+Added: Risks Related to Our Business and Industry
We are subject to demand fluctuations in the housing industry.
5 unchanged sentences
and we may incur substantial losses from operations.
−Removed: At any particular time, we cannot predict whether housing market conditions will improve, deteriorate or continue as they exist at that time.
+Added: At any particular time, we cannot accurately predict whether housing market conditions will improve, deteriorate or continue as they exist at that time.
Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our homes live could reduce the demand for homes and, as a result, could adversely affect our business, results of operations, and financial condition.
Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our homes live have had and may in the future have a negative impact on our business.
−Removed: Adverse changes in employment levels, job growth, consumer confidence, interest rates, perceptions regarding the strength of the housing market, and population growth, or an oversupply of homes for sale may reduce demand or depress prices for our homes and cause home buyers to cancel their agreements to purchase our homes.
+Added: Adverse changes in employment levels, job
+Added: growth, consumer confidence, interest rates, perceptions regarding the strength of the housing market, and population growth, or an oversupply of homes for sale may reduce demand or depress prices for our homes and cause home buyers to cancel their agreements to purchase our homes.
This, in turn, could adversely affect our results of operations and financial condition.
Our ability to execute on our business strategies is uncertain, and we may be unable to achieve our goals.
−Removed: Our strategy includes growing our business by expanding our luxury brand to new price points, product lines and geographies.
We cannot assure you that (i) our strategies, and any related initiatives or actions, will be successful or that they will generate growth, earnings or returns at any particular level or within any particular time frame;
6 unchanged sentences
and on our consolidated financial statements, and the effect, in each case, could be material.
+Added: Negative publicity could negatively impact sales, which could cause our revenues or results of operations to decline.
+Added: Our business is dependent upon the appeal of the Toll Brothers brand and its association with quality and luxury is integral to our success.
+Added: Our strategy includes growing our business by expanding our luxury brand to new price points, product lines and geographies, including expansion of our affordable luxury products.
+Added: If we are unable to maintain the position of the Toll Brothers brand, our business may be adversely affected by diminishing the distinctive appeal of the brand and tarnishing its image.
+Added: This could result in lower sales and earnings.
+Added: In addition, unfavorable media or investor and analyst reports related to our industry, company, brand, marketing, personnel, operations, business performance, or prospects may affect our stock price and the performance of our business, regardless of its accuracy or inaccuracy.
+Added: Furthermore, the speed at which negative publicity is disseminated has increased dramatically through the use of electronic communication, including social media outlets, websites and other digital platforms.
+Added: Our success in maintaining and enhancing our brand depends on our ability to adapt to this rapidly changing media environment.
+Added: Adverse publicity or negative commentary from any media outlets could damage our reputation and reduce the demand for our homes, which would adversely affect our business.
+Added: We can also be affected by poor relations with the residents of communities we develop because efforts made by us to resolve issues or disputes that may arise in connection with the operation or development of their communities, or in connection with the transition of a homeowners association, could be deemed unsatisfactory by the affected residents and subsequent actions by these residents could adversely affect sales or our reputation.
+Added: In addition, we could decide or be required to make material expenditures related to the settlement of such issues or disputes, which could adversely affect our results of operations.
A significant portion of our revenues and income from operations is generated from California in our Traditional Home Building segment.
19 unchanged sentences
It generally takes several years for us to acquire the land and construct, market, and deliver units or lease units in a high-rise building.
−Removed: Completion times vary on a building-by-building basis depending on the complexity of the project, its stage of development when acquired, and the regulatory and community issues involved.
+Added: Completion times vary on a building-by-building basis depending on the complexity of the project, its stage of development when acquired, and the regulatory and
+Added: community issues involved.
As a result of these potential delays in the completion of a building, we face the risk that demand for housing may decline during the period and we may be forced to sell or lease units at a loss or for prices that generate lower profit margins than we initially anticipated.
20 unchanged sentences
If we are unable to compete effectively in our markets, our business could decline disproportionately to that of our competitors.
−Removed: If we are not able to obtain suitable financing, or if the interest rates on our debt are increased, or if our credit ratings are lowered, our business and results of operations may decline.
−Removed: Our business and results of operations depend substantially on our ability to obtain financing, whether from bank borrowings or from financing in the public debt markets.
−Removed: Each of our $1.9 billion revolving credit facility and our $800.0 million term loan matures in November 2024, and $2.67 billion of our senior notes become due and payable at various times from February 2022 through November 2029.
−Removed: We cannot be certain that we will be able to continue to replace existing financing or find additional sources of financing in the future on favorable terms or at all.
−Removed: If we are not able to obtain suitable financing at reasonable terms or replace existing debt and credit facilities when they become due or expire, our costs for borrowings will likely increase and our revenues may decrease or we could be precluded from continuing our operations at current levels.
−Removed: Increases in interest rates can make it more difficult and/or expensive for us to obtain the funds we need to operate our business.
−Removed: The amount of interest we incur on our revolving bank credit facility and term loan fluctuates based on changes in short-term interest rates and the amount of borrowings we incur.
−Removed: Increases in interest rates generally and/or any downgrade in the ratings that national rating agencies assign to our outstanding debt securities could increase the interest rates we must pay on any subsequent issuances of debt securities, and any such ratings downgrade could also make it more difficult for us to sell such debt securities.
−Removed: If home buyers are not able to obtain suitable financing, our results of operations may decline.
−Removed: Our results of operations also depend on the ability of our potential home buyers to obtain mortgages for the purchase of our homes.
−Removed: Any uncertainty in the mortgage markets and its impact on the overall mortgage market, including the tightening of credit standards, future increases in the effective cost of home mortgage financing (including as a result of changes to federal tax law), and increased government regulation, could adversely affect the ability of our customers to obtain financing for a home purchase, thus preventing our potential home buyers from purchasing our homes.
−Removed: In addition, where our potential home buyers must sell their existing homes in order to buy a home from us, increases in mortgage costs and/or lack of availability of mortgages could prevent the buyers of our potential home buyers’ existing homes from obtaining the mortgages they need to complete their purchases, which would result in our potential home buyers’ inability to buy a home from us.
−Removed: Similar risks apply to those buyers whose contracts are in our backlog of homes to be delivered.
−Removed: If our home buyers, potential buyers, or buyers of our home buyers’ current homes cannot obtain suitable financing, our sales and results of operations could be adversely affected.
−Removed: If our ability to resell mortgages to investors is impaired, our home buyers may be required to find alternative financing.
−Removed: Generally, when our mortgage subsidiary closes a mortgage for a home buyer at a previously locked-in rate, it already has an agreement in place with an investor to acquire the mortgage following the closing.
−Removed: Should the resale market for our mortgages decline or the underwriting standards of our investors become more stringent, our ability to sell future mortgages could be adversely affected and either we would have to commit our own funds to long-term investments in mortgage loans, which could, among other things, delay the time when we recognize revenues from home sales on our statements of operations, or our home buyers would be required to find an alternative source of financing.
−Removed: If our home buyers cannot obtain another source of financing in order to purchase our homes, our sales and results of operations could be adversely affected.
If land is not available at reasonable prices, our sales and results of operations could decrease.
8 unchanged sentences
Due to the significant decline in our business during the 2006–2011 downturn in the housing industry, we recognized significant write-downs of our inventory.
−Removed: Failure by our employees or representatives to comply with laws and regulations may harm us.
−Removed: We are required to comply with laws and regulations that govern all aspects of our business including land acquisition, development, home construction, labor and employment, mortgage origination, title and escrow operations, sales and warranty.
−Removed: It is possible that our employees or entities engaged by us, such as subcontractors, could intentionally or unintentionally violate some of these laws and regulations.
−Removed: Although we endeavor to take immediate action if we become aware of such violations, we may incur fines or penalties as a result of these actions and our reputation with governmental agencies and our customers could be damaged.
−Removed: Negative publicity could negatively impact sales, which could cause our revenues or results of operations to decline.
−Removed: Our business strategy relies heavily on our brand, which is critical to our success.
−Removed: Unfavorable media or investor and analyst reports related to our industry, company, brand, marketing, personnel, operations, business performance, or prospects may affect our stock price and the performance of our business, regardless of its accuracy or inaccuracy.
−Removed: Furthermore, the speed at which negative publicity is disseminated has increased dramatically through the use of electronic communication, including social media outlets, websites and other digital platforms.
−Removed: Our success in maintaining and enhancing our brand depends on our ability to adapt to this rapidly changing media environment.
−Removed: Adverse publicity or negative commentary from any media outlets could damage our reputation and reduce the demand for our homes, which would adversely affect our business.
−Removed: In addition, we can be affected by poor relations with the residents of communities we develop because efforts made by us to resolve issues or disputes that may arise in connection with the operation or development of their communities, or in connection with the transition of a homeowners association, could be deemed unsatisfactory by the affected residents and subsequent actions by these residents could adversely affect sales or our reputation.
−Removed: In addition, we could decide or be required to make material expenditures related to the settlement of such issues or disputes, which could adversely affect our results of operations.
We rely on subcontractors to construct our homes and on building supply companies to supply components for the construction of our homes.
−Removed: The failure of our subcontractors to properly construct our homes or defects in the components we obtain from building supply companies could have an adverse effect on us.
+Added: The failure of our subcontractors to properly construct our homes and adopt appropriate jobsite safety practices or defects in the components we obtain from building supply companies could have an adverse effect on us.
We engage subcontractors to perform the actual construction of our homes and purchase components used in the construction of our homes from building supply companies.
−Removed: Despite our quality control efforts, we may discover that our subcontractors were engaging in improper construction practices or that the components purchased from building supply companies are not performing as specified.
−Removed: The occurrence of such events could require us to repair the homes in accordance with our standards and as required by law.
+Added: Despite our quality control and jobsite safety efforts, we may discover that our subcontractors were engaging in improper construction or safety practices or that the components purchased from building supply companies are not performing as specified.
+Added: The occurrence of such events could require us to repair homes in
+Added: accordance with our standards and as required by law, or to respond to claims of improper oversight of construction sites.
The cost of satisfying our legal obligations in these instances may be significant, and we may be unable to recover the cost of repair from subcontractors, suppliers and insurers.
3 unchanged sentences
We have investments in and commitments to certain joint ventures with unrelated parties.
−Removed: These joint ventures may borrow money to help finance their activities.
+Added: These joint ventures generally borrow money to help finance their activities.
In certain circumstances, the joint venture participants, including ourselves, are required to provide guarantees of certain obligations relating to the joint ventures.
5 unchanged sentences
Any increase in legal and regulatory requirements may cause us to incur substantial additional costs or, in some cases, cause us to determine that the property is not feasible for development.
−Removed: Various local, state, and federal statutes, ordinances, rules, and regulations concerning building, zoning, sales, accessibility, anti-discrimination, and similar matters apply to and/or affect the housing industry.
−Removed: Governmental regulation affects construction activities as well as sales activities, mortgage lending activities, and other dealings with home buyers, including
−Removed: anti-discrimination laws such as the Fair Housing Act and data privacy laws such as the California Consumer Privacy Act.
+Added: Various local, state, and federal statutes, ordinances, rules, and regulations concerning building, zoning, sales, accessibility, safety, anti-discrimination, and similar matters apply to and/or affect the housing industry.
+Added: Governmental regulation affects construction activities as well as sales activities, mortgage lending activities, and other dealings with home buyers, including anti-discrimination laws such as the Fair Housing Act and data privacy laws such as the California Consumer Privacy Act.
The industry also has experienced an increase in state and local legislation and regulations that limit the availability or use of land.
6 unchanged sentences
The impact of those statutes, rules, and regulations can increase our home buyers’ cost of financing, increase our cost of doing business, and restrict our home buyers’ access to some types of loans.
+Added: Product liability claims and litigation and warranty claims that arise in the ordinary course of business may be costly, which could adversely affect our business.
+Added: As a home builder, we are subject to construction defect and home warranty claims arising in the ordinary course of business.
+Added: These claims are common in the home building industry and can be costly.
+Added: In addition, the costs of insuring against construction defect and product liability claims are high, and the amount of coverage offered by insurance companies is currently limited.
+Added: There can be no assurance that this coverage will not be further restricted and become more costly.
+Added: If the limits or coverages of our current and former insurance programs prove inadequate, or we are not able to obtain adequate, or reasonably priced, insurance against these types of claims in the future, or the amounts currently provided for future warranty or insurance claims are inadequate, we may experience losses that could negatively impact our financial results.
+Added: We record expenses and liabilities based on the estimated costs required to cover our self-insured liability under our insurance policies and estimated costs of potential claims and claim adjustment expenses that are above our coverage limits or that are not covered by our insurance policies.
+Added: These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported.
+Added: The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of product we build, insurance industry practices, and legal or regulatory actions and/or interpretations, among other factors.
+Added: Key assumptions used in these estimates include claim frequencies, severities, and settlement patterns, which can occur over an extended period of time.
+Added: In addition, changes in the frequency and severity of reported claims and the estimates to settle claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated
+Added: financial statements.
+Added: Due to the degree of judgment required and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements.
+Added: Over the past several years, we have had a significant number of water intrusion claims related to homes we built in Pennsylvania and Delaware.
+Added: See Note 7 – “Accrued Expenses” in Item 15(a)1 of this Form 10-K for additional information regarding these warranty charges.
+Added: Our multi-unit buildings are subject to swings in delivery volume due to their extended construction time, levels of pre-sales, and quick delivery of units once buildings are complete.
+Added: Our quarterly operating results will fluctuate depending on the timing of completion of construction of our multi-unit buildings, levels of pre-sales and the relatively short delivery time of the pre-sold units once the building is completed.
+Added: Depending on the number of multi-unit buildings that are completed in a quarter, our quarterly operating results may be uneven and may be marked by lower revenues and earnings in some quarters than in others.
Increases in taxes or government fees could increase our costs, and adverse changes in tax laws or their interpretation could reduce demand for our homes and negatively affect our operating results.
1 unchanged sentence
In addition, increases in local real estate taxes could adversely affect our potential home buyers, who may consider those costs in determining whether to make a new home purchase and decide, as a result, not to purchase one of our homes.
−Removed: On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law, which, among other things, (i) limits the federal deduction for mortgage interest so that it only applies to the first $750,000 of a new mortgage (as compared to $1 million under previous tax law) and (ii) introduced a $10,000 cap on the federal deduction for state and local taxes.
−Removed: These changes could reduce the perceived affordability of homeownership, and therefore the demand for homes, and/or have a moderating impact on home sales prices, in areas with relatively high housing prices and/or high state and local income taxes and real estate taxes, including in certain of our markets in California, New Jersey and New York.
−Removed: Any further changes in the income tax laws that would reduce or eliminate tax deductions or incentives to homeowners could make housing less affordable or otherwise reduce the demand for housing, which in turn could reduce our sales and hurt our results of operations.
−Removed: Further, while we believe that our recorded tax balances are adequate, it is not possible to predict the effects of possible changes
−Removed: in the tax laws or changes in their interpretation and whether they could have a material adverse impact on our operating
+Added: Changes in the income tax laws that would reduce or eliminate tax deductions or incentives to homeowners could make housing less affordable or otherwise reduce the demand for housing, which in turn could reduce our sales and hurt our results of operations.
+Added: Further, while we believe that our recorded tax balances are adequate, it is not possible to predict the effects of possible changes in the tax laws or changes in their interpretation and whether they could have a material adverse impact on our operating results.
We have filed our tax returns in prior years based upon certain filing positions we believe are appropriate.
−Removed: Internal Revenue Service or state taxing authorities disagree with these filing positions, we may owe additional taxes.
+Added: If the Internal Revenue Service or state taxing authorities disagree with these filing positions, we may owe additional taxes, which could be material.
We are subject to extensive environmental regulations, which may cause us to incur additional operating expenses, subject us to longer construction cycle times, or result in material fines or harm to our reputation.
3 unchanged sentences
In addition, noncompliance with these regulations could result in fines and penalties, obligations to remediate, permit revocations or other sanctions;
−Removed: and contamination or other environmental conditions at or in the vicinity of our developments may result in claims against us for personal injury, property damage or other losses.
+Added: and contamination or other environmental conditions at or in the vicinity of our developments, whether or not we were responsible for such conditions, may result in claims against us for personal injury, property damage or other losses.
From time to time, the United States Environmental Protection Agency and other federal or state agencies review homebuilders' compliance with environmental laws and may levy fines and penalties for failure to strictly comply with applicable environmental laws or impose additional requirements for future compliance as a result of past failures.
2 unchanged sentences
Environmental regulations can also have an adverse impact on the availability and price of certain raw materials such as lumber.
−Removed: Our communities in California are especially susceptible to restrictive government regulations and environmental laws, particularly surrounding water usage due to continuing drought conditions within that region.
−Removed: Adverse weather conditions, natural disasters, and other conditions could disrupt the development of our communities, which could harm our sales and results of operations.
−Removed: Adverse weather conditions and natural disasters, such as hurricanes, tornadoes, earthquakes, floods, droughts, and wildfires, can have serious effects on our ability to develop our residential communities.
−Removed: We also may be affected by unforeseen engineering, environmental, or geological conditions or problems, including conditions or problems which arise on lands of third parties in the vicinity of our communities, but nevertheless negatively impact our communities.
−Removed: Any of these adverse events or circumstances could cause delays in or prevent the completion of, or increase the cost of, developing one or more of our residential communities and, as a result, could harm our sales and results of operations.
+Added: Our communities in California are especially susceptible to restrictive government regulations and environmental laws, particularly surrounding water usage, as well as residential building codes and zoning regulations designed to counteract climate change or otherwise enhance the sustainability of the environment.
+Added: Any or all of these changes could increase our costs to develop homes and adversely affect our financial condition and results of operations.
+Added: Failure by our employees or representatives to comply with laws and regulations may harm us.
+Added: We are required to comply with laws and regulations that govern all aspects of our business including land acquisition, development, home construction, labor and employment, mortgage origination, title and escrow operations, sales and warranty.
+Added: It is possible that our employees or entities engaged by us, such as subcontractors, could intentionally or unintentionally violate some of these laws and regulations.
+Added: Although we endeavor to take immediate action if we become aware of such violations, we may incur fines or penalties as a result of these actions and our reputation with governmental agencies and our customers could be damaged.
If we experience shortages or increased costs of labor and supplies or other circumstances beyond our control, there could be delays or increased costs in developing our communities, which could adversely affect our operating results.
11 unchanged sentences
At any given point in time, the employees of those subcontractors, who are not yet represented by a union, may be unionized.
−Removed: Product liability claims and litigation and warranty claims that arise in the ordinary course of business may be costly, which could adversely affect our business.
−Removed: As a home builder, we are subject to construction defect and home warranty claims arising in the ordinary course of business.
−Removed: These claims are common in the home building industry and can be costly.
−Removed: In addition, the costs of insuring against construction defect and product liability claims are high, and the amount of coverage offered by insurance companies is currently limited.
−Removed: There can be no assurance that this coverage will not be further restricted and become more costly.
−Removed: If the limits or coverages of our current and former insurance programs prove inadequate, or we are not able to obtain adequate, or reasonably priced, insurance against these types of claims in the future, or the amounts currently provided for future warranty or insurance claims are inadequate, we may experience losses that could negatively impact our financial results.
−Removed: We record expenses and liabilities based on the estimated costs required to cover our self-insured liability under our insurance policies and estimated costs of potential claims and claim adjustment expenses that are above our coverage limits or that are not covered by our insurance policies.
−Removed: These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported.
−Removed: The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of product we build, insurance industry practices, and legal or regulatory actions and/or interpretations, among other factors.
−Removed: Key assumptions used in these estimates include claim frequencies, severities, and settlement patterns, which can occur over an extended period of time.
−Removed: In addition, changes in the frequency and severity of reported claims and the estimates to settle claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements.
−Removed: Due to the degree of judgment required and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements.
−Removed: Over the past several years, we have had a significant number of water intrusion claims related to homes we built in Pennsylvania and Delaware.
−Removed: See Note 7 – “Accrued Expenses” in Item 15(a)1 of this Form 10-K for additional information regarding these warranty charges.
−Removed: Our cash flows and results of operations could be adversely affected if legal claims are brought against us and are not resolved in our favor.
−Removed: Claims have been brought against us in various legal proceedings that have not had, and are not expected to have, a material adverse effect on our business or financial condition.
−Removed: Should such claims be resolved in an unfavorable manner or should additional claims be filed in the future, it is possible that our cash flows and results of operations could be adversely affected .
−Removed: We could be adversely impacted by the loss of key management personnel or if we fail to attract qualified personnel.
−Removed: Our future success depends, to a significant degree, on the efforts of our senior management and our ability to attract qualified personnel.
−Removed: Our operations could be adversely affected if key members of our senior management leave our employ or we cannot attract qualified personnel to manage our business.
−Removed: Our multi-unit buildings are subject to swings in delivery volume due to their extended construction time, levels of pre-sales, and quick delivery of units once buildings are complete.
−Removed: Our quarterly operating results will fluctuate depending on the timing of completion of construction of our multi-unit buildings, levels of pre-sales and the relatively short delivery time of the pre-sold units once the building is completed.
−Removed: Depending on the number of multi-unit buildings that are completed in a quarter, our quarterly operating results may be uneven and may be marked by lower revenues and earnings in some quarters than in others.
Our quarterly operating results may fluctuate due to the seasonal nature of our business.
6 unchanged sentences
Because of these factors, our quarterly operating results may be uneven and may be marked by lower revenues and earnings in some quarters than in others.
+Added: We are implementing a new enterprise resource planning system, and challenges with the implementation of the system may impact our business and operations.
+Added: We are in the midst of a multi-year process of implementing a complex new enterprise resource planning system (“ERP”).
+Added: The ERP implementation requires the integration of the new ERP with multiple new and existing information systems and business processes, and is designed to accurately maintain our books and records and provide information to our management team important to the operation of the business.
+Added: Our ERP implementation will continue to require ongoing investment.
+Added: If the system as it currently stands or after necessary investments does not result in our ability to maintain accurate books and records, our financial condition, results of operations and cash flows could be negatively impacted.
+Added: Additionally, conversion from our old system to the ERP may cause inefficiencies until the ERP is stabilized and mature.
+Added: The implementation of our ERP mandated new procedures and many new key controls over financial reporting.
+Added: These procedures and controls are not yet mature in their operation and not fully tested by our internal auditors.
+Added: If we are unable to adequately implement and maintain procedures and controls relating to our ERP, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
+Added: Risks Related to Indebtedness and Financing
+Added: If we are not able to obtain suitable financing, or if the interest rates on our debt are increased, or if our credit ratings are lowered, our business and results of operations may decline.
+Added: Our business and results of operations depend substantially on our ability to obtain financing, whether from bank borrowings or from financing in the public debt mark ets.
+Added: Each of our revolving credit facility, which provides for approximately $1.9 billion in committed borrowing capacity, and our $800.0 million term loan matures in November 2025.
+Added: In addition, $2.67 billion of our senior notes become due and payable at various times from February 2022 through November 2029.
+Added: We cannot be certain that
+Added: we will be able to continue to replace existing financing or find additional sources of financing in the future on favorable terms or at all.
+Added: If we are not able to obtain suitable financing at reasonable terms or replace existing debt and credit facilities when they become due or expire, our costs for borrowings will likely increase and our revenues may decrease or we could be precluded from continuing our operations at current levels.
+Added: Increases in interest rates can make it more difficult and/or expensive for us to obtain the funds we need to operate our business.
+Added: The amount of interest we incur on our revolving bank credit facility and term loan fluctuates based on changes in short-term interest rates and the amount of borrowings we incur.
+Added: Increases in interest rates generally and/or any downgrade in the ratings that national rating agencies assign to our outstanding debt securities could increase the interest rates we must pay on any subsequent issuances of debt securities, and any such ratings downgrade could also make it more difficult for us to sell such debt securities.
+Added: If home buyers are not able to obtain suitable financing, our results of operations may decline.
+Added: Our results of operations also depend on the ability of our potential home buyers to obtain mortgages for the purchase of our homes.
+Added: Any uncertainty in the mortgage markets and its impact on the overall mortgage market, including the tightening of credit standards, future increases in the effective cost of home mortgage financing (including as a result of changes to federal tax law), and increased government regulation, could adversely affect the ability of our customers to obtain financing for a home purchase, thus preventing our potential home buyers from purchasing our homes.
+Added: In addition, where our potential home buyers must sell their existing homes in order to buy a home from us, increases in mortgage costs and/or lack of availability of mortgages could prevent the buyers of our potential home buyers’ existing homes from obtaining the mortgages they need to complete their purchases, which would result in our potential home buyers’ inability to buy a home from us.
+Added: Similar risks apply to those buyers whose contracts are in our backlog of homes to be delivered.
+Added: If our home buyers, potential buyers, or buyers of our home buyers’ current homes cannot obtain suitable financing, our sales and results of operations could be adversely affected.
+Added: If our ability to resell mortgages to investors is impaired, our home buyers may be required to find alternative financing.
+Added: Generally, when our mortgage subsidiary closes a mortgage for a home buyer at a previously locked-in rate, it already has an agreement in place with an investor to acquire the mortgage following the closing.
+Added: Our mortgage loans are sold to investors with limited recourse provisions derived from industry-standard representations and warranties in the relevant agreements.
+Added: These representations and warranties primarily involve the absence of misrepresentations by the borrower or other parties, the appropriate underwriting of the loan and in some cases, a required minimum number of payments to be made by the borrower.
+Added: We generally do not retain any other continuing interest related to mortgage loans sold in the secondary market.
+Added: However, if these recourse provisions are not satisfied, the mortgage loans sold to investors could be returned to us.
+Added: In addition, if the resale market for our mortgages decline or the underwriting standards of our investors become more stringent, our ability to sell future mortgage loans could be adversely affected and either we would have to commit our own funds to long-term investments in mortgage loans, which could, among other things, delay the time when we recognize revenues from home sales on our statements of operations, or our home buyers would be required to find an alternative source of financing.
+Added: If our home buyers cannot obtain another source of financing in order to purchase our homes, our sales and results of operations could be adversely affected.
+Added: Risks Related to the COVID-19 Pandemic and Other External Factors
+Added: Public health issues such as the COVID-19 pandemic have adversely affected, and could in the future, adversely affect our business or financial results.
+Added: The United States and other countries have experienced, and may experience in the future, outbreaks of contagious diseases that affect public health and public perception of health risk.
+Added: In connection with the outbreak of the global COVID-19 pandemic in 2020, the United States declared a national emergency in March 2020 and the World Health Organization and the U.S.
+Added: Centers for Disease Control and Prevention have recommended containment and mitigation measures.
+Added: Numerous states and municipalities have also declared public health emergencies.
+Added: Along with these declarations, extraordinary and wide-ranging actions have been taken by international, federal, state, and local public health and governmental authorities to mitigate the impact of COVID-19, including quarantines, stay-at-home orders and business closure mandates requiring that individuals substantially restrict daily activities and that businesses substantially modify, curtail or cease normal operations.
+Added: Many of these measures are currently in place in many jurisdictions throughout the United States, and additional measures may be imposed by governmental authorities in the future as the country has experienced a resurgence of the pandemic in the fall and winter of 2020.
+Added: Due to these restrictions, and in an effort to ensure the safety of our employees, customers, trade partners and the communities in which we operate, we substantially modified our business operations, which resulted in, among other things,
+Added: disruption in our ability to deliver homes in fiscal 2020, and in particular in certain regions of the country that were highly impacted by the pandemic in the Spring of 2020.
+Added: There is significant uncertainty regarding the extent to which and how long COVID-19 and related government directives, actions and economic relief efforts will disrupt the U.S.
+Added: economy and level of employment, capital markets, secondary mortgage markets, consumer confidence, demand for our homes and availability of mortgage loans to homebuyers.
+Added: The extent to which COVID-19 impacts our operational and financial performance will depend on future developments, including the duration and spread of COVID-19, the acceptance and effectiveness of vaccines, and the impact of COVID-19 and related containment and mitigation measures on our customers, trade partners and employees, all of which are highly uncertain, unpredictable and outside our control.
+Added: If COVID-19 continues to have a significant negative impact on economic conditions over a prolonged period of time, our results of operations and financial condition could be materially adversely impacted.
+Added: Adverse weather conditions, natural disasters, and other conditions could disrupt the development of our communities, which could harm our sales and results of operation.
+Added: Adverse weather conditions and natural disasters, such as hurricanes, tornadoes, earthquakes, floods, droughts, and wildfires, can have serious effects on our ability to develop our residential communities.
+Added: We also may be affected by unforeseen engineering, environmental, or geological conditions or problems, including conditions or problems which arise on lands of third parties in the vicinity of our communities, but nevertheless negatively impact our communities.
+Added: Any of these adverse events or circumstances could cause delays in or prevent the completion of, or increase the cost of, developing one or more of our residential communities and, as a result, could harm our sales and results of operations.
+Added: General Risk Factors
Increased domestic or international instability could have an adverse effect on our operations.
Increased domestic or international instability could adversely impact the economy and significantly reduce the number of new contracts signed, increase the number of cancellations of existing contracts, and/or increase our operating expenses, which could adversely affect our business.
+Added: We could be adversely impacted by the loss of key management personnel or if we fail to attract qualified personnel.
+Added: Our future success depends, to a significant degree, on the efforts of our senior management and our ability to attract qualified personnel.
+Added: Our operations could be adversely affected if key members of our senior management leave our employ or we cannot attract qualified personnel to manage our business.
Information technology failures and data security breaches could harm our business.
7 unchanged sentences
In addition, the costs of maintaining adequate protection against such threats, as they develop in the future (or as legal requirements related to data security increase) could be material.
−Removed: As previously disclosed, in the third quarter of 2019, after learning that certain loan applicants who had submitted applications to our mortgage subsidiary during the year had experienced identity theft, we investigated these incidents, found that unauthorized access to applicant data had occurred on a service provider’s system, and took a number of steps to block such access and enhance the security of our customers’ information.
−Removed: In addition, we notified all potentially impacted mortgage loan applicants of this security incident, offered credit monitoring services, and notified applicable regulatory agencies.
−Removed: Despite these efforts, we cannot assure you that similar cyber incidents will not occur in the future.
−Removed: We are implementing a new enterprise resource planning system, and challenges with the implementation of the system may impact our business and operations.
−Removed: We are in the process of implementing a complex, multi-year implementation of a new enterprise resource planning system (“ERP”).
−Removed: The ERP implementation requires the integration of the new ERP with multiple new and existing information systems and business processes, and is designed to accurately maintain our books and records and provide information to our management team important to the operation of the business.
−Removed: Our ERP implementation will continue to require ongoing investment.
−Removed: If the system as it currently stands or after necessary investments does not result in our ability to maintain accurate books and records, our financial condition, results of operations and cash flows could be negatively impacted.
−Removed: Additionally, conversion from our old system to the ERP may cause inefficiencies until the ERP is stabilized and mature.
−Removed: The implementation of our ERP mandated new procedures and many new key controls over financial reporting.
−Removed: These procedures and controls are not yet mature in their operation and not fully tested by our internal auditors.
−Removed: If we are unable to adequately implement and maintain procedures and controls relating to our ERP, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
+Added: In 2019, certain of our loan applicants experienced identity theft that we determined had occurred through the unauthorized access of one of our third-party service provider’s information systems, and, in the first quarter of fiscal 2020, we were the
+Added: direct target of an external cyber-attack that temporarily disrupted access to certain of our systems and may have resulted in the compromise of some proprietary internal data.
+Added: To date, neither of these incidents has individually or in the aggregate resulted in any material liability to us, any material damage to our reputation, or any material disruption to our operations.
+Added: However, we expect that we will continue to be the target of additional and increasingly sophisticated cyber-attacks and data security breaches, and the safeguards we have designed to help prevent these incidents from occurring may not be successful.
+Added: Recently, there has been a surge in widespread cyber-attacks during the COVID-19 pandemic.
+Added: Any increase in the frequency or scope of cyber-attacks during the pandemic may exacerbate these data security risks.
+Added: If we experience additional cyber-attacks or data security breaches in the future, we could suffer material liabilities, our reputation could be materially damaged and our operations could be materially disrupted.
UNRESOLVED STAFF COMMENTS
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.