þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Virginia | 54-1394360 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if smaller reporting company) |
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2
June 30, 2011 | December 31, 2010 | |||||||
(unaudited) | ||||||||
ASSETS |
||||||||
Homebuilding: |
||||||||
Cash and cash equivalents |
$ | 927,370 | $ | 1,190,731 | ||||
Receivables |
7,871 | 6,948 | ||||||
Inventory: |
||||||||
Lots and housing units, covered under sales
agreements with customers |
390,498 | 275,272 | ||||||
Unsold lots and housing units |
58,071 | 70,542 | ||||||
Land under development |
78,468 | 78,058 | ||||||
Manufacturing materials and other |
8,142 | 7,457 | ||||||
535,179 | 431,329 | |||||||
Assets related to consolidated variable interest entity |
23,022 | 22,371 | ||||||
Contract land deposits, net |
129,202 | 100,786 | ||||||
Property, plant and equipment, net |
23,530 | 19,523 | ||||||
Reorganization value in excess of amounts allocable to
identifiable assets, net |
41,580 | 41,580 | ||||||
Other assets, net |
285,292 | 243,005 | ||||||
1,973,046 | 2,056,273 | |||||||
Mortgage Banking: |
||||||||
Cash and cash equivalents |
2,075 | 2,661 | ||||||
Mortgage loans held for sale, net |
181,525 | 177,244 | ||||||
Property and equipment, net |
1,081 | 950 | ||||||
Reorganization value in excess of amounts allocable to
identifiable assets, net |
7,347 | 7,347 | ||||||
Other assets |
10,601 | 15,586 | ||||||
202,629 | 203,788 | |||||||
Total assets |
$ | 2,175,675 | $ | 2,260,061 | ||||
3
June 30, 2011 | December 31, 2010 | |||||||
(unaudited) | ||||||||
LIABILITIES AND SHAREHOLDERS
EQUITY |
||||||||
Homebuilding: |
||||||||
Accounts payable |
$ | 148,658 | $ | 115,578 | ||||
Accrued expenses and other liabilities |
184,615 | 237,052 | ||||||
Liabilities related to consolidated variable interest entity |
1,242 | 500 | ||||||
Non-recourse debt related to consolidated variable
interest entity |
6,535 | 7,592 | ||||||
Customer deposits |
67,593 | 53,705 | ||||||
Other term debt |
1,696 | 1,751 | ||||||
410,339 | 416,178 | |||||||
Mortgage Banking: |
||||||||
Accounts payable and other liabilities |
24,891 | 13,171 | ||||||
Note payable |
89,649 | 90,338 | ||||||
114,540 | 103,509 | |||||||
Total liabilities |
524,879 | 519,687 | ||||||
Commitments and contingencies |
||||||||
Shareholders equity: |
||||||||
Common stock, $0.01 par value; 60,000,000 shares authorized;
20,556,198 and 20,557,913 shares issued as of
June 30, 2011 and December 31, 2010, respectively |
206 | 206 | ||||||
Additional paid-in-capital |
1,037,299 | 951,234 | ||||||
Deferred compensation trust 152,964 and 158,894 shares
of NVR, Inc. common stock as of June 30, 2011 and
December 31, 2010, respectively |
(25,582 | ) | (27,582 | ) | ||||
Deferred compensation liability |
25,582 | 27,582 | ||||||
Retained earnings |
4,082,691 | 4,029,072 | ||||||
Less treasury stock at cost 14,977,205 and 14,894,357
shares at June 30, 2011 and December 31, 2010,
respectively |
(3,469,400 | ) | (3,240,138 | ) | ||||
Total shareholders equity |
1,650,796 | 1,740,374 | ||||||
Total liabilities and shareholders equity |
$ | 2,175,675 | $ | 2,260,061 | ||||
4
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Homebuilding: |
||||||||||||||||
Revenues |
$ | 682,663 | $ | 946,972 | $ | 1,185,407 | $ | 1,524,353 | ||||||||
Other income |
1,362 | 2,110 | 2,820 | 4,479 | ||||||||||||
Cost of sales |
(558,601 | ) | (771,475 | ) | (976,521 | ) | (1,242,544 | ) | ||||||||
Selling, general and administrative |
(68,045 | ) | (69,137 | ) | (135,233 | ) | (129,878 | ) | ||||||||
Operating income |
57,379 | 108,470 | 76,473 | 156,410 | ||||||||||||
Interest expense |
(287 | ) | (1,897 | ) | (509 | ) | (4,068 | ) | ||||||||
Homebuilding income |
57,092 | 106,573 | 75,964 | 152,342 | ||||||||||||
Mortgage Banking: |
||||||||||||||||
Mortgage banking fees |
13,218 | 17,532 | 24,978 | 30,365 | ||||||||||||
Interest income |
1,085 | 1,492 | 2,200 | 2,248 | ||||||||||||
Other income |
121 | 233 | 160 | 399 | ||||||||||||
General and administrative |
(7,898 | ) | (7,275 | ) | (14,575 | ) | (13,804 | ) | ||||||||
Interest expense |
(264 | ) | (296 | ) | (538 | ) | (560 | ) | ||||||||
Mortgage banking income |
6,262 | 11,686 | 12,225 | 18,648 | ||||||||||||
Income before taxes |
63,354 | 118,259 | 88,189 | 170,990 | ||||||||||||
Income tax expense |
(24,909 | ) | (46,983 | ) | (34,570 | ) | (67,627 | ) | ||||||||
Net income |
$ | 38,445 | $ | 71,276 | $ | 53,619 | $ | 103,363 | ||||||||
Basic earnings per share |
$ | 6.65 | $ | 11.64 | $ | 9.24 | $ | 16.96 | ||||||||
Diluted earnings per share |
$ | 6.48 | $ | 11.13 | $ | 8.98 | $ | 16.15 | ||||||||
Basic average shares outstanding |
5,785 | 6,123 | 5,804 | 6,095 | ||||||||||||
Diluted average shares outstanding |
5,929 | 6,405 | 5,974 | 6,402 | ||||||||||||
5
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 53,619 | $ | 103,363 | ||||
Adjustments to reconcile net income to net cash
used in operating activities: |
||||||||
Depreciation and amortization |
3,236 | 3,728 | ||||||
Excess income tax benefit from exercise of stock options |
(21,391 | ) | (58,562 | ) | ||||
Equity-based compensation expense |
31,705 | 20,826 | ||||||
Contract land deposit impairments (recoveries) |
4,069 | (949 | ) | |||||
Gain on sales of loans |
(18,865 | ) | (22,978 | ) | ||||
Mortgage loans closed |
(816,908 | ) | (1,073,149 | ) | ||||
Proceeds from sales of mortgage loans |
833,579 | 895,491 | ||||||
Principal payments on mortgage loans held for sale |
2,061 | 330 | ||||||
Distribution of earnings from unconsolidated joint ventures |
1,657 | | ||||||
Net change in assets and liabilities: |
||||||||
Increase in inventories |
(103,558 | ) | (1,983 | ) | ||||
Increase in contract land deposits |
(32,485 | ) | (19,256 | ) | ||||
Increase in receivables |
(487 | ) | (6,169 | ) | ||||
Increase in accounts payable, accrued expenses and customer deposits |
29,100 | 91,155 | ||||||
Other, net |
9,445 | 1,847 | ||||||
Net cash used in operating activities |
(25,223 | ) | (66,306 | ) | ||||
Cash flows from investing activities: |
||||||||
Purchase of marketable securities |
| (150,000 | ) | |||||
Redemption of marketable securities at maturity |
| 194,535 | ||||||
Investments in and advances to unconsolidated joint ventures |
(61,600 | ) | (2,000 | ) | ||||
Distribution of capital from unconsolidated joint ventures |
7,343 | | ||||||
Purchase of property, plant and equipment |
(7,478 | ) | (2,921 | ) | ||||
Proceeds from the sale of property, plant and equipment |
307 | 265 | ||||||
Net cash (used in) provided by investing activities |
(61,428 | ) | 39,879 | |||||
Cash flows from financing activities: |
||||||||
Purchase of treasury stock |
(300,885 | ) | (176,084 | ) | ||||
Net (repayments) borrowings under notes payable and credit lines |
(744 | ) | 66,514 | |||||
Redemption of senior notes |
| (133,370 | ) | |||||
Net repayments under non-recourse debt related to consolidated
variable interest entity |
(1,057 | ) | | |||||
Excess income tax benefit from equity-based compensation |
21,391 | 58,562 | ||||||
Exercise of stock options |
104,592 | 51,537 | ||||||
Net cash used in financing activities |
(176,703 | ) | (132,841 | ) | ||||
Net decrease in cash and cash equivalents |
(263,354 | ) | (159,268 | ) | ||||
Cash and cash equivalents, beginning of the period |
1,193,750 | 1,250,150 | ||||||
Cash and cash equivalents, end of period |
$ | 930,396 | $ | 1,090,882 | ||||
Supplemental disclosures of cash flow information: |
||||||||
Interest paid during the period, net |
$ | 1,056 | $ | 4,527 | ||||
Income taxes paid, net of refunds |
$ | 14,033 | $ | 9,710 | ||||
Supplemental disclosures of non-cash activities: |
||||||||
Investment in consolidated joint venture |
$ | | $ | (23,776 | ) | |||
6
7
June 30, 2011 | December 31, 2010 | |||||||
Contract land deposits |
$ | 197,324 | $ | 174,303 | ||||
Loss reserve on contract land deposits |
(68,122 | ) | (73,517 | ) | ||||
Contract land deposits, net |
129,202 | 100,786 | ||||||
Contingent obligations in the form of letters
of credit |
3,054 | 6,610 | ||||||
Contingent specific performance obligations (1) |
3,617 | 1,944 | ||||||
Total risk of loss |
$ | 135,873 | $ | 109,340 | ||||
(1) | At June 30, 2011 and December 31, 2010, the Company was committed to purchase 27 and 43 finished lots under specific performance obligations, respectively. |
8
Lots Under Contract With: | Not Under | |||||||||||||||
Location | NVR | Others | Contract | Totals | ||||||||||||
Spotsylvania County, VA |
143 | 16 | | 159 | ||||||||||||
Loudoun County, VA |
1,769 | 50 | | 1,819 | ||||||||||||
Prince Georges County, MD |
969 | | | 969 | ||||||||||||
Jefferson County, WV |
| | 2,659 | 2,659 | ||||||||||||
Total |
2,881 | 66 | 2,659 | 5,606 | ||||||||||||
June 30, 2011 | December 31, 2010 | |||||||
Cash |
$ | 951 | $ | 358 | ||||
Restricted cash |
852 | 501 | ||||||
Other assets |
125 | 126 | ||||||
Land under development |
21,094 | 21,386 | ||||||
Total assets |
$ | 23,022 | $ | 22,371 | ||||
Debt |
$ | 6,535 | $ | 7,592 | ||||
Accrued expenses |
492 | 59 | ||||||
Equity |
15,995 | 14,720 | ||||||
Total liabilities and equity |
$ | 23,022 | $ | 22,371 | ||||
9
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Weighted average number of shares outstanding
used to calculate basic EPS |
5,785,000 | 6,123,000 | 5,804,000 | 6,095,000 | ||||||||||||
Dilutive Securities: |
||||||||||||||||
Stock options and restricted share units |
144,000 | 282,000 | 170,000 | 307,000 | ||||||||||||
Weighted average number of shares and share
equivalents used to
calculate diluted EPS |
5,929,000 | 6,405,000 | 5,974,000 | 6,402,000 | ||||||||||||
10
Additional | Deferred | Deferred | ||||||||||||||||||||||||||
Common | Paid-In | Retained | Treasury | Comp. | Comp. | |||||||||||||||||||||||
Stock | Capital | Earnings | Stock | Trust | Liability | Total | ||||||||||||||||||||||
Balance, December 31, 2010 |
$ | 206 | $ | 951,234 | $ | 4,029,072 | $ | (3,240,138 | ) | $ | (27,582 | ) | $ | 27,582 | $ | 1,740,374 | ||||||||||||
Net income |
| | 53,619 | | | | 53,619 | |||||||||||||||||||||
Deferred compensation activity |
| | | | 2,000 | (2,000 | ) | | ||||||||||||||||||||
Purchase of common stock for
treasury |
| | | (300,885 | ) | | | (300,885 | ) | |||||||||||||||||||
Equity-based compensation |
| 31,705 | | | | | 31,705 | |||||||||||||||||||||
Tax benefit from stock options
exercised and deferred
compensation distributions |
| 21,391 | | | | | 21,391 | |||||||||||||||||||||
Proceeds from stock options
exercised |
| 104,592 | | | | | 104,592 | |||||||||||||||||||||
Treasury stock issued upon
option exercise |
| (71,623 | ) | | 71,623 | | | | ||||||||||||||||||||
Balance, June 30, 2011 |
$ | 206 | $ | 1,037,299 | $ | 4,082,691 | $ | (3,469,400 | ) | $ | (25,582 | ) | $ | 25,582 | $ | 1,650,796 | ||||||||||||
11
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Warranty reserve, beginning of period |
$ | 65,330 | $ | 65,082 | $ | 69,787 | $ | 64,417 | ||||||||
Provision |
8,041 | 14,452 | 11,773 | 22,673 | ||||||||||||
Payments |
(10,567 | ) | (9,353 | ) | (18,756 | ) | (16,909 | ) | ||||||||
Warranty reserve, end of period |
$ | 62,804 | $ | 70,181 | $ | 62,804 | $ | 70,181 | ||||||||
12
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Homebuilding Mid Atlantic |
$ | 404,253 | $ | 560,105 | $ | 717,193 | $ | 899,574 | ||||||||
Homebuilding North East |
67,715 | 84,962 | 106,908 | 149,119 | ||||||||||||
Homebuilding Mid East |
143,381 | 194,736 | 241,533 | 319,725 | ||||||||||||
Homebuilding South East |
67,314 | 107,169 | 119,773 | 155,935 | ||||||||||||
Mortgage Banking |
13,218 | 17,532 | 24,978 | 30,365 | ||||||||||||
Total Consolidated Revenues |
$ | 695,881 | $ | 964,504 | $ | 1,210,385 | $ | 1,554,718 | ||||||||
Profit: |
||||||||||||||||
Homebuilding Mid Atlantic |
$ | 45,327 | $ | 77,058 | $ | 71,203 | $ | 114,918 | ||||||||
Homebuilding North East |
6,676 | 6,173 | 7,799 | 11,928 | ||||||||||||
Homebuilding Mid East |
8,722 | 21,382 | 10,329 | 32,316 | ||||||||||||
Homebuilding South East |
5,251 | 9,956 | 7,464 | 11,013 | ||||||||||||
Mortgage Banking |
7,041 | 12,537 | 13,782 | 19,965 | ||||||||||||
Total Segment Profit |
73,017 | 127,106 | 110,577 | 190,140 | ||||||||||||
Contract land deposit impairment reserve (1) |
(1,375 | ) | 5,510 | (2,505 | ) | 7,518 | ||||||||||
Equity-based compensation expense (2) |
(16,125 | ) | (15,148 | ) | (31,705 | ) | (20,826 | ) | ||||||||
Corporate capital allocation (3) |
17,897 | 17,953 | 33,320 | 32,433 | ||||||||||||
Unallocated corporate overhead (4) |
(14,401 | ) | (16,290 | ) | (30,861 | ) | (36,969 | ) | ||||||||
Consolidation adjustments and other (5) |
4,448 | 929 | 9,573 | 2,573 | ||||||||||||
Corporate interest expense (6) |
(107 | ) | (1,801 | ) | (210 | ) | (3,879 | ) | ||||||||
Reconciling items sub-total |
(9,663 | ) | (8,847 | ) | (22,388 | ) | (19,150 | ) | ||||||||
Consolidated income before taxes |
$ | 63,354 | $ | 118,259 | $ | 88,189 | $ | 170,990 | ||||||||
13
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Assets: |
||||||||
Homebuilding Mid Atlantic |
$ | 629,559 | $ | 492,148 | ||||
Homebuilding North East |
50,141 | 35,827 | ||||||
Homebuilding Mid East |
115,495 | 78,246 | ||||||
Homebuilding South East |
48,494 | 43,041 | ||||||
Mortgage Banking |
195,282 | 196,441 | ||||||
Total Segment Assets |
1,038,971 | 845,703 | ||||||
Consolidated variable interest entity |
23,022 | 22,371 | ||||||
Cash and cash equivalents |
927,370 | 1,190,731 | ||||||
Deferred taxes |
172,318 | 184,930 | ||||||
Intangible assets |
48,927 | 48,927 | ||||||
Contract land deposit reserve |
(68,122 | ) | (73,517 | ) | ||||
Consolidation adjustments and other |
33,189 | 40,916 | ||||||
Reconciling items sub-total |
1,136,704 | 1,414,358 | ||||||
Consolidated Assets |
$ | 2,175,675 | $ | 2,260,061 | ||||
(1) | This item represents changes to the contract land deposit impairment reserve, which is not allocated to the reportable segments. | |
(2) | The year-to-date increase in equity-based compensation expense is due primarily to the issuance of non-qualified stock options and restricted share units from the 2010 Equity Incentive Plan in the second quarter of 2010. | |
(3) | This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segments monthly average asset balance, and is as follows for the periods presented: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Homebuilding Mid Atlantic |
$ | 12,105 | $ | 11,869 | $ | 22,936 | $ | 21,664 | ||||||||
Homebuilding North East |
1,566 | 1,672 | 2,729 | 3,222 | ||||||||||||
Homebuilding Mid East |
2,840 | 2,661 | 5,044 | 4,737 | ||||||||||||
Homebuilding South East |
1,386 | 1,751 | 2,611 | 2,810 | ||||||||||||
Total |
$ | 17,897 | $ | 17,953 | $ | 33,320 | $ | 32,433 | ||||||||
(4) | The decrease in unallocated corporate overhead in the three and six month periods of 2011 is primarily attributable to a decrease in management incentive costs period over period. | |
(5) | The favorable variance in consolidation adjustments and other in 2011 from 2010 is primarily attributable to changes in the corporate consolidation entries based on production volumes in the respective quarters. | |
(6) | The decrease in corporate interest expense is attributable to the redemption upon maturity of the outstanding senior notes in the second quarter of 2010 and the termination of the working capital credit facility in the fourth quarter of 2010. |
14
i) | the assumed gain/loss of the expected resultant loan sale (level 2); |
ii) | the effects of interest rate movements between the date of the rate lock and the balance sheet date (level 2); and |
iii) | the value of the servicing rights associated with the loan (level 2). |
15
Balance | Fair | |||||||
Sheet | Value | |||||||
Location | June 30, 2011 | |||||||
Derivative Assets: |
||||||||
Forward Sales Contracts and Rate
Lock Commitments |
NVRM - Other assets | $ | 1,313 | |||||
Assumed | Interest | Total Fair | ||||||||||||||||||||||
Notional or | Gain (Loss) | Rate | Servicing | Security | Value | |||||||||||||||||||
Principal | From Loan | Movement | Rights | Price | Adjustment | |||||||||||||||||||
Amount | Sale | Effect | Value | Change | Gain/(Loss) | |||||||||||||||||||
Rate lock commitments |
$ | 158,084 | $ | (536 | ) | $ | (887 | ) | $ | 1,896 | $ | | $ | 473 | ||||||||||
Forward sales contracts |
$ | 316,053 | | | | 840 | 840 | |||||||||||||||||
Mortgages held for sale |
$ | 179,833 | (812 | ) | 246 | 2,258 | | 1,692 | ||||||||||||||||
Total Fair Value Measurement, June 30, 2011 | (1,348 | ) | (641 | ) | 4,154 | 840 | 3,005 | |||||||||||||||||
Less: Fair Value
Measurement, December 31, 2010 |
(1,366 | ) | (6,534 | ) | 4,004 | 4,904 | 1,008 | |||||||||||||||||
Total Fair Value Adjustment
for the period ended June 30, 2011 |
$ | 18 | $ | 5,893 | $ | 150 | $ | (4,064 | ) | $ | 1,997 | |||||||||||||
16
17
18
Item 2. | Managements Discussion and Analysis of Financial Condition and
Results of Operations (dollars in thousands) |
Mid Atlantic:
|
Maryland, Virginia, West Virginia and Delaware | |
North East:
|
New Jersey and eastern Pennsylvania | |
Mid East:
|
Kentucky, New York, Ohio, western Pennsylvania and Indiana | |
South East:
|
North Carolina, South Carolina, Tennessee and Florida |
19
20
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 682,663 | $ | 946,972 | $ | 1,185,407 | $ | 1,524,353 | ||||||||
Cost of sales |
$ | 558,601 | $ | 771,475 | $ | 976,521 | $ | 1,242,544 | ||||||||
Gross profit margin percentage |
18.2 | % | 18.5 | % | 17.6 | % | 18.5 | % | ||||||||
Selling, general and administrative |
$ | 68,045 | $ | 69,137 | $ | 135,233 | $ | 129,878 | ||||||||
Settlements (units) |
2,207 | 3,345 | 3,841 | 5,264 | ||||||||||||
Average settlement price |
$ | 309.2 | $ | 283.0 | $ | 308.5 | $ | 289.5 | ||||||||
New orders (units) |
2,468 | 2,559 | 4,871 | 5,499 | ||||||||||||
Average new order price |
$ | 303.5 | $ | 309.6 | $ | 299.7 | $ | 297.4 | ||||||||
New order cancellation rate |
12.5 | % | 12.0 | % | 12.4 | % | 10.5 | % | ||||||||
Backlog (units) |
3,946 | 3,766 | ||||||||||||||
Average backlog price |
$ | 312.5 | $ | 315.3 |
21
22
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Mid Atlantic |
$ | 404,253 | $ | 560,105 | $ | 717,193 | $ | 899,574 | ||||||||
North East |
67,715 | 84,962 | 106,908 | 149,119 | ||||||||||||
Mid East |
143,381 | 194,736 | 241,533 | 319,725 | ||||||||||||
South East |
67,314 | 107,169 | 119,773 | 155,935 | ||||||||||||
Total |
$ | 682,663 | $ | 946,972 | $ | 1,185,407 | $ | 1,524,353 | ||||||||
Gross profit margin: |
||||||||||||||||
Mid Atlantic |
$ | 78,722 | $ | 110,931 | $ | 136,357 | $ | 178,072 | ||||||||
North East |
12,867 | 12,381 | 19,216 | 23,842 | ||||||||||||
Mid East |
23,261 | 35,011 | 37,708 | 57,289 | ||||||||||||
South East |
11,990 | 17,786 | 20,422 | 25,473 | ||||||||||||
Total |
$ | 126,840 | $ | 176,109 | $ | 213,703 | $ | 284,676 | ||||||||
Segment profit: |
||||||||||||||||
Mid Atlantic |
$ | 45,327 | $ | 77,058 | $ | 71,203 | $ | 114,918 | ||||||||
North East |
6,676 | 6,173 | 7,799 | 11,928 | ||||||||||||
Mid East |
8,722 | 21,382 | 10,329 | 32,316 | ||||||||||||
South East |
5,251 | 9,956 | 7,464 | 11,013 | ||||||||||||
Total |
$ | 65,976 | $ | 114,569 | $ | 96,795 | $ | 170,175 | ||||||||
23
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Gross profit margin percentage: |
||||||||||||||||
Mid Atlantic |
19.5 | % | 19.8 | % | 19.0 | % | 19.8 | % | ||||||||
North East |
19.0 | % | 14.6 | % | 18.0 | % | 16.0 | % | ||||||||
Mid East |
16.2 | % | 18.0 | % | 15.6 | % | 17.9 | % | ||||||||
South East |
17.8 | % | 16.6 | % | 17.1 | % | 16.3 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
Units | Average Price | Units | Average Price | |||||||||||||||||||||||||||||
Settlements: |
||||||||||||||||||||||||||||||||
Mid Atlantic |
1,076 | 1,672 | $ | 375.7 | $ | 335.0 | 1,912 | 2,607 | $ | 375.1 | $ | 345.0 | ||||||||||||||||||||
North East |
217 | 282 | $ | 312.1 | $ | 301.3 | 345 | 502 | $ | 309.9 | $ | 297.0 | ||||||||||||||||||||
Mid East |
612 | 922 | $ | 234.1 | $ | 211.0 | 1,043 | 1,487 | $ | 231.4 | $ | 214.9 | ||||||||||||||||||||
South East |
302 | 469 | $ | 222.5 | $ | 228.5 | 541 | 668 | $ | 221.0 | $ | 233.4 | ||||||||||||||||||||
Total |
2,207 | 3,345 | $ | 309.2 | $ | 283.0 | 3,841 | 5,264 | $ | 308.5 | $ | 289.5 | ||||||||||||||||||||
New orders, net of cancellations: |
||||||||||||||||||||||||||||||||
Mid Atlantic |
1,219 | 1,303 | $ | 367.8 | $ | 367.5 | 2,364 | 2,694 | $ | 362.6 | $ | 358.9 | ||||||||||||||||||||
North East |
208 | 219 | $ | 308.4 | $ | 332.0 | 460 | 479 | $ | 301.0 | $ | 317.8 | ||||||||||||||||||||
Mid East |
691 | 749 | $ | 236.0 | $ | 227.5 | 1,382 | 1,628 | $ | 233.7 | $ | 216.9 | ||||||||||||||||||||
South East |
350 | 288 | $ | 210.0 | $ | 244.5 | 665 | 698 | $ | 212.3 | $ | 233.9 | ||||||||||||||||||||
Total |
2,468 | 2,559 | $ | 303.5 | $ | 309.6 | 4,871 | 5,499 | $ | 299.7 | $ | 297.4 | ||||||||||||||||||||
Backlog: |
||||||||||||||||||||||||||||||||
Mid Atlantic |
2,047 | 1,950 | $ | 377.2 | $ | 377.4 | ||||||||||||||||||||||||||
North East |
347 | 302 | $ | 302.2 | $ | 336.2 | ||||||||||||||||||||||||||
Mid East |
1,069 | 1,101 | $ | 236.7 | $ | 226.4 | ||||||||||||||||||||||||||
South East |
483 | 413 | $ | 213.9 | $ | 244.1 | ||||||||||||||||||||||||||
Total |
3,946 | 3,766 | $ | 312.5 | $ | 315.3 | ||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
New order cancellation rate: |
||||||||||||||||
Mid Atlantic |
12.0 | % | 9.5 | % | 12.5 | % | 8.7 | % | ||||||||
North East |
12.6 | % | 16.1 | % | 10.3 | % | 14.9 | % | ||||||||
Mid East |
13.0 | % | 11.9 | % | 12.6 | % | 10.6 | % | ||||||||
South East |
13.4 | % | 19.3 | % | 13.0 | % | 13.4 | % | ||||||||
Average active communities: |
||||||||||||||||
Mid Atlantic |
186 | 169 | 184 | 165 | ||||||||||||
North East |
31 | 34 | 32 | 34 | ||||||||||||
Mid East |
112 | 110 | 110 | 109 | ||||||||||||
South East |
57 | 60 | 57 | 58 | ||||||||||||
Total |
386 | 373 | 383 | 366 | ||||||||||||
24
As of June 30, | ||||||||
2011 | 2010 | |||||||
Sold inventory: |
||||||||
Mid Atlantic |
$ | 252,457 | $ | 218,264 | ||||
North East |
32,230 | 37,199 | ||||||
Mid East |
73,107 | 58,597 | ||||||
South East |
28,750 | 25,019 | ||||||
Total (1) |
$ | 386,544 | $ | 339,079 | ||||
Unsold lots and housing units inventory: |
||||||||
Mid Atlantic |
$ | 37,989 | $ | 30,980 | ||||
North East |
2,957 | 4,235 | ||||||
Mid East |
8,451 | 12,256 | ||||||
South East |
7,068 | 6,742 | ||||||
Total (1) |
$ | 56,465 | $ | 54,213 | ||||
(1) | The reconciling items between segment inventory and consolidated inventory include certain consolidation adjustments necessary to convert the reportable segments results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes and are not allocated to our operating segments. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Unsold inventory impairments: |
||||||||||||||||
Mid Atlantic |
$ | 278 | $ | 223 | $ | 659 | $ | 261 | ||||||||
North East |
159 | 27 | 226 | 297 | ||||||||||||
Mid East |
190 | 192 | 340 | 258 | ||||||||||||
South East |
| 261 | 129 | 275 | ||||||||||||
Total |
$ | 627 | $ | 703 | $ | 1,354 | $ | 1,091 | ||||||||
As of June 30, | ||||||||
2011 | 2010 | |||||||
Total lots controlled: |
||||||||
Mid Atlantic |
30,725 | 27,016 | ||||||
North East |
4,240 | 3,548 | ||||||
Mid East |
11,690 | 10,370 | ||||||
South East |
7,180 | 6,544 | ||||||
Total |
53,835 | 47,478 | ||||||
Lots included in impairment reserve: |
||||||||
Mid Atlantic |
6,090 | 6,552 | ||||||
North East |
517 | 456 | ||||||
Mid East |
1,640 | 1,892 | ||||||
South East |
1,568 | 1,278 | ||||||
Total |
9,815 | 10,178 | ||||||
25
As of June 30, | ||||||||
2011 | 2010 | |||||||
Contract land deposits, net: |
||||||||
Mid Atlantic |
$ | 100,708 | $ | 56,869 | ||||
North East |
9,663 | 6,489 | ||||||
Mid East |
15,654 | 8,274 | ||||||
South East |
6,231 | 4,848 | ||||||
Total |
$ | 132,256 | $ | 76,480 | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Contract land deposit impairments: |
||||||||||||||||
Mid Atlantic |
$ | 1,199 | $ | 1,327 | $ | 1,426 | $ | 1,327 | ||||||||
North East |
| 3,689 | 7 | 3,689 | ||||||||||||
Mid East |
79 | 94 | 62 | 180 | ||||||||||||
South East |
68 | 1,255 | 68 | 1,255 | ||||||||||||
Total |
$ | 1,346 | $ | 6,365 | $ | 1,563 | $ | 6,451 | ||||||||
26
27
28
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Homebuilding Consolidated Gross Profit: |
||||||||||||||||
Homebuilding Mid Atlantic |
$ | 78,722 | $ | 110,931 | $ | 136,357 | $ | 178,072 | ||||||||
Homebuilding North East |
12,867 | 12,381 | 19,216 | 23,842 | ||||||||||||
Homebuilding Mid East |
23,261 | 35,011 | 37,708 | 57,289 | ||||||||||||
Homebuilding South East |
11,990 | 17,786 | 20,422 | 25,473 | ||||||||||||
Consolidation adjustments and other |
(2,778 | ) | (612 | ) | (4,817 | ) | (2,867 | ) | ||||||||
Segment gross profit |
$ | 124,062 | $ | 175,497 | $ | 208,886 | $ | 281,809 | ||||||||
29
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Homebuilding Consolidated Profit
Before Tax: |
||||||||||||||||
Homebuilding Mid Atlantic |
$ | 45,327 | $ | 77,058 | $ | 71,203 | $ | 114,918 | ||||||||
Homebuilding North East |
6,676 | 6,173 | 7,799 | 11,928 | ||||||||||||
Homebuilding Mid East |
8,722 | 21,382 | 10,329 | 32,316 | ||||||||||||
Homebuilding South East |
5,251 | 9,956 | 7,464 | 11,013 | ||||||||||||
Reconciling items: |
||||||||||||||||
Contract land deposit impairments (1) |
(1,375 | ) | 5,510 | (2,505 | ) | 7,518 | ||||||||||
Equity-based compensation expense (2) |
(15,346 | ) | (14,297 | ) | (30,148 | ) | (19,509 | ) | ||||||||
Corporate capital allocation (3) |
17,897 | 17,953 | 33,320 | 32,433 | ||||||||||||
Unallocated corporate overhead (4) |
(14,401 | ) | (16,290 | ) | (30,861 | ) | (36,969 | ) | ||||||||
Consolidation adjustments and other (5) |
4,448 | 929 | 9,573 | 2,573 | ||||||||||||
Corporate interest expense (6) |
(107 | ) | (1,801 | ) | (210 | ) | (3,879 | ) | ||||||||
Reconciling items sub-total |
(8,884 | ) | (7,996 | ) | (20,831 | ) | (17,833 | ) | ||||||||
Homebuilding consolidated
profit before taxes |
$ | 57,092 | $ | 106,573 | $ | 75,964 | $ | 152,342 | ||||||||
(1) | This item represents changes to the contract land deposit impairment reserve which are not allocated to the reportable segments. | |
(2) | The year-to-date increase in equity-based compensation expense is due primarily to the issuance of non-qualified stock options and restricted share units from the 2010 Equity Incentive Plan in the second quarter of 2010. | |
(3) | This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segments monthly average asset balance, and is as follows for the periods presented: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Homebuilding Mid Atlantic |
$ | 12,105 | $ | 11,869 | $ | 22,936 | $ | 21,664 | ||||||||
Homebuilding North East |
1,566 | 1,672 | 2,729 | 3,222 | ||||||||||||
Homebuilding Mid East |
2,840 | 2,661 | 5,044 | 4,737 | ||||||||||||
Homebuilding South East |
1,386 | 1,751 | 2,611 | 2,810 | ||||||||||||
Total |
$ | 17,897 | $ | 17,953 | $ | 33,320 | $ | 32,433 | ||||||||
(4) | The decrease in unallocated corporate overhead in the three and six month periods of 2011 is primarily attributable to a decrease in management incentive costs period over period. | |
(5) | The favorable variance in consolidation adjustments and other in 2011 from 2010 is primarily attributable to changes in the corporate consolidation entries based on production volumes in the respective quarters. | |
(6) | The decrease in corporate interest expense is attributable to the redemption upon maturity of the outstanding senior notes in the second quarter of 2010 and the termination of the working capital credit facility in the fourth quarter of 2010. |
30
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Loan closing volume: |
||||||||||||||||
Total principal |
$ | 504,116 | $ | 706,551 | $ | 857,687 | $ | 1,124,593 | ||||||||
Loan volume mix: |
||||||||||||||||
Adjustable rate mortgages |
10 | % | 4 | % | 10 | % | 3 | % | ||||||||
Fixed-rate mortgages |
90 | % | 96 | % | 90 | % | 97 | % | ||||||||
Operating Profit: |
||||||||||||||||
Segment Profit |
$ | 7,040 | $ | 12,537 | $ | 13,782 | $ | 19,965 | ||||||||
Stock option expense |
(778 | ) | (851 | ) | (1,557 | ) | (1,317 | ) | ||||||||
Mortgage banking income
before tax |
$ | 6,262 | $ | 11,686 | $ | 12,225 | $ | 18,648 | ||||||||
Capture rate: |
90 | % | 90 | % | 89 | % | 90 | % | ||||||||
Mortgage Banking Fees: |
||||||||||||||||
Net gain on sale of loans |
$ | 9,735 | $ | 13,049 | $ | 18,865 | $ | 22,978 | ||||||||
Title services |
3,378 | 4,377 | 5,836 | 7,058 | ||||||||||||
Servicing fees |
105 | 106 | 277 | 329 | ||||||||||||
$ | 13,218 | $ | 17,532 | $ | 24,978 | $ | 30,365 | |||||||||
31
32
33
34
35
36
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds (Dollars in thousands, except per share data) |
Maximum Number | ||||||||||||||||
Total Number of | (or Approximate | |||||||||||||||
Shares Purchased | Dollar Value) of | |||||||||||||||
Total Number | Average | as Part of Publicly | Shares that May Yet | |||||||||||||
of Shares | Price Paid | Announced Plans | Be Purchased Under | |||||||||||||
Period | Purchased | per Share | or Programs | the Plans or Programs | ||||||||||||
April 1 - 30, 2011 |
2,700 | $ | 718.29 | 2,700 | $ | 43,852 | ||||||||||
May 1 - 31, 2011 (1) |
167,044 | $ | 732.26 | 167,044 | $ | 221,531 | ||||||||||
June 1 - 30, 2011 |
156,273 | $ | 724.48 | 156,273 | $ | 108,314 | ||||||||||
Total |
326,017 | $ | 728.42 | 326,017 | ||||||||||||
(1) | 59,566 shares were purchased under the 2010 Authorization, which fully utilized the 2010 Authorization. The remaining 107,478 shares were purchased under the 2011 Authorization. |
31.1
|
Certification of NVRs Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
31.2
|
Certification of NVRs Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
32
|
Certification of NVRs Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. |
37
101.INS
|
XBRL Instance Document | |
101.SCH
|
XBRL Taxonomy Extension Schema Document | |
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document |
38
August 8, 2011 | NVR, Inc. |
|||
By: | /s/ Dennis M. Seremet | |||
Dennis M. Seremet | ||||
Senior Vice President, Chief Financial Officer and Treasurer |
39
Exhibit | ||
Number | Description | |
31.1
|
Certification of NVRs Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
31.2
|
Certification of NVRs Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
32
|
Certification of NVRs Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
101.INS
|
XBRL Instance Document | |
101.SCH
|
XBRL Taxonomy Extension Schema Document | |
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document |
40
1. | I have reviewed this report on Form 10-Q of NVR, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 8, 2011 | By: | /s/ Paul C. Saville | ||
Paul C. Saville | ||||
President and Chief Executive Officer | ||||
1. | I have reviewed this report on Form 10-Q of NVR, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 8, 2011 | By: | /s/ Dennis M. Seremet | ||
Dennis M. Seremet | ||||
Senior Vice President, Chief Financial Officer and Treasurer |
||||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NVR, Inc. |
Date: August 8, 2011 | By: | /s/ Paul C. Saville | ||
Paul C. Saville | ||||
President and Chief Executive Officer | ||||
By: | /s/ Dennis M. Seremet | |||
Dennis M. Seremet | ||||
Senior Vice President, Chief Financial Officer and Treasurer |
||||
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Shareholders' equity: | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 20,556,198 | 20,557,913 |
Deferred compensation trust, shares | 152,964 | 158,894 |
Treasury stock, shares | 14,977,205 | 14,894,357 |
Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Mortgage banking fees | $ 13,218 | $ 17,532 | $ 24,978 | $ 30,365 |
Income before taxes | 63,354 | 118,259 | 88,189 | 170,990 |
Income tax expense | (24,909) | (46,983) | (34,570) | (67,627) |
Net income | 38,445 | 71,276 | 53,619 | 103,363 |
Basic earnings per share | $ 6.65 | $ 11.64 | $ 9.24 | $ 16.96 |
Diluted earnings per share | $ 6.48 | $ 11.13 | $ 8.98 | $ 16.15 |
Basic average shares outstanding | 5,785 | 6,123 | 5,804 | 6,095 |
Diluted average shares outstanding | 5,929 | 6,405 | 5,974 | 6,402 |
Homebuilding
|
||||
Revenues | 682,663 | 946,972 | 1,185,407 | 1,524,353 |
Other income | 1,362 | 2,110 | 2,820 | 4,479 |
Cost of sales | (558,601) | (771,475) | (976,521) | (1,242,544) |
Selling, general and administrative | (68,045) | (69,137) | (135,233) | (129,878) |
Operating income | 57,379 | 108,470 | 76,473 | 156,410 |
Interest expense | (287) | (1,897) | (509) | (4,068) |
Income before taxes | 57,092 | 106,573 | 75,964 | 152,342 |
Mortgage Banking
|
||||
Mortgage banking fees | 13,218 | 17,532 | 24,978 | 30,365 |
Interest income | 1,085 | 1,492 | 2,200 | 2,248 |
Other income | 121 | 233 | 160 | 399 |
General and administrative | (7,898) | (7,275) | (14,575) | (13,804) |
Interest expense | (264) | (296) | (538) | (560) |
Income before taxes | $ 6,262 | $ 11,686 | $ 12,225 | $ 18,648 |
Fair Value (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Fair Value [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Undesignated derivative instruments |
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Unrealized gain or loss from change in fair value measurements included in earnings as a component of mortgage banking fees |
|
Document and Entity Information (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Aug. 02, 2011
|
Jun. 30, 2010
|
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NVR INC | ||
Entity Central Index Key | 0000906163 | ||
Document Type | 10-Q | ||
Document Period End Date | Jun. 30, 2011 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q2 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 3,693,820,000 | ||
Entity Common Stock, Shares Outstanding | 5,431,193 |
Variable Interest Entities and Joint Ventures (Details 2) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Condensed Balance Sheet Of Consolidated Joint Venture Abstract | ||
Cash | $ 951 | $ 358 |
Restricted cash | 852 | 501 |
Other assets | 125 | 126 |
Land under development | 21,094 | 21,386 |
Total assets | 23,022 | 22,371 |
Debt | 6,535 | 7,592 |
Accrued expenses | 492 | 59 |
Equity | 15,995 | 14,720 |
Total liabilities and equity | $ 23,022 | $ 22,371 |
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Shareholders' Equity
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Shareholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity |
7. Shareholders’ Equity
A summary of changes in shareholders’ equity is presented below:
The Company repurchased 411,477 shares of its common stock during the six months ended
June 30, 2011 at an aggregate purchase price of $300,885. The Company settles option exercises by
issuing shares of treasury stock to option holders. Shares are relieved from the treasury account
based on the weighted average cost basis of treasury shares acquired. Approximately 329,000
options to purchase shares of the Company’s common stock were exercised during the six months ended
June 30, 2011.
|
Variable Interest Entities and Joint Ventures (Details Textuals) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Variable Interest Entities and Joint Ventures (Textuals) [Abstract] | ||
Maximum range of deposits required under the purchase agreements | 10.00% | |
Power of developer's equity holders to direct operating activities of the development entity | 100.00% | |
Finished lots committed to purchase under specific performance obligations | 27 | 43 |
Aggregate investment | $ 77,200 | |
Number of Joint Ventures | 4 | |
Number of Joint Ventures NVR is Not Primary Beneficiary | 3 | |
Expected production of finished lots | 6,600 | |
Additional funding commitments in the aggregate | 5,000 | |
Investment in an unconsolidated joint venture | $ 61,250 | |
Interest in an unconsolidated joint venture | 50.00% | |
Parcels of land from entities controlled by a joint venture investment | 9 | |
Lots controlled under an unconsolidated joint venture | 5,600 | |
Total lots under contract with NVR under the joint venture | 2,881 |
Segment Disclosures (Details Textuals)
|
Jun. 30, 2011
|
---|---|
Homebuilding [Member]
|
|
Segment Reporting Information [Line Items] | |
Number of reportable business segments | 4 |
Mortgage Banking [Member]
|
|
Segment Reporting Information [Line Items] | |
Number of reportable business segments | 1 |
Commitments and Contingencies
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies |
12. Commitments and Contingencies
On July 18, 2007, former and current employees filed lawsuits against the Company in the Court
of Common Pleas in Allegheny County, Pennsylvania and Hamilton County, Ohio, in Superior Court in
Durham County, North Carolina, and in the Circuit Court in Montgomery County, Maryland, and on July
19, 2007 in the Superior Court in New Jersey, alleging that the Company incorrectly classified its
sales and marketing representatives as being exempt from overtime wages. These lawsuits are similar
in nature to another lawsuit filed on October 29, 2004 by another former employee in the United
States District Court for the Western District of New York. The complaints seek injunctive relief,
an award of unpaid wages, including fringe benefits, liquidated damages equal to the overtime wages
allegedly due and not paid, attorney and other fees and interest, and where available, multiple
damages. The suits were filed as purported class actions. However, while a number of individuals
have filed consents to join and assert federal claims in the New York action, none of the groups of
employees that the lawsuits purport to represent have been certified as a class. The lawsuits filed
in Ohio, Pennsylvania, Maryland, New Jersey and North Carolina have been stayed pending further
developments in the New York action.
The Company believes that its compensation practices in regard to sales and marketing
representatives are entirely lawful and in compliance with two letter rulings from the United
States Department of Labor (“DOL”) issued in January 2007. The two courts to most recently consider
similar claims against other homebuilders have acknowledged the DOL’s position that sales and
marketing representatives were properly classified as exempt from overtime wages and the only court
to have directly addressed the exempt status of such employees concluded that the DOL’s position
was valid. Accordingly, the Company has vigorously defended and intends to continue to vigorously
defend these lawsuits. Because the Company is unable to determine the likelihood of an unfavorable
outcome of this case, or the amount of damages, if any, the Company has not recorded any associated
liabilities in the accompanying consolidated balance sheets.
In June 2010, the Company received a Request for Information from the United States
Environmental Protection Agency (the “EPA”) pursuant to Section 308 of the Clean Water Act. The
request sought information about storm water discharge practices in connection with homebuilding
projects completed or underway by the Company. The Company has cooperated with this request, has
provided information to the EPA and intends to continue cooperating with any future EPA inquiries.
At this time, the Company cannot predict the outcome of this inquiry, nor can it reasonably
estimate the potential costs that may be associated with its eventual resolution.
In April 2010, NVRM received a Report of Examination (“ROE”) from the Office of the
Commissioner of Banks of the State of North Carolina (the “NCCOB”) reporting certain findings that
resulted from the NCCOB’s examination of selected files relating to loans originated by NVRM in
North Carolina between August 1, 2006 and August 31, 2009. The ROE alleged that certain of the loan
files reflected violations of North Carolina and/or U.S. lending or consumer protection laws. The
ROE requested that NVRM correct or otherwise address the alleged violations and in some instances
requested that NVRM undertake an examination of all of its other loans in North Carolina to
determine whether similar alleged violations may have occurred, and if so, to take corrective
action. NVRM responded to the ROE by letter dated June 10, 2010, contesting the findings and
allegations, providing factual information to correct certain of the findings, and
refuting the
NCCOB’s interpretation of applicable law. On November 15, 2010, the NCCOB provided a written
response to NVRM’s June 10, 2010 letter closing certain alleged violations while reasserting
certain other violations. On January 12, 2011, NVRM responded to the NCCOB’s November 15, 2010
letter providing additional factual information to address the remaining findings, and refuting the
NCCOB’s interpretation of applicable law. Accordingly, while the Company believes that it has
provided the NCCOB with all necessary information to resolve the matter, the Company does not
believe that it can determine the likely outcome of the matter. However, the Company does not
expect resolution of the matter to have a material adverse effect on the Company’s financial
position, results of operations or liquidity.
The Company and its subsidiaries are also involved in various other litigation arising in the
ordinary course of business. In the opinion of management, and based on advice of legal counsel,
this litigation is not expected to have a material adverse effect on the financial position,
results of operations or cash flows of the Company. Legal costs incurred in connection with
outstanding litigation are expensed as incurred.
|
Land Under Development
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Land Under Development [Abstract] | |
Land Under Development |
3. Land Under Development
On a limited basis, NVR directly acquires raw parcels of land already zoned for its intended
use to develop into finished lots. Land under development includes the land acquisition costs,
direct improvement costs, capitalized interest, where applicable, and real estate taxes. As of
June 30, 2011, NVR directly owned three separate raw parcels of land with a carrying value of
approximately $78,500 that it intends to develop into approximately 850 finished lots for use in
its homebuilding operations. All three of the raw parcels are located in the Washington, D.C.
metropolitan area and none of them had any indicators of impairment as of June 30, 2011. Based on
current market conditions, NVR may, on a very limited basis, directly acquire additional raw
parcels to develop into finished lots. See the Overview section of Item 2, Management’s Discussion
and Analysis of Financial Condition and Results of Operations included herein for additional
discussion.
|
Segment Disclosures (Details 1) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Profit | ||||
Total segment profit | $ 63,354 | $ 118,259 | $ 88,189 | $ 170,990 |
Equity-based compensation expense | 16,125 | 15,148 | 31,705 | 20,826 |
Homebuilding Mid Atlantic [Member]
|
||||
Profit | ||||
Total segment profit | 45,327 | 77,058 | 71,203 | 114,918 |
Reportable Segment [Member]
|
||||
Profit | ||||
Total segment profit | 73,017 | 127,106 | 110,577 | 190,140 |
Significant Reconciling Items [Member]
|
||||
Profit | ||||
Total segment Profit | (9,663) | (8,847) | (22,388) | (19,150) |
Homebuilding North East [Member]
|
||||
Profit | ||||
Total segment profit | 6,676 | 6,173 | 7,799 | 11,928 |
Homebuilding Mid East [Member]
|
||||
Profit | ||||
Total segment profit | 8,722 | 21,382 | 10,329 | 32,316 |
Homebuilding South East [Member]
|
||||
Profit | ||||
Total segment profit | 5,251 | 9,956 | 7,464 | 11,013 |
Mortgage Banking [Member]
|
||||
Profit | ||||
Total segment profit | 6,262 | 11,686 | 12,225 | 18,648 |
Mortgage Banking | 7,041 | 12,537 | 13,782 | 19,965 |
Contract Land Deposit Impairment Reserve [Member]
|
||||
Profit | ||||
Total segment Profit | (1,375) | 5,510 | (2,505) | 7,518 |
Corporate Capital Allocation [Member]
|
||||
Profit | ||||
Total segment Profit | 17,897 | 17,953 | 33,320 | 32,433 |
Unallocated Corporate Overhead [Member]
|
||||
Profit | ||||
Total segment Profit | (14,401) | (16,290) | (30,861) | (36,969) |
Consolidation Adjustments And Other [Member]
|
||||
Profit | ||||
Total segment Profit | 4,448 | 929 | 9,573 | 2,573 |
Corporate Interest Expense [Member]
|
||||
Profit | ||||
Total segment Profit | $ (107) | $ (1,801) | $ (210) | $ (3,879) |
Segment Disclosures
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Segment Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Disclosures |
9. Segment Disclosures
The following disclosure includes four homebuilding reportable segments that aggregate
geographically the Company’s homebuilding operating segments, and the mortgage banking operations
presented as a single reportable segment. The homebuilding reportable segments are comprised of
operating divisions in the following geographic areas:
Homebuilding Mid Atlantic - Virginia, West Virginia, Maryland and Delaware
Homebuilding North East - New Jersey and eastern Pennsylvania
Homebuilding Mid East - Kentucky, New York, Ohio, western Pennsylvania and
Indiana
Homebuilding South East - North Carolina, South Carolina, Florida and Tennessee
Homebuilding profit before tax includes all revenues and income generated from the sale of
homes, less the cost of homes sold, selling, general and administrative expenses, and a corporate
capital allocation charge. The corporate capital allocation charge eliminates in consolidation, is
based on the segment’s average net assets employed, and is charged using a consistent methodology
in the periods presented. The corporate capital allocation charged to the operating segment allows
the Chief Operating Decision Maker to determine whether the operating segment’s results are
providing the desired rate of return after covering the Company’s cost of capital. The Company
records charges on contract land deposits when it is determined that it is probable that recovery
of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits
are charged to the operating segment upon the determination to terminate a finished lot purchase
agreement with the developer, or to restructure a lot purchase agreement resulting in the
forfeiture of the deposit. Mortgage banking profit before tax consists of revenues generated from
mortgage financing, title insurance and closing services, less the costs of such services and
general and administrative costs. Mortgage banking operations are not charged a capital allocation
charge.
In addition to the corporate capital allocation and contract land deposit impairments
discussed above, the other reconciling items between segment profit and consolidated profit before
tax include unallocated corporate overhead (including all management incentive compensation),
equity-based compensation expense, consolidation adjustments and external corporate interest
expense. NVR’s overhead functions, such as accounting, treasury, human resources, etc., are
centrally performed and the costs are not allocated to the Company’s operating segments.
Consolidation adjustments consist of such items necessary to convert the
reportable segments’
results, which are predominantly maintained on a cash basis, to a full accrual basis for external
financial statement presentation purposes, and are not allocated to the Company’s operating
segments. Likewise, equity-based compensation expense is not charged to the operating segments.
Following are tables presenting revenues, segment profit and segment assets for each
reportable segment, with reconciliations to the amounts reported for the consolidated enterprise,
where applicable:
|
Earnings per share (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Earnings per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted earnings per share |
|
Fair Value
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value |
10. Fair Value
Financial Instruments
Except as otherwise noted here, NVR believes that insignificant differences exist between the
carrying value and the fair value of its financial instruments.
Derivative Instruments and Mortgage Loans Held for Sale
In the normal course of business, NVR’s mortgage banking segment enters into contractual
commitments to extend credit to buyers of single-family homes with fixed expiration dates. The
commitments become effective when the borrowers “lock-in” a specified interest rate within time
frames established by NVR. All mortgagors are evaluated for credit worthiness prior to the
extension of the commitment. Market risk arises if interest rates move adversely between the time
of the “lock-in” of rates by the borrower and the sale date of the loan to a broker/dealer. To
mitigate the effect of the interest rate risk inherent in providing rate lock commitments
to borrowers, the Company enters into optional or mandatory delivery forward sale contracts to sell
whole loans and mortgage-backed securities to broker/dealers. The forward sale contracts lock in
an interest rate and price for the sale of loans similar to the specific rate lock commitments.
NVR does not engage in speculative or trading derivative activities. Both the rate lock
commitments to borrowers and the forward sale contracts to broker/dealers are undesignated
derivatives and, accordingly, are marked to fair value through earnings. At June 30, 2011, there
were contractual commitments to extend credit to borrowers aggregating $158,084 and open forward
delivery contracts aggregating $316,053.
GAAP assigns a fair value hierarchy to the inputs used to measure fair value. Level 1 inputs
are quoted prices in active markets for identical assets and liabilities. Level 2 inputs are
inputs other than quoted market prices that are observable for the asset or liability, either
directly or indirectly. Level 3 inputs are unobservable inputs. The fair value of the Company’s
rate lock commitments to borrowers and the related input levels includes, as applicable:
The assumed gain/loss considers the amount that the Company has discounted the price to the
borrower from par for competitive reasons and the excess servicing to be received or buydown fees
to be paid upon securitization of the loan. The excess servicing and buydown fees are calculated
pursuant to contractual terms with investors. To calculate the effects of interest rate movements,
the Company utilizes applicable published mortgage-backed security prices, and multiplies the price
movement between the rate lock date and the balance sheet date by the notional loan commitment
amount. The Company sells all of its loans on a servicing released basis, and receives a servicing
released premium upon sale. Thus, the value of the servicing rights, which averaged 128 basis
points of the loan amount as of June 30, 2011, is included in the fair value measurement and is
based upon contractual terms with investors and varies depending on the loan type. The Company
assumes an approximate 9% fallout rate when measuring the fair value of rate lock commitments.
Fallout is defined as locked loan commitments for which the Company does not close a mortgage loan
and is based on historical experience.
The fair value of the Company’s forward sales contracts to broker/dealers solely considers the
market price movement of the same type of security between the trade date and the balance sheet
date (level 2). The market price changes are multiplied by the notional amount of the forward
sales contracts to measure the fair value.
Mortgage loans held for sale are recorded at fair value when closed, and thereafter are
carried at the lower of cost or fair value, net of deferred origination costs, until sold. The
fair value of loans held-for-sale of $181,525 included in the accompanying condensed consolidated
balance sheet has been increased by $1,692 from the aggregate principal balance of $179,833.
The undesignated derivative instruments are included in the accompanying condensed
consolidated balance sheet as follows:
The unrealized gain or loss from the change in the fair value measurements is included in
earnings as a component of mortgage banking fees in the accompanying condensed consolidated
statements of income as follows:
The fair value measurement will be impacted in the future by the change in the value of
the servicing rights and the volume and product mix of the Company’s closed loans and locked loan
commitments.
|
Shareholders' Equity (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
Common Stock [Member]
|
Dec. 31, 2010
Common Stock [Member]
|
Jun. 30, 2011
Additional Paid-in Capital [Member]
|
Jun. 30, 2011
Retained Earnings [Member]
|
Jun. 30, 2011
Treasury Stock [Member]
|
Jun. 30, 2011
Deferred Compensation Trust [Member]
|
Jun. 30, 2011
Deferred Compensation Liability [Member]
|
|
Summary of changes in shareholders' equity | |||||||||||
Balance, December 31, 2010 | $ 1,740,374 | $ 206 | $ 206 | $ 951,234 | $ 4,029,072 | $ (3,240,138) | $ (27,582) | $ 27,582 | |||
Net income | 38,445 | 71,276 | 53,619 | 103,363 | 53,619 | ||||||
Deferred compensation activity | 2,000 | (2,000) | |||||||||
Purchase of common stock for treasury | (300,885) | (300,885) | |||||||||
Equity-based compensation | 31,705 | 31,705 | |||||||||
Tax benefit from stock options exercised and deferred compensation distributions | 21,391 | 21,391 | |||||||||
Proceeds from stock options exercised | 104,592 | 51,537 | 104,592 | ||||||||
Treasury stock issued upon option exercise | (71,623) | 71,623 | |||||||||
Balance, June 30, 2011 | 1,650,796 | 1,650,796 | 206 | 206 | 1,037,299 | 4,082,691 | (3,469,400) | (25,582) | 25,582 | ||
Shareholders' Equity (Textuals) [Abstract] | |||||||||||
Common stock repurchased | 411,477 | ||||||||||
Aggregate purchase price of common stock | $ 300,885 | $ 300,885 | |||||||||
Stock option exercised | 329,000 |
Product Warranties
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Product Warranties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties |
8. Product Warranties
The Company establishes warranty and product liability reserves (“warranty reserve”)
to provide for estimated future expenses as a result of construction and product defects, product
recalls and litigation incidental to NVR’s homebuilding business. Liability estimates are
determined based on management’s judgment, considering such factors as historical experience, the
likely current cost of corrective action, manufacturers’ and subcontractors’ participation in
sharing the cost of corrective action, consultations with third party experts such as engineers,
and discussions with our general counsel and outside counsel retained to handle specific product
liability cases. The following table reflects the changes in the Company’s warranty reserve during
the three and six months ended June 30, 2011 and 2010:
|
Basis of Presentation
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Basis of Presentation [Abstract] | |
Basis of Presentation |
1. Basis of Presentation
The accompanying unaudited, condensed consolidated financial statements include the accounts
of NVR, Inc. (“NVR” or the “Company”) and its subsidiaries and certain other entities in which the
Company is deemed to be the primary beneficiary (see Note 2 to the accompanying financial
statements). Intercompany accounts and transactions have been eliminated in consolidation. The
statements have been prepared in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial information and with the instructions to
Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. Because the accompanying condensed
consolidated financial statements do not include all of the information and footnotes required by
GAAP, they should be read in conjunction with the financial statements and notes thereto included
in the Company’s 2010 Annual Report on Form 10-K. In the opinion of management, all adjustments
(consisting only of normal recurring accruals except as otherwise noted herein) considered
necessary for a fair presentation have been included. Operating results for the three and six
month periods ended June 30, 2011 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2011.
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
For the three and six-month periods ended June 30, 2011 and 2010, comprehensive income equaled
net income; therefore, a separate statement of comprehensive income is not included in the
accompanying financial statements.
|
Contract Land Deposits
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Contract Land Deposits [Abstract] | |
Contract Land Deposits |
4. Contract Land Deposits
As of June 30, 2011, NVR controlled approximately 49,100 lots with deposits in cash and
letters of credit of $197,300 and $3,100, respectively. At December 31, 2010, NVR controlled
approximately 50,400 lots with deposits in cash and letters of credit totaling approximately
$174,300 and $6,600, respectively. During the three and six month periods ended June 30, 2011, the
Company recognized a net pre-tax charge of approximately $2,700 and $4,100, respectively, related
to the impairment of contract land deposits. During the three-month period ended June 30, 2010,
the Company recognized a net pre-tax contract land deposit impairment charge of approximately $970
and for the six-month period recognized a net pre-tax recovery of approximately $950 of contract
land deposits previously determined to be uncollectible. The contract land deposit asset is shown
net of an approximate $68,100 and $73,500 impairment valuation allowance at June 30, 2011 and
December 31, 2010, respectively.
|
Excess Reorganization Value (Details Textuals) (USD $)
In Thousands |
Jun. 30, 2011
|
---|---|
Excess Reorganization Value (Textuals) [Abstract] | |
Impairment of excess reorganization value | $ 0 |
Earnings per Share
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Earnings per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share |
5. Earnings per Share
The following weighted average shares and share equivalents are used to calculate basic and
diluted earnings per share for the three and six months ended June 30, 2011 and 2010:
The assumed proceeds used in the treasury method for calculating NVR’s diluted earnings
per share includes the amount the employee must pay upon exercise, the amount of compensation cost
attributed to future services and not yet recognized, and the amount of tax benefits that would be
credited to additional paid-in capital assuming exercise of the option or the vesting of the
restricted share unit. The assumed amount credited to additional paid-in capital equals the tax
benefit from assumed exercise of stock options or the assumed vesting of restricted share units
after consideration of the intrinsic value upon assumed exercise less the actual stock-based
compensation expense to be recognized in the income statement from 2006 and future periods.
Stock options issued under equity benefit plans to purchase 449,134 and
448,810 shares of common stock were outstanding during the three and six month periods ended June
30, 2011, and stock options issued under equity benefit plans to purchase 435,548 and 434,206
shares of common stock were outstanding during the three and six months ended June 30, 2010, but
were not included in the computation of diluted earnings per share because the effect would have
been anti-dilutive in the respective periods.
|
Debt (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2011
|
---|---|
Debt (Textuals) [Abstract] | |
Repurchase facility Maximum loan borrowing capacity | $ 100,000 |
Repurchase facility maximum commitments | 125,000 |
Repurchase facility outstanding amount | 89,600 |
Average pricing rate of outstanding amount | 4.10% |
Repurchase agreement with reduced available purchase limit | $ 25,000 |
Land Under Development (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2011
|
---|---|
Land Under Development (Textuals) [Abstract] | |
Number of raw parcels of land acquired | 3 |
Purchase price of raw parcels of land | $ 78,500 |
Number of finished lots for use in homebuilding operations | 850 |
Product Warranties (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Summary of changes in product warranties reserve | ||||
Warranty reserve, beginning of period | $ 65,330 | $ 65,082 | $ 69,787 | $ 64,417 |
Provision | 8,041 | 14,452 | 11,773 | 22,673 |
Payments | (10,567) | (9,353) | (18,756) | (16,909) |
Warranty reserve, end of period | $ 62,804 | $ 70,181 | $ 62,804 | $ 70,181 |
Fair Value (Details Textuals) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | 12 Months Ended | 18 Months Ended |
---|---|---|---|
Jun. 30, 2011
|
Dec. 31, 2010
|
Jun. 30, 2011
|
|
Derivative [Line Items] | |||
Aggregate principal balance of loans held for sale | $ 179,833 | $ 179,833 | |
Fair Value (Textuals) [Abstract] | |||
Average basis points of loan amount | 128 | 128 | |
Fall out rate of measuring fair value of rate lock commitments | 9.00% | 9.00% | |
Fair value of loans held for sale | 181,525 | 181,525 | |
Increase in fair value of loans held for sale | 1,997 | 1,008 | 3,005 |
Rate Lock Commitments [Member]
|
|||
Derivative [Line Items] | |||
Aggregate principal balance of loans held for sale | 158,084 | 158,084 | |
Fair Value (Textuals) [Abstract] | |||
Increase in fair value of loans held for sale | 473 | ||
Forward Sales Contracts [Member]
|
|||
Derivative [Line Items] | |||
Notional Amount of Derivatives | 316,053 | 316,053 | |
Aggregate principal balance of loans held for sale | 316,053 | 316,053 | |
Fair Value (Textuals) [Abstract] | |||
Increase in fair value of loans held for sale | $ 840 |
Earnings per share (Details)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Basic and diluted earnings per share | ||||
Weighted average number of shares outstanding used to calculate basic EPS | 5,785,000 | 6,123,000 | 5,804,000 | 6,095,000 |
Dilutive Securities: | ||||
Stock options and restricted share units | 144,000 | 282,000 | 170,000 | 307,000 |
Weighted average number of shares and share equivalents used to calculate diluted EPS | 5,929,000 | 6,405,000 | 5,974,000 | 6,402,000 |
Earnings per share (Textuals) [Abstract] | ||||
Options issued to purchase common stock | 449,134 | 435,548 | 448,810 | 434,206 |
Variable Interest Entities and Joint Ventures (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Variable Interest Entities and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Specific performance obligations |
|
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Joint Venture Lots |
|
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The condensed balance sheet of the consolidated JV |
|
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