NVR, Inc. (Form: 8-K)

July 20, 2006, Reston, VA—NVR, Inc. (AMEX: NVR), one of the nation’s largest homebuilding and mortgage banking companies, announced that diluted earnings per share for its second quarter ended June 30, 2006 increased 31% and net income increased 14% when compared to the 2005 second quarter. Net income for the 2006 second quarter was $190,352,000, $28.08 per diluted share, compared to net income of $167,649,000, $21.42 per diluted share, for the same period of 2005. Consolidated revenues for the second quarter of 2006 totaled $1,748,928,000, a 37% increase from $1,277,689,000 for the comparable 2005 quarter.

New orders in the second quarter of 2006 decreased 13% to 4,204 units, when compared to 4,829 units in the second quarter of 2005. The cancellation rate in the quarter ended June 30, 2006 was 13% compared to 8% in the second quarter of 2005 and 17% in the first quarter of 2006. New orders in the Washington and Baltimore markets declined 27% and 24%, respectively, in the second quarter when compared with the year earlier quarter. The cancellation rate in Washington was 21% in the quarter, an improvement from 26% in the first quarter of 2006, but higher than the 8% cancellation rate in the second quarter of 2005. The cancellation rate in Baltimore was 14% in the quarter compared to 17% in the first quarter of 2006 and 8% in the second quarter of 2005. The average sales price of total new orders in the second quarter of 2006 declined 6% from the second quarter of 2005. The decline is the result of a shift of new orders into lower priced markets in the North and South regions and a 13% decline in average order price in the Washington market as compared to 2005.

Settlements increased in the second quarter of 2006 to 4,297 units, 26% more than the same period of 2005. Homebuilding revenues for the three months ended June 30, 2006 totaled $1,722,797,000, 37% higher than the year earlier period. Income before tax from the homebuilding segment totaled $295,592,000, an increase of 12% when compared to the second quarter of the previous year. Gross profit margins decreased to 24.3% in the 2006 second quarter compared to 27.8% for the same period in 2005. Gross margins were negatively impacted by land deposit write-downs of approximately $26,000,000, primarily in the Washington market. These write-downs lowered gross margins by 151 basis points and reduced diluted earnings per share by $2.34 for the quarter. The Company’s backlog of homes sold but not settled at the end of the 2006 quarter decreased on a unit basis by 7% to 8,864 units and 6% on a dollar basis to $3,798,214,000 when compared to the same period last year.

For the six months ended June 30, 2006, consolidated revenues were $2,953,583,000, 32% higher than the $2,231,121,000 reported for the same period of 2005. Net income for the six months ended June 30, 2006 was $322,912,000, an increase of 13% when compared to the six months ended June 30, 2005. Earnings per diluted share for the six months ended June 30, 2006 was $47.54, an increase of 33% from $35.68 per diluted share for the comparable period of 2005.

Mortgage closed loan production of $1,123,461,000 for the three months ended June 30, 2006 was 31% higher than the same period last year. Operating income contributed by the mortgage banking operations during the second quarter of 2006 increased 29% to $17,486,000, when compared to $13,510,000 reported for the same period of 2005.

The Company expects gross margins in the second half of 2006 to continue to be negatively impacted by pricing pressure in many of its markets. The Company updated its full year 2006 guidance on net income to approximately $690,000,000. Full year net income expectations include an after tax expense of approximately $36,000,000 for the implementation of SFAS 123R, Share Based Payment.

Some of the statements in this release made by the Company constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “will,” “should” or “anticipates” or the negative thereof or other variations thereof or comparable terminology, or by discussion of strategies, each of which involves risks and uncertainties. All statements other than those of historical facts included herein, including those regarding market trends, NVR’s financial position, business strategy, projected plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of NVR to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to, general economic and business conditions (on both a national and regional level), interest rate changes, access to suitable financing, competition, the availability and cost of land and other raw materials used by NVR in its homebuilding operations, shortages of labor, weather related slow downs, building moratoria, governmental regulation, the ability of NVR to integrate any acquired business, fluctuation and volatility of stock and other financial markets and other factors over which NVR has little or no control. The Company has no obligation to update such forward-looking statements.

NVR, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
*Homebuilding:*
Revenues	$	1,722,797		$	1,257,248		$	2,906,539		$	2,196,500
Other income		2,634			874			5,010			2,933
Cost of sales		(1,304,183	)		(907,284	)		(2,165,222	)		(1,586,831	)
Selling, general and administrative		(119,551	)		(84,235	)		(233,557	)		(156,650	)

Operating income		301,697			266,603			512,770			455,952
Interest expense		(6,105	)		(3,006	)		(11,632	)		(5,930	)

Homebuilding income		295,592			263,597			501,138			450,022

*Mortgage Banking:*
Mortgage banking fees		26,131			20,441			47,044			34,621
Interest income		1,791			868			3,250			1,784
Other income		383			372			614			587
General and administrative		(9,852	)		(7,893	)		(19,020	)		(14,529	)
Interest expense		(967	)		(278	)		(1,921	)		(453	)

Mortgage banking income		17,486			13,510			29,967			22,010

*Income before taxes*		313,078			277,107			531,105			472,032
Income tax expense		(122,726	)		(109,458	)		(208,193	)		(186,453	)

*Net income*	$	190,352		$	167,649		$	322,912		$	285,579

*Basic earnings per share*	$	33.27		$	26.31		$	57.06		$	43.84

*Diluted earnings per share*	$	28.08		$	21.42		$	47.54		$	35.68

*Basic average shares outstanding*		5,722			6,372			5,659			6,515

*Diluted average shares outstanding*		6,779			7,825			6,792			8,004

NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)


	June 30, 2006		December 31, 2005
	(unaudited)
ASSETS
*Homebuilding:*
Cash and cash equivalents	$	172,845	$	170,090
Receivables		19,172		40,562
Inventory:
Lots and housing units, covered under
sales agreements with customers		947,688		723,657
Unsold lots and housing units		61,619		60,419
Manufacturing materials and other		8,722		9,899

		1,018,029		793,975
Contract land deposits		575,637		549,160
Assets not owned, consolidated
per FIN 46R		262,184		275,306
Property, plant and equipment, net		34,738		31,096
Reorganization value in excess of amounts
allocable to identifiable assets, net		41,580		41,580
Goodwill and other indefinite and definite
life intangibles, net		11,998		12,061
Other assets		176,566		142,851

		2,312,749		2,056,681

*Mortgage Banking:*
Cash and cash equivalents		3,123		7,436
Mortgage loans held for sale, net		200,251		193,932
Property and equipment, net		1,366		1,003
Reorganization value in excess of amounts
allocable to identifiable assets, net		7,347		7,347
Other assets		2,990		3,189

		215,077		212,907

Total assets	$	2,527,826	$	2,269,588

NVR, Inc.
Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data)


	June 30, 2006			December 31, 2005
	(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
*Homebuilding:*
Accounts payable	$	319,281		$	262,086
Accrued expenses and other liabilities		374,668			369,176
Liabilities related to assets not owned,
consolidated per FIN 46R		203,107			215,284
Customer deposits		246,967			256,837
Other term debt		3,200			3,325
Notes payable		—			103,000
Senior notes		200,000			200,000

		1,347,223			1,409,708

*Mortgage Banking:*
Accounts payable and other liabilities		12,208			25,902
Notes payable		168,188			156,816

		180,396			182,718

Total liabilities		1,527,619			1,592,426

*Commitments and contingencies*
*Shareholders’ equity:*
Common stock, $0.01 par value; 60,000,000
shares authorized; 20,592,640 shares issued
for both June 30, 2006 and December 31, 2005		206			206
Additional paid-in capital		546,709			473,886
Deferred compensation trust – 548,414 and
547,697 shares of NVR, Inc. common stock for
June 30, 2006 and December 31, 2005,
respectively		(79,783	)		(76,303	)
Deferred compensation liability		79,783			76,303
Retained earnings		2,931,540			2,608,628
Less treasury stock at cost – 14,841,701 and
14,964,482 shares for June 30, 2006 and
December 31, 2005, respectively		(2,478,248	)		(2,405,558	)

Total shareholders’ equity		1,000,207			677,162

Total liabilities and shareholders’
equity	$	2,527,826		$	2,269,588


	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
*Homebuilding data:*
New orders (units)
Washington (1)		981			1,348			1,786			2,259
Baltimore (2)		460			603			918			1,030
North (3)		1,779			1,942			3,370			3,255
South (4)		984			936			1,763			1,597

Total		4,204			4,829			7,837			8,141

Average new order price	$	384.7		$	408.1		$	386.0		$	405.4
Settlements (units)
Washington (1)		1,074			977			1,819			1,606
Baltimore (2)		566			317			1,031			658
North (3)		1,801			1,379			2,939			2,398
South (4)		856			743			1,494			1,369

Total		4,297			3,416			7,283			6,031

Average settlement price	$	400.3		$	366.8		$	398.5		$	363.2
Backlog (units)
Washington (1)								2,716			3,206
Baltimore (2)								960			1,188
North (3)								3,498			3,606
South (4)								1,690			1,554

Total								8,864			9,554

Average backlog price							$	428.5		$	421.0
Community count (average)		618			504			598			493
Lots controlled at end of period								104,000			97,000
*Mortgage banking data:*
Loan closings	$	1,123,461		$	857,821		$	1,860,243		$	1,472,313
Capture rate		87	%		88	%		86	%		88	%
*Common stock information:*
Shares outstanding at end of period								5,750,939			6,345,446
Weighted average basic shares outstanding		5,722,000			6,372,000			5,659,000			6,515,000
Weighted average diluted shares outstanding		6,779,000			7,825,000			6,792,000			8,004,000
Number of shares repurchased		—			190,700			161,856			506,150
Aggregate cost of shares repurchased	$	—		$	146,910		$	120,817		$	395,316

(1)

Washington, D.C. metropolitan area and adjacent counties in Maryland, Virginia and West Virginia

(3)

Delaware, Maryland Eastern Shore, New Jersey, New York, Ohio, Pennsylvania, Michigan, and Kentucky


Virginia	1-12378	54-1394360
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

11700 Plaza America Drive, Suite 500, Reston, Virginia		20190
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	NVR, Inc.

July 20, 2006	By:	/s/ Dennis M. Seremet

		Name: Dennis M. Seremet
		Title: Vice President and Chief Financial Officer


Exhibit No.		Description

99.1		Press release dated July 20, 2006


Date of Report (Date of Earliest Event Reported):		July 20, 2006


Registrant’s telephone number, including area code:		703-956-4000


FOR IMMEDIATE RELEASE		Contact: Office:		Dan Malzahn (703) 956-4204