What changed in this filing

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Item 1. Financial Statements

2021-11-02 compared with 2021-08-03 · 93 added, 82 removed, 392 unchanged (31% of the section changed)

3 unchanged sentences

(In thousands, except share data)

June 30, December 31,

September 30, December 31,

Cash and cash equivalents $ 46,717 $ 35,942

13 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 26,926,693 shares issued and 24,617,479 shares outstanding as of June 30, 2021 and 26,741,554 shares issued and 24,983,561 shares outstanding as of December 31, 2020

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 26,941,222 shares issued and 24,273,191 shares outstanding as of September 30, 2021 and 26,741,554 shares issued and 24,983,561 shares outstanding as of December 31, 2020

Additional paid-in capital 286,709 270,598

8 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

33 unchanged sentences

BALANCE— June 30, 2021 26,926,693 $ 269 $ 281,808 $ 1,152,069 $ ( 147,740 ) $ 1,286,406

Net income — — — 100,550 — 100,550

Stock repurchase — — — — ( 56,083 ) ( 56,083 )

Compensation expense for equity awards — — 3,352 — — 3,352

Stock issued under employee incentive plans 14,529 — 1,549 — — 1,549

BALANCE— September 30, 2021 26,941,222 $ 269 $ 286,709 $ 1,252,619 $ ( 203,823 ) $ 1,335,774

See accompanying notes to the consolidated financial statements.

LGI HOMES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share data)

Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Total Equity

Shares Amount

BALANCE—December 31, 2019 26,398,409 $ 264 $ 252,603 $ 610,382 $ ( 18,056 ) $ 845,193

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BALANCE— June 30, 2020 26,695,179 $ 267 $ 259,061 $ 708,845 $ ( 49,391 ) $ 918,782

Net income — — — 89,004 — 89,004

Compensation expense for equity awards — — 3,926 — — 3,926

Stock issued under employee incentive plans 11,275 — 958 — — 958

BALANCE— September 30, 2020 26,706,454 $ 267 $ 263,945 $ 797,849 $ ( 49,391 ) $ 1,012,670

See accompanying notes to the consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Loss on extinguishment of debt 13,976 —

Loss on disposal of assets 350 —

Gain on disposal of assets ( 880 ) —

Compensation expense for equity awards 10,169 8,392

11 unchanged sentences

Investment in unconsolidated entities ( 1,324 ) ( 1,125 )

Payment for business acquisition ( 27,279 ) —

Payment for business acquisitions ( 66,864 ) —

Net cash used in investing activities ( 69,829 ) ( 2,286 )

2 unchanged sentences

Payments on notes payable ( 944,000 ) ( 275,000 )

Redemption Premium ( 10,314 ) —

Loan issuance costs ( 10,572 ) ( 2,155 )

18 unchanged sentences

Results for interim periods are not necessarily indicative of results to be expected for the full year.

The accompanying unaudited financial statements as of June 30, 2021, and for the three and six months ended June 30, 2021 and 2020, include the accounts of the Company and its subsidiaries.

The accompanying unaudited financial statements as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020, include the accounts of the Company and its subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

7 unchanged sentences

The following table presents our home sales revenues disaggregated by revenue stream (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

3 unchanged sentences

The following table presents our home sales revenues disaggregated by geography, based on our determined reportable segments in Note 13 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Our real estate inventory consists of the following (in thousands):

June 30, December 31,

September 30, December 31,

Land, land under development and finished lots $ 1,211,693 $ 981,838

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We acquired approximately 100 homes under construction and more than 3,000 owned and controlled lots.

The total purchase price for the KenRoe assets, primarily consisting of inventory, was approximately $ 27.3 million in cash.

The total purchase price for the KenRoe assets, primarily consisting of inventory, was approximately $ 27.3 million in cash, subject to certain potential post-closing adjustments.

The acquisition is accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”).

Our purchase accounting for KenRoe as of June 30, 2021 is preliminary and we expect to complete the working capital adjustment and valuation of the tangible assets, intangible assets and liabilities assumed as of the acquisition date within one year from the acquisition date.

Our purchase accounting for KenRoe as of September 30, 2021 is preliminary and we expect to complete the working capital adjustment and valuation of the tangible assets, intangible assets and liabilities assumed as of the acquisition date within one year from the acquisition date.

On July 14, 2021, we acquired the real estate assets of Buffington Homebuilding Group, Ltd.

(“Buffington”) and assumed certain related liabilities.

The total purchase price for the Buffington assets, primarily consisting of inventory, was approximately $ 39.1 million in cash, subject to certain potential post-closing adjustments.

This acquisition further expands our land position in the Austin, Texas market.

The acquired assets include over 100 homes under construction, and more than 500 owned and controlled lots.

The acquisition is accounted for in accordance with ASC 805.

Our purchase accounting for Buffington as of September 30, 2021 is preliminary and we expect to complete the working capital adjustment and valuation of the tangible assets, intangible assets and liabilities assumed as of the acquisition date within one year from the acquisition date.

ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued and other liabilities consist of the following (in thousands):

June 30, December 31,

September 30, December 31,

Taxes payable $ 7,818 $ 26,181

15 unchanged sentences

Changes to our warranty accrual are as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

8 unchanged sentences

otherwise, the Credit Agreement is on substantially the same terms as the 2020 Credit Agreement.

As of June 30, 2021, the borrowing base under the Credit Agreement was $ 1.3 billion, of which borrowings, including the 2026 Senior Notes and the 2029 Senior Notes (each as defined herein), of $ 600.3 million were outstanding, $ 10.3 million of letters of credit were outstanding and $ 714.5 million was available to borrow under the Credit Agreement.

As of September 30, 2021, the borrowing base under the Credit Agreement was $ 1.1 billion, of which borrowings, including the 2029 Senior Notes (as defined herein), of $ 679.0 million were outstanding, $ 8.3 million of letters of credit were outstanding and $ 459.6 million was available to borrow under the Credit Agreement.

Interest is paid monthly on borrowings at LIBOR plus 1.45 %.

The Credit Agreement applicable margin for LIBOR loans ranges from 1.45 % to 2.10 % based on our leverage ratio.

At June 30, 2021, LIBOR was 0.09 %;

At September 30, 2021, LIBOR was 0.08 %;

however, the Credit Agreement has a 0.50 % LIBOR floor.

1 unchanged sentence

The Credit Agreement contains various covenants that, among other restrictions, limit the amount of our additional debt and our ability to make certain investments.

At June 30, 2021, we were in compliance with all of the covenants contained in the Credit Agreement.

At September 30, 2021, we were in compliance with all of the covenants contained in the Credit Agreement.

Senior Notes Offerings

6 unchanged sentences

persons in transactions outside the United States pursuant to Regulation S.

Interest on the 2026 Senior Notes accrues at a rate of 6.875 % per annum, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019, and the 2026 Senior Notes mature on July 15, 2026 .

Terms of the 2026 Senior Notes are governed by an Indenture and First Supplemental Indenture thereto, each dated as of July 6, 2018, and a Second Supplemental Indenture thereto, dated as of April 30, 2020, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the 2020 Credit Agreement and Wilmington Trust, National Association, as trustee.

On June 14, 2021, the Company delivered a notice of conditional full redemption for all of the outstanding 2026 Senior Notes.

The redemption price for the 2026 Senior Notes was equal to 103.438 % (expressed as a percentage of the principal amount of the 2026 Senior Notes redeemed), plus accrued and unpaid interest, if any, on the 2026 Senior Notes to be redeemed.

The Company financed the redemption of the 2026 Senior Notes with a portion of the net proceeds from the offering of the 2029 Senior Notes, together with cash on hand.

The Company’s obligation to redeem the 2026 Senior Notes was conditioned upon the prior consummation of the issuance of the 2029 Senior Notes.

On July 15, 2021, we redeemed all of the outstanding 2026 Senior Notes, which resulted in the principal payment of $ 300.0 million and a redemption premium of $ 10.3 million.

Additionally, we expensed $ 3.0 million of deferred financing costs and discounts that were being previously amortized in association with the 2026 Senior Notes.

Additionally, we expensed $ 3.0 million of deferred financing costs and discounts that

were being previously amortized in association with the 2026 Senior Notes.

We financed the redemption of the 2026 Senior Notes with a portion of the net proceeds from the offering of the 2029 Senior Notes, together with cash on hand.

Notes payable consist of the following (in thousands):

June 30, 2021 December 31, 2020

Notes payable under the Credit Agreement ($ 850.0 million revolving credit facility at June 30, 2021) maturing on April 28, 2025;

September 30, 2021 December 31, 2020

Notes payable under the Credit Agreement ($ 850.0 million revolving credit facility at September 30, 2021) maturing on April 28, 2025;

interest paid monthly at LIBOR plus 1.45 %.

4 unchanged sentences

interest paid semi-annually at 6.875 %.

300,000 300,000

Net discount and debt issuance costs ( 12,947 ) ( 8,223 )

2 unchanged sentences

Interest activity, including other financing costs, for notes payable for the periods presented is as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

3 unchanged sentences

Cash paid for interest $ 11,772 $ 13,122 $ 26,264 $ 31,822

Included in interest incurred was amortization of deferred financing costs and discounts for notes payable of $ 0.7 million for each of the three months ended June 30, 2021 and 2020, and $ 1.4 million for each of the six months ended June 30, 2021 and 2020.

Included in interest incurred was amortization of deferred financing costs and discounts for notes payable of $ 0.8 million for each of the three months ended September 30, 2021 and 2020, and $ 2.2 million for each of the nine months ended September 30, 2021 and 2020.

and state income tax returns in jurisdictions with varying statutes of limitations.

4 unchanged sentences

however, audit outcomes and the timing of audit adjustments are subject to significant uncertainty.

For the three and six months ended June 30, 2021, our effective tax rate of 20.8 % and 20.0 %, respectively, is lower than the Federal statutory rate primarily as a result of the federal energy efficient homes tax credit and excess compensation cost for share-based payments, partially offset by an increase in the rate for state income taxes, net of the federal benefit payments.

Income taxes paid were $ 63.5 million and $ 0.5 million for the three months ended June 30, 2021 and 2020, respectively.

Income taxes paid were $ 63.7 million and $ 18.9 million for the six months ended June 30, 2021 and 2020, respectively.

For the three and nine months ended September 30, 2021, our effective tax rates of 20.8 % and 20.3 %, respectively, are lower than the Federal statutory rate primarily as a result of the federal energy efficient homes tax credit and excess compensation cost for share-based payments, partially offset by an increase in the rate for state income taxes, net of the federal benefit payments.

Income taxes paid were $ 36.0 million and $ 46.6 million for the three months ended September 30, 2021 and 2020, respectively.

Income taxes paid were $ 99.7 million and $ 65.5 million for the nine months ended September 30, 2021 and 2020, respectively.

Stock Repurchase Program

1 unchanged sentence

In October 2020, the Board approved an increase in our stock repurchase program by an additional $ 300.0 million.

During the three months ended June 30, 2021, we repurchased 335,000 shares of our common stock for $ 55.8 million to be held as treasury stock.

During the six months ended June 30, 2021, we repurchased 551,221 shares of our common stock for $ 81.6 million to be held as treasury stock.

During the three months ended September 30, 2021, we repurchased 358,817 shares of our common stock for $ 56.1 million to be held as treasury stock.

During the nine months

ended September 30, 2021, we repurchased 910,038 shares of our common stock for $ 137.7 million to be held as treasury stock.

A total of 1,668,031 shares of our common stock has been repurchased since our stock repurchase program commenced.

As of June 30, 2021, we may purchase up to $ 218.8 million of shares of our common stock under our stock repurchase program.

As of September 30, 2021, we may purchase up to $ 162.7 million of shares of our common stock under our stock repurchase program.

The timing, amount and other terms and conditions of any repurchases of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements.

1 unchanged sentence

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

11 unchanged sentences

The following table summarizes the activity of our time-vested restricted stock units (“RSUs”):

Six Months Ended June 30,

Nine Months Ended September 30,

Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value

4 unchanged sentences

Ending balance 126,154 $ 77.61 153,353 $ 60.65

We recognized $ 0.9 million of stock-based compensation expense related to outstanding RSUs for each of the three months ended June 30, 2021 and 2020.

We recognized $ 1.7 million of stock-based compensation expense related to outstanding RSUs for each of the six months ended June 30, 2021 and 2020.

We recognized $ 0.8 million and $ 0.9 million of stock-based compensation expense related to outstanding RSUs for each of the three months ended September 30, 2021 and 2020, respectively.

We recognized $ 2.5 million and $ 2.6 million of stock-based compensation expense related to outstanding RSUs for each of the nine months ended September 30, 2021 and 2020, respectively.

Generally, the RSUs cliff vest on the third anniversary of the grant date and can only be settled in shares of our common stock.

At June 30, 2021, we had unrecognized compensation cost of $ 5.4 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.0 years.

At September 30, 2021, we had unrecognized compensation cost of $ 4.5 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.0 years.

Performance-Based Restricted Stock Units

8 unchanged sentences

The PSUs can only be settled in shares of our common stock.

The following table summarizes the activity of our PSUs for the six months ended June 30, 2021:

Period Granted Performance Period Target PSUs Outstanding at December 31, 2020 Target PSUs Granted Target PSUs Vested Target PSUs Forfeited Target PSUs Outstanding at June 30, 2021 Weighted Average Grant Date Fair Value

The following table summarizes the activity of our PSUs for the nine months ended September 30, 2021:

Period Granted Performance Period Target PSUs Outstanding at December 31, 2020 Target PSUs Granted Target PSUs Vested Target PSUs Forfeited Target PSUs Outstanding at September 30, 2021 Weighted Average Grant Date Fair Value

2018 2018 - 2020 60,040 — ( 60,040 ) — — $ 64.60

3 unchanged sentences

Total 229,820 46,027 ( 60,040 ) — 215,807

At June 30, 2021, management estimates that the recipients will receive approximately 158 %, 200 % and 200 % of the 2021, 2020 and 2019 target number of PSUs, respectively, at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics.

We recognized $ 2.2 million and $ 1.5 million of total stock-based compensation expense related to outstanding PSUs for the three months ended June 30, 2021 and 2020, respectively.

We recognized $ 4.4 million and $ 2.4 million of total stock-based compensation expense related to outstanding PSUs for the six months ended June 30, 2021 and 2020, respectively.

The 2018 - 2020 performance period PSUs vested and issued on March 15,

2021 at 200 % of the target number.

At June 30, 2021, we had unrecognized compensation cost of $ 14.9 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 2.2 years.

At September 30, 2021, management estimates that the recipients will receive approximately 185 %, 200 % and 200 % of the 2021, 2020 and 2019 target number of PSUs, respectively, at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics.

We recognized $ 2.3 million and $ 1.3 million of total stock-based compensation expense related to outstanding PSUs for the three months ended September 30, 2021 and 2020, respectively.

We recognized $ 6.7 million and $ 3.7 million of total stock-based compensation expense related to outstanding PSUs for the nine months ended September 30, 2021 and 2020, respectively.

The 2018 - 2020 performance period PSUs vested

and issued on March 15, 2021 at 200 % of the target number.

At September 30, 2021, we had unrecognized compensation cost of $ 13.8 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 2.0 years.

FAIR VALUE DISCLOSURES

12 unchanged sentences

The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and certain accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.

As of June 30, 2021, the Credit Agreement’s carrying value approximates market value since it has a floating interest rate, which increases or decreases with market interest rates and our leverage ratio.

As of September 30, 2021, the Credit Agreement’s carrying value approximates market value since it has a floating interest rate, which increases or decreases with market interest rates and our leverage ratio.

In order to determine the fair value of the 2029 Senior Notes and the 2026 Senior Notes, the future contractual cash flows are discounted at our estimate of current market rates of interest, which were determined based upon the average interest rates of similar senior notes within the homebuilding industry (Level 2 measurement).

The following table below shows the level and measurement of liabilities at June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

The following table below shows the level and measurement of liabilities at September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 December 31, 2020

Fair Value Hierarchy Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

9 unchanged sentences

Land Purchases from Affiliates

During the three months ended June 30, 2021, we completed a land purchase contract to purchase a total of 110 finished lots in Pasco County, Florida from an affiliate of one of our directors for a total base purchase price of approximately $ 4.0 million.

We did not complete any land purchase contracts with affiliates during the three months ended September 30, 2021.

During the nine months ended September 30, 2021, we completed a land purchase contract to purchase a total of 110 finished lots in Pasco County, Florida from an affiliate of one of our directors for a total base purchase price of approximately $ 4.0 million.

The lots were purchased in takedowns, subject to a maximum price escalation of 6 % per annum, and may provide for additional payments to the seller at the time of sale to the homebuyer.

1 unchanged sentence

In April 2021, we purchased the remaining land in a takedown of 52 lots under the Pasco County contract for a base purchase price of approximately $ 1.9 million.

During the three months ended June 30, 2021, we completed a land purchase contract to purchase a total of 25 finished lots in Burnet County, Texas from an affiliate of a family member of our chief executive officer for a total base purchase price of approximately $ 2.5 million.

During the nine months ended September 30, 2021, we completed a land purchase contract to purchase a total of 25 finished lots in Burnet County, Texas from an affiliate of a family member of our chief executive officer for a total base purchase price of approximately $ 2.5 million.

COMMITMENTS AND CONTINGENCIES

14 unchanged sentences

The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Land deposits and option payments $ 46,324 $ 34,097

1 unchanged sentence

Lots under land purchase contracts 43,338 26,236

As of June 30, 2021 and December 31, 2020, approximately $ 21.0 million and $ 24.0 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates.

As of September 30, 2021 and December 31, 2020, approximately $ 25.1 million and $ 24.0 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates.

Lease Obligations

7 unchanged sentences

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

ROU assets, as included in other assets on the consolidated balance sheets, were $ 4.7 million and $ 4.9 million at June 30, 2021 and December 31, 2020, respectively.

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 5.1 million and $ 5.3 million at June 30, 2021 and December 31, 2020, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.4 million and $ 0.3 million for the three months ended June 30, 2021 and 2020, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.8 million and $ 0.7 million for the six months ended June 30, 2021 and 2020, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases during the six months ended June 30, 2021 and 2020 was $ 0.8 million and $ 0.7 million, respectively.

As of June 30, 2021, the weighted-average discount rate was 5.23 % and our weighted-average remaining life was 4.4 years.

We do not have any significant lease contracts that have not yet commenced at June 30, 2021.

The table below shows the future minimum payments under non-cancelable operating leases at June 30, 2021 (in thousands):

ROU assets, as included in other assets on the consolidated balance sheets, were $ 4.6 million and $ 4.9 million at September 30, 2021 and December 31, 2020, respectively.

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 4.8 million and $ 5.3 million at September 30, 2021 and December 31, 2020, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.5 million and $ 0.4 million for the three months ended September 30, 2021 and 2020, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 1.3 million and $ 1.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases during the nine months ended September 30, 2021 and 2020 was $ 1.2 million and $ 0.7 million, respectively.

As of September 30, 2021, the weighted-average discount rate was 5.20 % and our weighted-average remaining life was 4.3 years.

We do not have any significant lease contracts that have not yet commenced at September 30, 2021.

The table below shows the future minimum payments under non-cancelable operating leases at September 30, 2021 (in thousands):

Year Ending December 31, Operating leases

3 unchanged sentences

Bonding and Letters of Credit

We have outstanding letters of credit and performance and surety bonds totaling $ 182.3 million (including $ 10.3 million of letters of credit issued under the Credit Agreement) and $ 143.8 million at June 30, 2021 and December 31, 2020, respectively, related to our obligations for site improvements at various projects.

We have outstanding letters of credit and performance and surety bonds totaling $ 199.7 million (including $ 8.3 million of letters of credit issued under the Credit Agreement) and $ 143.8 million at September 30, 2021 and December 31, 2020, respectively, related to our obligations for site improvements at various projects.

Management does not believe that draws upon the letters of credit, surety bonds or financial guarantees if any, will have a material effect on our consolidated financial position, results of operations or cash flows.

2 unchanged sentences

The term of the commitment is eight years and includes renewals of up to two additional years.

Additionally, during the three months ended June 30, 2021, we entered into a joint venture with a mortgage lender.

As of June 30, 2021 and December 31, 2020, we have a total of $ 5.3 million and $ 3.9 million, respectively, within other assets on the balance sheet relating to our investment in this real estate investment fund and this mortgage joint venture.

Contributions into the unconsolidated entities are for the use of investing in certain real estate transactions and residential mortgage servic es.

Additionally, during the nine months ended September 30, 2021, we entered into a joint venture with a mortgage lender.

As of September 30, 2021 and December 31, 2020, we have a total of $ 5.3 million and $ 3.9 million, respectively, within other assets on the balance sheet relating to our investment in this real estate investment fund and this mortgage joint venture.

Contributions into the unconsolidated entities are for the use of investing in certain real estate transactions and residential mortgage servic es, respectively.

SEGMENT INFORMATION

We operate one principal homebuilding business that is organized and reports by division.

We have seven operating segments (our Central, Midwest, Southeast, Mid-Atlantic, Northwest, West, and Florida divisions) that we aggregate into five qualifying reportable segments at June 30, 2021:

We have seven operating segments (our Central, Midwest, Southeast, Mid-Atlantic, Northwest, West, and Florida divisions) that we aggregate into five qualifying reportable segments at September 30, 2021:

our Central, Southeast, Northwest, West, and Florida divisions.

These segments reflect the way the Company evaluates its business performance and manages its operations.

The Central division is our largest division and comprised approximately 42.5 % and 35.6 % of total home sales revenues for the six months ended June 30, 2021 and 2020, respectively.

The Central division is our largest division and comprised approximately 41.1 % and 35.4 % of total home sales revenues for the nine months ended September 30, 2021 and 2020, respectively.

In accordance with ASC 280, Segment Reporting , operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision-makers (“CODMs”) in deciding how to allocate resources and in assessing performance.

5 unchanged sentences

Financial information relating to our reportable segments was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

14 unchanged sentences

Total net income before income taxes $ 126,994 $ 77,815 $ 399,391 $ 201,301

(1) The Corporate balance consists primarily of general and administration unallocated costs for various shared service functions, as well as our warranty reserve.

(1) The Corporate balance consists primarily of general and administration unallocated costs for various shared service functions, as well as our warranty reserve and loss on extinguishment of debt.

Actual warranty expenses are reflected within the reportable segments.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Central $ 808,278 $ 708,087

7 unchanged sentences

(1) The Corporate balance consists primarily of cash, prepaid insurance, ROU assets, prepaid expenses and income tax receivables related to the federal energy efficient homes tax credit.

SUBSEQUENT EVENTS

On July 15, 2021, we redeemed all of the outstanding 2026 Senior Notes, as more fully discussed in Note 5 .

On July 14, 2021, we acquired the real estate assets of Buffington Homebuilding Group, Ltd.

(“Buffington”), one of the largest privately held homebuilders in Austin, Texas.

The total purchase price for the Buffington assets, primarily consisting of inventory, was approximately $ 40.0 million in cash.

This acquisition further expands our land position in the Austin, Texas market.

The acquired assets include over 100 homes under construction, and more than 500 owned and controlled lots.

The acquisition is accounted for in accordance with ASC 805.

Our purchase accounting for Buffington is preliminary and we expect to complete the working capital adjustment and valuation of the tangible assets, intangible assets and liabilities assumed as of the acquisition date within one year from the acquisition date.

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