What changed in this filing

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Item 1. Financial Statements

2022-01-28 compared with 2021-07-23 · 80 added, 149 removed, 304 unchanged (43% of the section changed)

7 unchanged sentences

Investment in unconsolidated ventures 0.5 0.9

Income taxes receivable — 6.3

Property and equipment, net 4.2 2.9

2 unchanged sentences

Accounts payable $ 53.5 $ 47.4

Accrued development costs 116.7 104.5

Earnest money on sales contracts 141.9 148.3

5 unchanged sentences

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

49,527,108 and 48,061,921 shares issued and outstanding at June 30, 2021

49,675,768 and 49,580,389 shares issued and outstanding at December 31, 2021

and September 30, 2021, respectively

9 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

(In millions, except per share amounts)

2 unchanged sentences

Selling, general and administrative expense 21.5 15.5

Equity in loss (earnings) of unconsolidated ventures — 0.1 ( 0.2 ) ( 0.6 )

Equity in earnings of unconsolidated ventures ( 1.1 ) ( 0.2 )

Gain on sale of assets ( 0.5 ) —

Interest and other income — ( 0.3 )

Loss on extinguishment of debt 18.1 — 18.1 —

Income before income taxes 53.5 29.2

18 unchanged sentences

— — 40.5 — 40.5

Stock issued under employee benefit plans ( 14,722 shares)

Cash paid for shares withheld for taxes

— ( 0.1 ) — — ( 0.1 )

Stock-based compensation expense

— 0.3 — — 0.3

Balances at December 31, 2020 ( 48,076,643 shares)

$ 48.1 $ 604.1 $ 240.9 $ 1.0 $ 894.1

— — 28.4 — 28.4

Issuance of common stock ( 84,547 shares)

0.1 1.6 — — 1.7

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

Stock issued under employee benefit plans ( 10,832 shares)

3 unchanged sentences

— 0.4 — — 0.4

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

$ 49.1 $ 625.3 $ 269.3 $ 0.8 $ 944.5

— — 15.8 0.1 15.9

Issuance of common stock ( 378,736 shares)

0.4 8.9 — — 9.3

Stock issued under employee benefit plans ( 23,571 shares)

Cash paid for shares withheld for taxes

— ( 0.1 ) — — ( 0.1 )

Stock-based compensation expense

— 0.8 — — 0.8

Balances at June 30, 2021 ( 49,527,108 shares)

Balances at December 31, 2021 ( 49,675,768 shares)

$ 49.7 $ 638.1 $ 369.6 $ 1.0 $ 1,058.4

See accompanying notes to consolidated financial statements.

FORESTAR GROUP INC.

CONSOLIDATED STATEMENTS OF TOTAL EQUITY (Continued)

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

2 unchanged sentences

$ 48.1 $ 603.9 $ 218.9 $ 0.9 $ 871.8

Net income (loss) — — 16.9 ( 0.1 ) 16.8

Stock issued under employee benefit plans ( 27,993 shares)

Cash paid for shares withheld for taxes

— ( 0.2 ) — — ( 0.2 )

Stock-based compensation expense

— 0.5 — — 0.5

Distributions to noncontrolling interests

— — — ( 0.4 ) ( 0.4 )

Balances at December 31, 2019 ( 48,025,359 shares)

$ 48.0 $ 602.5 $ 175.0 $ 0.1 $ 825.6

Net income — — 22.0 0.1 22.1

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

Net income — — 10.1 — 10.1

Stock issued under employee benefit plans ( 14,722 shares)

0.1 — — — 0.1

Cash paid for shares withheld for taxes

2 unchanged sentences

— 0.3 — — 0.3

Distributions to noncontrolling interests

— — — ( 0.3 ) ( 0.3 )

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

Balances at December 31, 2020 ( 48,076,643 shares)

$ 48.1 $ 604.1 $ 240.9 $ 1.0 $ 894.1

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended June 30,

Three Months Ended December 31,

(In millions)

6 unchanged sentences

Land option charges 0.6 0.4

Loss on extinguishment of debt 18.1 —

Gain on sale of assets ( 0.5 ) —

1 unchanged sentence

Increase in real estate ( 55.5 ) ( 218.6 )

Decrease (increase) in income taxes receivable 6.3 ( 5.7 )

Increase in other assets ( 13.4 ) ( 4.2 )

Decrease (increase) in other assets 2.6 ( 2.6 )

Increase (decrease) in accounts payable and other accrued liabilities 12.2 ( 1.0 )

Increase in earnest money on sales contracts 51.8 2.9

Net cash used in operating activities ( 340.6 ) ( 205.7 )

Increase in accrued development costs 12.2 12.6

(Decrease) increase in earnest money deposits on sales contracts ( 6.2 ) 21.1

Decrease in income taxes receivable — 4.2

Net cash provided by (used in) operating activities 5.8 ( 158.7 )

INVESTING ACTIVITIES

Expenditures for property, equipment and other ( 0.5 ) ( 0.6 )

Expenditures for property, equipment, software and other ( 1.5 ) ( 0.1 )

Return of investment in unconsolidated ventures 1.5 2.1

2 unchanged sentences

FINANCING ACTIVITIES

Proceeds from debt 425.0 300.0

Repayments of debt ( 389.0 ) ( 118.9 )

Deferred financing fees ( 5.0 ) ( 4.8 )

Proceeds from issuance of common stock 32.6 —

Purchase of noncontrolling interest ( 2.4 ) —

Distributions to noncontrolling interests, net — ( 0.1 )

Cash paid for shares withheld for taxes ( 0.1 ) ( 0.1 )

Net cash provided by financing activities 60.6 175.4

Net decrease in cash and cash equivalents ( 278.3 ) ( 27.2 )

Net cash used in financing activities ( 0.1 ) ( 0.2 )

Net increase (decrease) in cash and cash equivalents 8.9 ( 156.9 )

Cash and cash equivalents at beginning of period 153.6 394.3

2 unchanged sentences

Note payable issued for real estate $ — $ 12.5

Issuance of common stock not settled $ 1.7 $ —

See accompanying notes to consolidated financial statements.

13 unchanged sentences

These financial statements, including the consolidated balance sheet as of September 30, 2021, 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, 2021.

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 June 30, 2021, D.R.

At December 31, 2021, D.R.

Horton owned approximately 63 % of the Company's outstanding common stock.

3 unchanged sentences

Actual results could differ materially from those estimates.

Changes in Presentation and Reclassifications

The Company reclassified the change in accrued development costs from the change in accounts payable and other liabilities to the change in accrued development costs in the prior year statement of cash flows to conform to the current year presentation.

This reclassification had no net effect on the Company's consolidated operating results, financial position or cash flows.

Pending Accounting Standards

In December 2019, the FASB issued ASU 2019-12 related to simplifying the accounting for income taxes.

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

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.

In March 2020, the Financial Accounting Standards Board (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.

1 unchanged sentence

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform - Scope,” which clarified the scope and application of the original guidance.

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

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

In October 2021, the FASB issued ASU 2021-08, which requires application of ASC 606, “Revenue from Contracts with Customers,” to recognize and measure contract assets and liabilities from contracts with customers acquired in a business combination.

ASU 2021-08 creates an exception to the general recognition and measurement principle in ASC 805 and will result in recognition of contract assets and contract liabilities consistent with those recorded by the acquiree immediately before the acquisition date.

The guidance is effective for the Company beginning October 1, 2023 and interim periods therein, with early adoption 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 or cash flows.

Note 2— Segment Information

9 unchanged sentences

$ 1,960.1 $ 1,905.2

In the nine months ended June 30, 2021, the Company invested $ 654.7 million in the acquisition of residential real estate and $ 604.3 million in the development of residential real estate.

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

In the three months ended December 31, 2021, the Company invested $ 135.2 million for the acquisition of residential real estate and $ 244.8 million for the development of residential real estate.

At December 31, 2021 and September 30, 2021, undeveloped land primarily consisted 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 any period presented in the consolidated statements of operations.

During the three and nine months ended June 30, 2021, pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 0.7 million and $ 1.6 million, respectively, compared to $ 0.1 million and $ 0.5 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.

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

In the three months ended December 31, 2021 and 2020, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 0.6 million and $ 0.4 million, respectively.

These land option charges are included in cost of sales in the consolidated statements of operations.

Note 4— Revenues

Revenues consist of:

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

2021 2020 2021 2020

Three Months Ended December 31,

(In millions)

6 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 nine months of fiscal 2021 and fiscal 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 nine months ended June 30, 2021 and 2020.

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

2021 2020 2021 2020

In the first three months of fiscal 2022 and fiscal year 2021, 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 in the three months ended December 31, 2021 and 2020.

Three Months Ended December 31,

(In millions)

4 unchanged sentences

Note 6— Other Assets, Accrued Expenses and Other Liabilities

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

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

2021 September 30,

(In millions)

Receivables, net $ 0.5 $ 0.4

Earnest money notes receivable on sales contracts $ 0.6 $ 0.7

Other receivables 2.1 0.4

Lease right of use assets 7.2 6.9

3 unchanged sentences

$ 35.2 $ 39.1

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

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

2021 September 30,

7 unchanged sentences

Income taxes payable 19.9 6.8

Accrued development costs 84.5 44.4

Other accrued expenses 10.2 8.9

7 unchanged sentences

5.0 % senior notes due 2028 (1)

Other note payable 12.5 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 June 30, 2021 and September 30, 2020, respectively.

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 7.6 million and $ 8.0 million at December 31, 2021 and September 30, 2021, respectively.

Bank Credit Facility

In April 2021, the Company's senior unsecured revolving credit facility was amended to increase its capacity 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 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.

The maturity date of the facility is April 16, 2025.

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.

1 unchanged sentence

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

The maturity date of the facility was extended to April 16, 2025.

Borrowings and repayments under the facility were $ 25 million each during the nine months ended June 30, 2021.

At June 30, 2021, there were no borrowings outstanding and $ 60.2 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 349.8 million.

There were no borrowings or repayments under the facility in the three months ended December 31, 2021.

At December 31, 2021, there were no borrowings outstanding and $ 66.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 343.7 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 June 30, 2021, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

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

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.

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.

The Company's $ 400 million principal amount of 3.85 % senior notes (the "2026 notes") mature May 15, 2026 with interest payable semi-annually.

On or after May 15, 2023, the 2026 notes may be redeemed at 101.925 % of their principal amount plus any accrued and unpaid interest.

1 unchanged sentence

The annual effective interest rate of the 2026 notes after giving effect to the amortization of financing costs is 4.1 %.

The net proceeds from this issuance were primarily used to redeem the Company's $ 350 million principal amount of 8.0 % senior notes due April 15, 2024 on May 7, 2021.

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

The Company recognized an $ 18.1 million loss on extinguishment of debt upon the redemption of the notes.

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

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

On or after March 1, 2023, the 2028 notes may be redeemed at 102.5 % of their principal amount plus any accrued and unpaid interest.

9 unchanged sentences

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

At June 30, 2021, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

At December 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 June 30, 2021.

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

Other Note Payable

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 Company's other note payable of $ 12.5 million 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 June 30, Nine Months Ended June 30,

2021 2020 2021 2020

Three Months Ended December 31,

(In millions, except share and per share amounts)

9 unchanged sentences

Note 9— Income Taxes

The Company’s income tax expense for the three and nine months ended June 30, 2021 was $ 5.2 million and $ 21.5 million compared to $ 0.2 million and $ 8.9 million in the prior year periods.

The effective tax rate was 24.6 % and 24.5 % for the three and nine months ended June 30, 2021 compared to 1.9 % and 19.3 % 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 Coronavirus Aid, Relief, and Economic Security Act, which allowed the Company to carryback a portion of its 2018 NOL.

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

At June 30, 2021, the Company had deferred tax liabilities, net of deferred tax assets, of $ 8.5 million.

The Company’s income tax expense for the three months ended December 31, 2021 and 2020 was $ 13.0 million and $ 7.1 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, 2021, the Company had deferred tax liabilities, net of deferred tax assets, of $ 23.0 million.

The deferred tax assets were partially offset by a valuation allowance of $ 1.2 million, resulting in a net deferred tax liability of $ 24.2 million.

1 unchanged sentence

The deferred tax assets were partially offset by a valuation allowance of $ 1.2 million, resulting in a net deferred tax liability of $ 24.4 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 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 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.

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.

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

During the three and nine months ended June 30, 2021, the Company issued 0.4 million and 1.4 million shares of common stock under its at-the-market equity offering program for proceeds of $ 9.3 million and $ 32.6 million, respectively, net of commissions and other issuance costs.

At June 30, 2021, $ 361.0 million remained available for issuance under the shelf registration statement, of which $ 66.7 million is reserved for sales under the Company's at-the-market equity offering program.

The Company has an effective shelf registration statement, filed with the Securities and Exchange Commission in October 2021, registering $ 750 million of equity securities, of which $ 300 million was reserved for sales under its at-the-market equity offering program that became effective in November 2021.

In the three months ended December 31, 2021, the Company issued 84,547 shares of common stock under its at-the-market equity offering program for proceeds of $ 1.7 million, net of commissions and other issuance costs totaling $ 0.1 million.

At December 31, 2021, $ 748.2 million remained available for issuance under the shelf registration statement, of which $ 298.2 million was reserved for sales under the at-the-market equity offering program.

Restricted Stock Units (RSUs)

3 unchanged sentences

The RSUs have no voting rights until vested.

During the nine months ended June 30, 2021, a total of 234,000 time-based RSUs were granted.

The weighted average grant date fair value of these equity awards was $ 23.13 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 nine months ended June 30, 2021 was $ 0.8 million and $ 2.0 million compared to $ 0.3 million and $ 1.6 million in the prior year periods.

Stock-based compensation expense in the nine months ended June 30, 2021 and 2020 included $ 0.7 million and $ 0.6 million, respectively, of expense recognized for employees that were retirement eligible on the date of grant.

There were no new grants of time-based RSUs in the three months ended December 31, 2021.

Total stock-based compensation expense related to the Company's restricted stock units for the three months ended December 31, 2021 and 2020 was $ 0.4 million and $ 0.3 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 June 30, 2021, the Company had outstanding letters of credit of $ 60.2 million under the revolving credit facility and surety bonds of $ 436.6 million issued by third parties to secure performance under various contracts.

At December 31, 2021, the Company had outstanding letters of credit of $ 66.3 million under the revolving credit facility and surety bonds of $ 528.2 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 nine months ended June 30, 2021 and 2020, selling, general and administrative expense in the consolidated statements of operations includes $ 2.9 million and $ 3.8 million for these shared services, $ 3.4 million and $ 1.9 million for the cost of health insurance and other employee benefits and $ 5.5 million and $ 3.4 million for other corporate and administrative expenses paid by D.R.

In the three months ended December 31, 2021 and 2020, selling, general and administrative expense in the consolidated statements of operations includes $ 1.0 million and $ 1.1 million for these shared services, $ 1.6 million and $ 1.0 million for the cost of health insurance and other employee benefits and $ 0.9 million and $ 1.1 million for other corporate and administrative expenses paid by D.R.

Horton on behalf of the Company.

Under the terms of the Master Supply Agreement with D.R.

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

At June 30, 2021 and September 30, 2020, the Company owned or controlled through purchase contracts approximately 96,600 and 60,500 residential lots, of which D.R.

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

At December 31, 2021 and September 30, 2021, the Company owned approximately 65,700 and 64,400 residential lots, of which D.R.

Horton had the following involvement.

11 unchanged sentences

Horton $ 1,491.5 $ 1,582.7

In the three months ended June 30, 2021 and 2020, the Company's residential lot sales totaled 3,858 and 2,023 , and lot sales revenues were $ 307.4 million and $ 164.4 million.

In the nine months ended June 30, 2021 and 2020, the Company's residential lot sales totaled 11,013 and 6,396 , and lot sales revenues were $ 894.5 million and $ 537.9 million.

Revenues recognized from sales to D.R.

Horton during those periods were as follows.

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

2021 2020 2021 2020

In the three months ended December 31, 2021 and 2020, the Company sold 4,516 and 3,567 residential lots, and lot sales revenues were $ 404.1 million and $ 307.0 million.

Lot sales and lot sales revenue to D.R.

Horton in those periods were as follows.

Three Months Ended December 31,

(Dollars in millions)

3 unchanged sentences

Horton $ 328.0 $ 294.0

Tract acres sold to D.R.

Horton 7 30 21 66

Tract sales revenues from sales to D.R.

Horton $ 3.0 $ 13.4 $ 6.0 $ 20.6

Other revenue from transactions with D.R.

Horton $ 2.4 $ — $ 2.4 $ —

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

Horton by $ 3.9 million in both the three and nine months ended June 30, 2021 and increased revenues on lot sales to D.R.

Horton by $ 2.8 million and $ 2.1 million in the three and nine months ended June 30, 2020.

During the three and nine months ended June 30, 2021, the Company reimbursed D.R.

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

Horton by $ 2.1 million and $ 0.2 million in the three months ended December 31, 2021 and 2020, respectively.

In the three months ended December 31, 2021 and 2020, the Company reimbursed D.R.

Horton approximately $ 2.7 million and $ 16.1 million for previously paid earnest money and $ 21.6 million and $ 20.9 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 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.

During the three and nine months ended June 30, 2021, the Company paid D.R.

Horton $ 1.3 million and $ 4.2 million for land development services compared to $ 1.0 million and $ 3.9 million for these services in the prior year periods.

In the three months ended December 31, 2021 and 2020, the Company paid D.R.

Horton $ 0.9 million and $ 1.7 million for land development services.

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

At June 30, 2021 and September 30, 2020, undeveloped land was $ 83.5 million and $ 5.4 million.

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

At December 31, 2021 and September 30, 2021, 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.

At June 30, 2021 and September 30, 2020, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 6.5 million and $ 8.4 million, respectively, owed to D.R.

At December 31, 2021 and September 30, 2021, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 7.7 million and $ 6.7 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 June 30, 2021 and September 30, 2020.

Fair Value at June 30, 2021

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, 2021 and September 30, 2021.

Fair Value at December 31, 2021

Carrying Value Level 1 Level 2 Level 3 Total

(in millions)

Cash and cash equivalents (1)

Cash and cash equivalents (a)

$ 162.5 $ 162.5 $ — $ — $ 162.5

3 unchanged sentences

(in millions)

Cash and cash equivalents (1)

Cash and cash equivalents (a)

$ 153.6 $ 153.6 $ — $ — $ 153.6

1 unchanged sentence

_____________________

(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 June 30, 2021 and September 30, 2020, the Company's debt primarily consisted of its senior notes.

(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, 2021 and September 30, 2021, debt primarily consisted of the Company's 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.

(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.

(c) 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