What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-11-19 compared with 2024-11-19 · 156 added, 81 removed, 604 unchanged (28% of the section changed)

115 unchanged sentences

Interest and other income ( 6.3 ) ( 19.8 ) ( 13.6 )

Loss on extinguishment of debt 1.2 — —

Income before income taxes 219.3 270.1 221.6

13 unchanged sentences

— — 166.9 — 166.9

Issuance of common stock ( 84,547 shares)

0.1 1.6 — — 1.7

Stock issued under employee benefit plans ( 142,233 shares)

7 unchanged sentences

— — 203.4 — 203.4

Issuance of common stock ( 546,174 shares)

0.6 19.1 — — 19.7

Stock issued under employee benefit plans ( 203,750 shares)

7 unchanged sentences

— — 167.9 — 167.9

Issuance of common stock ( 546,174 shares)

0.6 19.1 — — 19.7

Stock issued under employee benefit plans ( 179,534 shares)

20 unchanged sentences

Gain on sale of assets ( 4.5 ) ( 9.5 ) ( 1.6 )

Loss on extinguishment of debt 1.2 — —

Changes in operating assets and liabilities:

3 unchanged sentences

( 7.4 ) ( 27.7 ) ( 7.0 )

Increase (decrease) in accounts payable and other accrued liabilities

(Decrease) increase in accounts payable and other accrued liabilities

( 14.4 ) 24.7 ( 12.7 )

Increase (decrease) in accrued development costs

(Decrease) increase in accrued development costs

( 12.8 ) 40.5 ( 18.2 )

9 unchanged sentences

Issuance of common stock — 19.7 —

Additions to debt 780.0 — —

Repayment of debt ( 680.0 ) — ( 12.5 )

Deferred financing fees ( 6.2 ) — —

Cash paid for shares withheld for taxes ( 1.8 ) ( 3.4 ) ( 0.7 )

Stock issued under employee benefit plans 0.5 — —

Net cash provided by (used in) financing activities 92.5 16.3 ( 13.2 )

47 unchanged sentences

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

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

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

The Company receives earnest money deposits from homebuilders for purchases of developed lots.

4 unchanged sentences

The reimbursement amounts for these improvements are defined by the district and are based on the allowable costs of the improvements.

The transfer is consummated and the Company generally receives payment when the districts have a sufficient tax base to support funding of their bonds.

The cost incurred by the Company in constructing these improvements, net of the amount expected to be collected in the future, is included in the Company's land development budgets and in the determination of lot costs.

The Company reviews real estate assets held for use for impairment when events or circumstances indicate that their carrying value may not be recoverable.

The transfer is consummated and the Company generally receives payment when the districts have a sufficient tax base to support the funding of their bonds.

The Company reviews real estate assets for impairment when events or circumstances indicate that their carrying value may not be recoverable.

Impairment exists if the carrying amount of the asset is not recoverable from the undiscounted cash flows expected from its use and eventual disposition.

5 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 fiscal 2024 and 2023, the Company’s active real estate exceeded its debt level, and all interest incurred was capitalized to real estate.

During all periods presented, the Company’s active real estate exceeded its debt level, and all interest incurred was capitalized to real estate.

Land Purchase Contract Deposits and Pre-Acquisition Costs

40 unchanged sentences

From time to time, the Compensation Committee of the Company’s Board of Directors (Compensation Committee) authorizes the grant of stock-based compensation to its employees and directors from these available shares.

At September 30, 2024, the outstanding stock-based compensation awards consist of time-based restricted stock units.

Grants of time-based restricted stock units vest over a certain number of years as determined by the Compensation Committee.

Restricted stock units outstanding at September 30, 2024 have a remaining vesting period of up to 4.5 years.

At September 30, 2025, all outstanding stock-based compensation awards were in the form of restricted stock units (time based and performance based).

Grants of restricted time based and performance-based stock units vest over a certain number of years as determined by the Compensation Committee.

Restricted time based and performance-based stock units outstanding at September 30, 2025 have a remaining vesting period of up to 4.1 years and 2.0 years, respectively.

The compensation expense for stock-based awards is based on the grant date fair value of the award and is recognized on a straight-line basis over the remaining vesting period.

4 unchanged sentences

Non-financial assets measured at fair value on a non-recurring basis principally include real estate assets which the Company reviews for indicators of impairment when events and circumstances indicate that the carrying value is not recoverable.

Pending Accounting Standards

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

Recently Adopted Accounting Pronouncements

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

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

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

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

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

Additionally, all disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment.

The Company adopted the annual requirements of ASU 2023-07 and the disclosures required are included in Note 2 - Segment Reporting.

The new interim period disclosures are required beginning in the first quarter of fiscal 2026 on a retrospective basis to all periods presented and will be included in the Company's Quarterly Reports on Form 10-Q at that time.

The adoption of this ASU did not have any impact on the Company's consolidated financial statements.

Pending Accounting Standards

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

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

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

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

2 unchanged sentences

The Company is currently evaluating the impact this standard will have on its disclosures.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Note 2 — Segment Information

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

The Company manages its operations through its real estate segment, which is its only operating segment.

The real estate segment is the Company's only reportable segment.

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

The real estate segment primarily acquires land and installs 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.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

The Company's chief operating decision makers (CODM), are deemed to be a group of four executives;

the Executive Chairman of the Board, the Chief Executive Officer, the Chief Operating Officer, and the Chief Financial Officer.

The CODM use income before income taxes as reported on the Consolidated Statements of Operations as the primary measure to allocate capital resources and assess the operating performance of the real estate segment.

The CODM analyze income before income taxes at least quarterly to review comparative period variances and to monitor performance, identify trends, and guide strategic and operational decisions.

There are no significant segment operating expenses that are reviewed by the CODM other than those included in the expense categories reported on the Company’s Consolidated Statements of Operations.

All revenues and real estate assets are attributable to operations in the United States.

Segment assets that are reported as total assets and capital expenditures are reviewed by the CODM and are presented on the Consolidated Balance Sheets and Consolidated Statements of Cash Flows, respectively.

For the years ended September 30, 2025, 2024 and 2023, revenues to D.R.

Horton accounted for more than 10% of the Company's total revenues.

Horton is a related party and additional information regarding transactions with D.R.

Horton is disclosed in Note 13 - Related Party Transactions.

Note 3 — Real Estate

9 unchanged sentences

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 impairment charges were recorded during fiscal 2024.

During fiscal 2023 and 2022, the Company recorded non-cash impairment charges of $ 19.4 million and $ 3.8 million, respectively.

As a result of this process, no impairment charges were recorded during fiscal 2025 and 2024.

During fiscal 2023, the Company recorded non-cash impairment charges of $ 19.4 million.

During fiscal 2025, 2024 and 2023 land purchase contract deposit and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 7.2 million, $ 4.1 million and $ 4.6 million, respectively.

These land option charges and the impairments discussed above are included in cost of sales in the consolidated statements of operations.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Note 4 — Revenues

7 unchanged sentences

$ 1,662.4 $ 1,509.4 $ 1,436.9

In fiscal 2022, the Company sold 854 deferred development lots to customers other than D.R.

Horton for a total transaction price of $ 63.9 million.

In fiscal 2024, 2023 and 2022, the Company recognized $ 8.1 million, $ 29.0 million and $ 26.8 million, respectively, of revenues as a result of its progress towards completion of its remaining unsatisfied performance obligations on these deferred development projects.

At September 30, 2024, all performance obligations related to deferred development lot sales have been fully satisfied.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Note 5 — Capitalized Interest

15 unchanged sentences

Land purchase contract deposits 34.5 23.4

Income taxes receivable 1.4 —

Contract assets — 8.9

Pledged reimbursements asset (1)

Other assets 3.3 1.8

$ 104.6 $ 85.3

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

The Company's accrued expenses and other liabilities at September 30, 2025 and 2024 were as follows:

9 unchanged sentences

Other accrued expenses 4.3 8.0

Pledged reimbursements liability (1)

Other liabilities 8.1 5.7

$ 83.1 $ 68.3

_______________

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

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

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

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

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

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

FORESTAR GROUP INC.

7 unchanged sentences

5.0 % senior notes due 2028 (1)

6.5 % senior notes due 2033 (1)

Other note payable 9.9 9.9

3 unchanged sentences

Bank Credit Facility

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.

As of September 30, 2025 the Company had a $ 640 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $ 1 billion, subject to certain conditions and availability of additional bank commitments.

The facility includes bank commitments of $ 575 million maturing on December 18, 2029 and $ 65 million maturing on October 28, 2026.

On October 30, 2025, the Company exercised the accordion feature under its credit facility and increased the total commitments by $ 25 million, resulting in total commitments of $ 665 million, of which $ 600 million matures on December 18, 2029 and $ 65 million matures on October 28, 2026.

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

1 unchanged sentence

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

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

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

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

The revolving credit facility is guaranteed by the Company’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

7 unchanged sentences

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 $ 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.

In accordance with the indenture, the redemption price decreases annually thereafter and the 2026 notes can be redeemed at par on or after May 15, 2025 through maturity.

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

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

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.

In March 2025, the Company issued $ 500 million principal amount of 6.5 % senior notes due March 15, 2033 (the "2033 notes"), with interest payable semiannually.

The annual effective interest rate of the 2033 notes after giving effect to the amortization of financing costs is 6.7 %.

The net proceeds from this issuance were primarily used to fund the Company's tender offer to purchase any and all of its outstanding $ 400 million principal amount of 3.85 % senior notes due 2026 (the "2026 notes"), of which $ 329.4 million aggregate principal amount was tendered.

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

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

In fiscal 2025, the Company recognized a $ 1.2 million loss on extinguishment of debt related to the repurchase and redemption of its 2026 notes.

At any time prior to March 15, 2028 , the Company may, on one or more occasions, redeem up to 40 % of the aggregate principal amount of the 2033 notes with the net cash proceeds from certain equity offerings at a redemption price of 106.5 % of the principal amount of the 2033 notes being redeemed.

At any time prior to March 15, 2028 , the Company may redeem some or all of the 2033 notes at a redemption price of 100 % of the principal amount thereof plus a specified "make whole" premium described in the indenture.

The Company also has the option, at any time on or after March 15, 2028 , to redeem some or all of the 2033 notes at 103.25 % of their principal amount plus any accrued and unpaid interest.

In accordance with the indenture, the redemption price decreases annually thereafter and the 2033 notes can be redeemed at par on or after March 15, 2030 through maturity.

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

Until March 1, 2026, the 2028 notes may be redeemed at 100.833 % of their principal amount plus any accrued and unpaid interest, and the 2028 notes can be redeemed at par on or after March 1, 2026 through maturity.

The annual effective interest rate of the 2028 notes after giving effect to the amortization of financing costs is 5.2 %.

The indentures governing the senior notes require that, upon the occurrence of both a change of control and a rating decline (as defined in each indenture), the Company offer to purchase the applicable series of 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 such notes equal to the excess net cash proceeds at a purchase price of 100% of their principal amount.

The indentures contain covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to pay dividends or distributions, repurchase equity, prepay subordinated debt and make certain investments;

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

Under the indenture governing the 2028 notes, 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 such notes equal to the excess net cash proceeds at a purchase price of 100% of their principal amount.

The indenture governing the 2028 notes contain covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to pay dividends or distributions, repurchase equity, prepay subordinated debt and make certain investments;

incur additional debt or issue mandatorily redeemable equity;

3 unchanged sentences

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

At September 30, 2024, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

The indenture governing the 2033 notes contains certain covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to create certain liens on assets;

engage in certain sale and leaseback transactions;

and merge or consolidate with another company or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the assets of the Company and its restricted subsidiaries (taken as a whole).

At September 30, 2025, the Company was in compliance with all of the limitations and restrictions associated with the 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 September 30, 2024.

All of the $ 30 million authorization remained at September 30, 2025.

Other Note Payable

In December 2023, the Company issued a note payable of $ 9.9 million as part of a transaction to acquire real estate for development.

The note is non-recourse, is secured by the underlying real estate, accrues interest at 4.0 % per annum and matures in December 2025.

The note is non-recourse and is secured by the underlying real estate, accrues interest at 4.0 % per annum and matures in December 2025.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Note 8 — Earnings per Share

9 unchanged sentences

Diluted net income per common share $ 3.29 $ 4.00 $ 3.33

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Note 9 — Income Taxes

20 unchanged sentences

Effective tax rate 23.4 % 24.7 % 24.7 %

The effective tax rate for all years includes an expense for state income taxes and nondeductible expenses.

The effective tax rate for all years includes an expense for state income taxes and non-deductible expenses as well as a benefit for nontaxable income in fiscal 2025.

FORESTAR GROUP INC.

5 unchanged sentences

Real estate $ 16.7 $ 11.9

Corporate AMT credit carryforwards

Employee benefits 4.4 3.8

9 unchanged sentences

At September 30, 2025, the Company had tax benefits of $ 0.7 million related to state NOL carryforwards, of which $ 0.3 million will expire between 2030 and 2037 while the remaining $ 0.4 million do not have an expiration date.

The Company has $ 16.5 million of corporate alternative minimum tax credit carryforwards which do not have an expiration date.

The Company had a valuation allowance of $ 0.6 million and $ 0.8 million at September 30, 2025 and 2024, respectively, 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.

8 unchanged sentences

and in various state jurisdictions.

The federal statute of limitations for tax years prior to 2021 is closed and the statute of limitations in major state jurisdictions for tax years prior to 2019 is closed.

The Company is not currently being audited by the IRS.

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

The Company is not currently under audit for federal income taxes.

T he Company is under audit by various states;

1 unchanged sentence

The Company had no unrecognized tax benefits at September 30, 2025, 2024 and 2023.

Note 10 — Stockholders' Equity

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 the at-the-market equity offering program that became effective in November 2021.

In fiscal 2024, the Company issued 546,174 shares of common stock under its at-the-market equity offering program for proceeds of $ 19.7 million, net of commissions and other issuance costs totaling $ 0.4 million.

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

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

The Company's at-the-market equity offering program expired in October 2024, and the Company anticipates entering into a new at-the-market offering program under its September 2024 shelf registration statement.

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

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

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Note 10 — Stockholders' Equity

The Company has an effective shelf registration statement, filed with the Securities and Exchange Commission in September 2024, registering $ 750 million of equity securities, of which $ 300 million is reserved for sales under the at-the-market equity offering program that the Company entered into in November 2024.

In fiscal 2025, the Company did not issue any shares under its at-the-market equity offering program.

At September 30, 2025, the full $ 750 million remained available for issuance under the Company's shelf registration statement, with $ 300 million reserved for sales under the at-the-market equity offering program.

Note 11 — Employee Benefit Plans

2 unchanged sentences

The Company matches portions of employees’ voluntary contributions.

Additional employer contributions in the form of profit sharing may also be made at the Company’s discretion.

The Company recorded expense of $ 1.6 million, $ 1.1 million and $ 1.0 million for matching contributions in fiscal 2025, 2024 and 2023, respectively, which is included in selling, general and administrative expense in the Company's consolidated statements of operations.

In fiscal 2024, the Compensation Committee approved the participation of certain Company employees in D.R.

Horton's Supplemental Executive Retirement Plan (SERP).

This plan is a non-qualified deferred compensation program that provides benefits payable to certain management employees upon retirement, death or termination of employment.

Under the SERP, the Company accrues an unfunded benefit based on a percentage of the eligible employees’ salaries, as well as an interest factor based upon a predetermined formula.

The Company’s liability related to the SERP was $ 1.9 million at September 30, 2025.

The Company recorded $ 0.6 million and $ 0.1 million of expense for this plan in fiscal 2025 and 2024, respectively.

Employee Stock Purchase Plan

4 unchanged sentences

Under the terms of the plan, the total fair market value of common stock that an eligible employee may purchase each year is limited to the lesser of 15 % of the employee’s annual compensation or $ 25,000 .

Under the plan, employees purchased 6,941 shares for $ 0.2 million in fiscal 2024 .

Under the plan, employees purchased 14,822 shares and 6,941 shares for $ 0.3 million and $ 0.2 million in fiscal 2025 and 2024, respectively.

No shares were purchased under the ESPP in fiscal 2023.

The aggregate number of shares of the Company's stock reserved for issuance under the plan is 2.5 million.

Restricted Stock Units (RSUs)

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 and have no voting rights during the vesting period.

Incentive Bonus Plan

The Company’s Incentive Bonus Plan, which began in fiscal 2025, provides for the Compensation Committee to award short-term performance bonuses to senior management based upon the level of achievement of certain criteria.

For fiscal 2025, the Compensation Committee approved awards whereby certain executive officers could earn performance bonuses based upon percentages of the Company’s pre-tax income.

Compensation expense related to this plan was $ 3.1 million in fiscal 2025.

Stock-Based Compensation

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

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

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

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

At September 30, 2025, the Company had 2.1 million shares of common stock reserved for issuance and 1.1 million shares available for future grants under the Stock Incentive Plan.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Time-Based Restricted Stock Unit Equity Awards (RSUs)

During fiscal 2025, 2024 and 2023, the Company granted time-based RSUs that vest annually in equal installments over periods of three to five years .

The following table provides additional information related to time-based RSU activity during those periods.

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

Year Ended September 30,

7 unchanged sentences

The total fair value of shares vested on the vesting date was $ 5.3 million, $ 10.5 million and $ 3.5 million during fiscal 2025, 2024 and 2023, respectively.

Total stock-based compensation expense related to the Company's restricted stock units for fiscal 2024, 2023 and 2022 was $ 5.3 million, $ 4.3 million and $ 3.3 million, respectively.

Stock-based compensation expense related to the Company's restricted stock units for fiscal 2025, 2024 and 2023 was $ 6.1 million, $ 5.3 million and $ 4.3 million, respectively.

These expenses are included in selling, general and administrative expense in the Company's consolidated statements of operations.

1 unchanged sentence

This expense is expected to be recognized over a weighted average period of 2.5 years.

Performance-Based Restricted Stock Unit Equity Awards (PSUs)

During fiscal 2025, PSUs that vest at the end of a three-year performance period were granted to the Company's executive officers.

The number of units that ultimately vest depends on the achievement of three performance criteria which are (i) relative total stockholder return, (ii) return on inventory and (iii) market share goals, and can range from 0 % to 200 % of the number of units granted.

The three performance criteria are weighted equally.

Compensation expense related to these grants is based on an estimate of the Company's achievement of the three performance criteria, the elapsed portion of the performance period and the grant date fair value of the award.

No PSUs were granted in fiscal 2024 or 2023.

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

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

Year Ended September 30,

2025 2024 2023

(In millions)

October 2024 September 2027 99,097 $ 35.20 $ 1.2 $ — $ —

FORESTAR GROUP INC.

7 unchanged sentences

The Company has no material third-party guarantees.

The Company is involved in various legal proceedings that arise from time to time in the ordinary course of business and believes that adequate reserves have been established for any probable losses.

On April 29, 2025, a verified stockholder of the Company filed a derivative complaint in the Delaware Court of Chancery, on behalf of the Company, against D.R.

Horton, Inc., the Company’s Executive Chairman, and certain of the Company’s directors.

The complaint, which is captioned Mississippi Public Employees’ Retirement System v.

Horton, Inc., C.A.

2025-0465-MTZ, asserts claims for breach of fiduciary duty arising out of lot sale transactions between the Company and D.R.

The complaint seeks judgment awarding the Company damages against the defendants and awarding the plaintiff the costs and disbursements of the action, including reasonable attorneys’ and experts’ fees.

The Company disputes the allegations of wrongdoing in this matter.

Nevertheless, the outcome of this lawsuit is uncertain and cannot be predicted with any certainty.

Accordingly, at this time, the Company is not able to estimate a possible loss or range of loss that may result from this lawsuit or to determine whether such loss, if any, would have a material adverse effect on its business, financial condition, results of operations or liquidity.

On September 6, 2024, the Maryland Department of Environment (MDE) filed suit in the Circuit Court for Harford County, Maryland against the Company regarding various alleged stormwater compliance issues and violations at a project in Maryland dating from 2022 through 2024, seeking injunctive relief and civil penalties.

Since the Company's first discovery of these issues, it has enhanced its practices and procedures related to stormwater compliance at the project in question, and it is seeking to resolve these matters through further discussions with MDE.

The Company does not believe it is reasonably possible that this matter would result in a loss that would have a material effect on its consolidated financial position, results of operations or cash flows.

In addition, the Company is involved in various legal proceedings that arise from time to time in the ordinary course of business and believes that adequate reserves have been established for any probable losses.

The Company does not believe that the outcome of any of these proceedings will have a significant adverse effect on its financial position, long-term results of operations or cash flows.

6 unchanged sentences

At September 30, 2025, the Company had total deposits of $ 34.5 million related to contracts to purchase land with a total remaining purchase price of approximately $ 870.5 million.

The majority of land and lots under contract are currently expected to be purchased within three years .

The majority of land and lots under contract are currently expected to be purchased within 3 years.

None of the land purchase contracts were subject to specific performance provisions at September 30, 2025.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Other Commitments

9 unchanged sentences

and $ 0.4 million thereafter.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Note 13 — Related Party Transactions

35 unchanged sentences

Horton $ 1.1 $ 2.9 $ —

Tract acres sold to D.R.

Horton 32 820 —

Tract sales revenues from sales to D.R.

Horton $ 15.2 $ 114.1 $ —

Other revenues from D.R.

Tract sales and other revenues from D.R.

$ 99.5 $ 23.7 $ 115.1

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

During fiscal 2025, 2024 and 2023, the Company reimbursed D.R.

Horton approximately $ 27.5 million, $ 10.9 million and $ 8.7 million for previously paid earnest money and $ 22.9 million, $ 21.8 million and $ 58.9 million for pre-acquisition and other due diligence and development costs related to land purchase contracts identified by D.R.

Horton approximately $ 20.6 million, $ 27.5 million, and $ 10.9 million, respectively for previously paid earnest money and $ 26.5 million, $ 22.9 million, and $ 21.8 million, respectively for pre-acquisition and other due diligence and development costs related to land purchase contracts identified by D.R.

Horton that the Company independently underwrote and closed.

During fiscal 2025, the Company purchased $ 2.1 million of water rights from D.R.

During fiscal 2025, 2024 and 2023, the Company paid D.R.

Horton $ 0.9 million, $ 0.8 million and $ 2.8 million for land development services.

Horton $ 0.4 million, $ 0.9 million and $ 0.8 million, respectively for land development services.

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

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

At September 30, 2025 and 2024, land held for future development primarily consisted of undeveloped land which the Company has under contract to sell to D.R.

8 unchanged sentences

Horton, former Chairman of D.R.

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

Note 14 — Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants.

In arriving at a fair value measurement, the Company uses a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

The three levels of inputs used to establish fair value are the following:

In arriving at a fair value measurement, the Company uses a fair value hierarchy based on three levels of input, of which the first two are considered observable and the last unobservable.

The three levels of input used to establish fair value are the following:

• Level 1 — Quoted prices in active markets for identical assets or liabilities;

4 unchanged sentences

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

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

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 September 30, 2025 and 2024.

15 unchanged sentences

The fair value of the senior notes is determined based on quoted market prices in markets that are not active, which is classified as Level 2 within the fair value hierarchy.

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

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data