land sales to D.R.

Horton during those periods were as follows.

Three Months Ended December 31,

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

2021 2020 2021 2020

(Dollars in millions)

3 unchanged sentences

Horton $ 265.6 $ 151.2 $ 559.6 $ 366.8

Residential tract acres sold to D.R.

Residential tract sales revenues from sales to D.R.

Tract acres sold to D.R.

Horton 14 — 14 36

In addition, the net impact of the change in contract liabilities increased revenues on lot sales to D.R.

Horton by $ 0.2 million in the three months ended December 31, 2020 and decreased revenues on lot sales to D.R.

Horton by $ 1.5 million in the three months ended December 31, 2019.

During the three months ended December 31, 2020 and 2019, the Company reimbursed D.R.

Tract sales revenues from sales to D.R.

Horton $ 3.0 $ — $ 3.0 $ 7.2

In addition, the net impact of the change in contract liabilities decreased revenues on lot sales to D.R.

Horton by $ 0.2 million in the three months ended March 31, 2021 and $ 0.6 million in the six months ended March 31, 2020, and increased revenues on lot sales to D.R.

Horton by $ 0.8 million in the three months ended March 31, 2020.

During the three and six months ended March 31, 2021, the Company reimbursed D.R.

Horton approximately $ 8.0 million and $ 24.2 million for previously paid earnest money and $ 7.3 million and $ 28.2 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 months ended December 31, 2020 and 2019, the Company paid D.R.

Horton $ 1.7 million and $ 1.5 million for land development services.

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

Horton approximately $ 5.5 million and $ 16.2 million for previously paid earnest money and $ 8.2 million and $ 13.3 million for pre-acquisition and other due diligence and development costs.

During the three and six months ended March 31, 2021 and 2020, the Company paid D.R.

Horton $ 1.2 million and $ 2.9 million for land development services compared to $ 1.5 million and $ 2.9 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 December 31, 2020 and September 30, 2020, undeveloped land was $ 55.5 million and $ 5.4 million.

At March 31, 2021 and September 30, 2020, undeveloped land was $ 55.5 million and $ 5.4 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 of 12 % to 16 % per annum.

At December 31, 2020 and September 30, 2020, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 1.4 million and $ 8.4 million, respectively, owed to D.R.

Horton at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 12 % to 16 % per annum.

At March 31, 2021 and September 30, 2020, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 1.1 million and $ 8.4 million, respectively, 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.

9 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 December 31, 2020 and September 30, 2020.

Fair Value at December 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 March 31, 2021 and September 30, 2020.

Fair Value at March 31, 2021

Carrying Value Level 1 Level 2 Level 3 Total

(in millions)

Cash and cash equivalents (a)

Cash and cash equivalents (1)

$ 167.2 $ 167.2 $ — $ — $ 167.2

3 unchanged sentences

(in millions)

Cash and cash equivalents (a)

Cash and cash equivalents (1)

$ 394.3 $ 394.3 $ — $ — $ 394.3

1 unchanged sentence

__________________

(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 December 31, 2020 and September 30, 2020, debt consisted of the Company's senior notes.

(1) 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.

(2) At March 31, 2021 and September 30, 2020, the Company's debt primarily consisted of its senior notes.

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

(c) The fair value of the Company's other note payable approximates its carrying value and is classified as Level 3 within the fair value hierarchy.

(3) The fair value of the Company's other note payable approximates its carrying value due to its short-term nature and is classified as Level 3 within the fair value hierarchy.

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.

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