10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________ 

FORM 10-Q

_________________________________________________________ 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33662

_________________________________________________________  

FORESTAR GROUP INC.

(Exact Name of Registrant as Specified in Its Charter)

 _________________________________________________________ 

Delaware	26-1336998
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

6300 Bee Cave Road, Building Two, Suite 500, Austin, Texas 78746

(Address of Principal Executive Offices, Including Zip Code)

(512) 433-5200

(Registrant’s Telephone Number, Including Area Code)

 _________________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨		Accelerated filer	x
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title of Each Class	Number of Shares Outstanding as of May 4, 2015
Common Stock, par value $1.00 per share	33,618,526

FORESTAR GROUP INC.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION	3
Item 1. Financial Statements (Unaudited)	3
Consolidated Balance Sheets	3
Consolidated Statements of Income and Comprehensive Income	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6
Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	34
PART II — OTHER INFORMATION	35
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3. Defaults Upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	35
Item 6. Exhibits	36
SIGNATURES	37

2

PART I—FINANCIAL INFORMATION

Item 1.Financial Statements

FORESTAR GROUP INC.

Consolidated Balance Sheets

(Unaudited)

	First Quarter-End			Year-End
	2015			2014
	(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	126,262		$	170,127
Real estate, net	596,284			575,756
Oil and gas properties and equipment, net	279,954			263,493
Investment in unconsolidated ventures	65,381			65,005
Timber	8,430			8,315
Receivables, net	15,785			24,589
Income taxes receivable	2,092			7,503
Prepaid expenses	3,379			6,000
Property and equipment, net	11,104			11,627
Deferred tax asset, net	44,583			40,624
Goodwill and other intangible assets	65,891			66,131
Other assets	17,826			19,029
TOTAL ASSETS	$	1,236,971		$	1,258,199
LIABILITIES AND EQUITY
Accounts payable	$	11,123		$	20,400
Accrued employee compensation and benefits	2,807			8,323
Accrued property taxes	3,092			5,966
Accrued interest	7,551			3,451
Earnest money deposits	10,113			10,045
Other accrued expenses	33,964			35,729
Other liabilities	30,519			31,799
Debt	434,413			432,744
TOTAL LIABILITIES	533,582			548,457
COMMITMENTS AND CONTINGENCIES
EQUITY
Forestar Group Inc. shareholders’ equity:
Common stock, par value $1.00 per share, 200,000,000 authorized shares, 36,946,603 issued at first quarter-end 2015 and year-end 2014	36,947			36,947
Additional paid-in capital	558,600			558,945
Retained earnings	158,843			167,001
Treasury stock, at cost, 3,328,077 shares at first quarter-end 2015 and 3,485,278 shares at year-end 2014	(53,124		)	(55,691		)
Total Forestar Group Inc. shareholders’ equity	701,266			707,202
Noncontrolling interests	2,123			2,540
TOTAL EQUITY	703,389			709,742
TOTAL LIABILITIES AND EQUITY	$	1,236,971		$	1,258,199

Please read the notes to consolidated financial statements.

3

FORESTAR GROUP INC.

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

	First Quarter
	2015			2014
	(In thousands, except per share amounts)
REVENUES
Real estate sales and other	$	21,961		$	55,547
Commercial and income producing properties	10,869			9,933
Real estate	32,830			65,480
Oil and gas	13,185			17,554
Other natural resources	1,790			1,571
	47,805			84,605
COSTS AND EXPENSES
Cost of real estate sales and other	(10,362		)	(26,064		)
Cost of commercial and income producing properties	(7,692		)	(10,120		)
Cost of oil and gas producing activities	(11,542		)	(12,620		)
Cost of other natural resources	(920		)	(776		)
Other operating	(18,060		)	(13,997		)
General and administrative	(8,142		)	(5,145		)
	(56,718		)	(68,722		)
GAIN ON SALE OF ASSETS	1,176			—
OPERATING INCOME (LOSS)	(7,737		)	15,883
Equity in earnings of unconsolidated ventures	3,045			991
Interest expense	(8,821		)	(5,503		)
Other non-operating income	917			2,294
INCOME (LOSS) BEFORE TAXES	(12,596		)	13,665
Income tax benefit (expense)	4,359			(4,658		)
CONSOLIDATED NET INCOME (LOSS)	(8,237		)	9,007
Less: Net (income) loss attributable to noncontrolling interests	79			(673		)
NET INCOME (LOSS) ATTRIBUTABLE TO FORESTAR GROUP INC.	$	(8,158	)	$	8,334
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	34,168			35,576
Diluted	34,168			43,913
NET INCOME (LOSS) PER COMMON SHARE
Basic	$	(0.24	)	$	0.20
Diluted	$	(0.24	)	$	0.19
TOTAL COMPREHENSIVE INCOME (LOSS)	$	(8,158	)	$	8,334

Please read the notes to consolidated financial statements.

4

FORESTAR GROUP INC.

Consolidated Statements of Cash Flows

(Unaudited)

	First Quarter
	2015			2014
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$	(8,237	)	$	9,007
Adjustments:
Depreciation, depletion and amortization	11,325			7,439
Change in deferred income taxes	(4,359		)	2,976
Equity in earnings of unconsolidated ventures	(3,045		)	(991		)
Distributions of earnings of unconsolidated ventures	2,845			1,018
Share-based compensation	3,342			313
Real estate cost of sales	9,884			24,812
Dry hole and leasehold abandonment costs	86			2,381
Real estate development and acquisition expenditures, net	(34,769		)	(35,035		)
Reimbursements from utility and improvement districts	4,130			1,536
Other changes in real estate	667			652
Changes in deferred income	81			(132		)
Gain on sale of assets	(1,176		)	—
Other	982			615
Changes in:
Notes and accounts receivable	7,016			7,433
Prepaid expenses and other	2,695			790
Accounts payable and other accrued liabilities	(15,644		)	(15,104		)
Income taxes	5,411			(2,167		)
Net cash provided by (used for) operating activities	(18,766		)	5,543
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, equipment, software, reforestation and other	(2,809		)	(4,699		)
Oil and gas properties and equipment	(23,718		)	(19,357		)
Investment in unconsolidated ventures	(831		)	(4,293		)
Proceeds from sales of oil and gas properties, net	2,000			—
Return of investment in unconsolidated ventures	655			155
Net cash used for investing activities	(24,703		)	(28,194		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt	(2,463		)	(15,711		)
Additions to debt	3,119			2,608
Deferred financing fees	(6		)	—
Distributions to noncontrolling interests, net	(338		)	(498		)
Purchase of noncontrolling interests	—			(7,971		)
Exercise of stock options	14			754
Payroll taxes on issuance of stock-based awards	(723		)	(879		)
Excess income tax benefit from share-based compensation	1			20
Net cash used for financing activities	(396		)	(21,677		)
Net decrease in cash and cash equivalents	(43,865		)	(44,328		)
Cash and cash equivalents at beginning of period	170,127			192,307
Cash and cash equivalents at end of period	$	126,262		$	147,979

Please read the notes to consolidated financial statements.

5

FORESTAR GROUP INC.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1—Basis of Presentation

Our consolidated financial statements include the accounts of Forestar Group Inc., all subsidiaries, ventures and other entities in which we have a controlling interest. We account for our investment in other entities in which we have significant influence over operations and financial policies using the equity method. We eliminate all material intercompany accounts and transactions. Noncontrolling interests in consolidated pass-through entities are recognized before income taxes.

We prepare our unaudited interim financial statements in accordance with U.S. generally accepted accounting principles and Securities and Exchange Commission requirements for interim financial statements. As a result, they do not include all the information and disclosures required for complete financial statements. However, in our opinion, all adjustments considered necessary for a fair presentation have been included. Such adjustments consist only of normal recurring items unless otherwise noted. We make estimates and assumptions about future events. Actual results can, and probably will, differ from those we currently estimate including those principally related to allocating costs to real estate, measuring long-lived assets for impairment, oil and gas revenue accruals, capital expenditure and lease operating expense accruals associated with our oil and gas production activities, oil and gas reserves and depletion of our oil and gas properties. These interim operating results are not necessarily indicative of the results that may be expected for the entire year. For further information, please read the financial statements included in our 2014 Annual Report on Form 10-K.

Note 2—New and Pending Accounting Pronouncements

Pending Accounting Standards

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2016. On April 1, the FASB voted to propose a deferral of the effective date of the new standard by one year. This proposed deferral would result in the new standard being effective after December 15, 2017. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, requiring entities to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The revised consolidation model: (1) modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (2) eliminates the presumption that a general partner should consolidate a limited partnership, (3) affects the consolidation analysis of reporting entities that are involved with VIEs, and (4) provides a scope exception from consolidation guidance for reporting entities with interests in certain legal entities. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The updated standard may be applied retrospectively or using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. We are currently evaluating the effect that the updated standard will have on our financial position and disclosures.

6

Note 3—Real Estate

Real estate consists of:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Entitled, developed and under development projects	$	338,607		$	321,273
Undeveloped land (includes land in entitlement)	93,458			93,182
Commercial and income producing properties
Carrying value	196,348			192,678
Less: accumulated depreciation	(32,129		)	(31,377		)
Net carrying value	164,219			161,301
	$	596,284		$	575,756

Our estimated costs of assets for which we expect to be reimbursed by utility and improvement districts were $90,506,000 at first quarter-end2015 and $65,212,000 at year-end 2014, including $47,075,000 at first quarter-end2015 and $31,913,000 at year-end 2014 related to our Cibolo Canyons project near San Antonio, Texas. At first quarter-end2015,$47,075,000 of reimbursable costs for the Cibolo Canyons project were related to submitted and approved reimbursements of $65,438,000 net of collections totaling $33,552,000 plus $15,189,000 of additional reimbursable costs we incurred which we plan to submit for approval from the district. At year-end 2014, $31,913,000 of reimbursable costs for the Cibolo Canyons project were related to costs of $65,465,000 that were submitted, net of collections totaling $33,552,000. These costs are principally for water, sewer and other infrastructure assets that we have incurred and submitted or will submit to utility or improvement districts for approval and reimbursement. We expect to be reimbursed by utility and improvement districts when these districts achieve adequate tax basis or otherwise have funds available to support payment. In first quarter2015, our submitted reimbursements to these districts for all real estate projects excluding Cibolo Canyons project were $1,520,000 and we have collected and $4,130,000 in reimbursements that were previously submitted to these districts.

At first quarter-end2015, commercial and income producing properties represents our investment of $78,566,000 in multifamily development sites located in Austin, Charlotte, Dallas and Nashville, $52,742,000 investment in a 257-unit multifamily project in Austin, $32,505,000 investment in a 413 guest room hotel in Austin and $406,000 investment in a golf course and a country club property located near Fort Worth.

Note 4—Oil and Gas Properties and Equipment, net

Net capitalized costs, utilizing the successful efforts method of accounting, related to our oil and gas producing activities follows:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Unproved oil and gas properties	$	85,771		$	90,446
Proved oil and gas properties	249,601			221,299
Total costs	335,372			311,745
Less: accumulated depreciation, depletion and amortization	(55,418		)	(48,252		)
	$	279,954		$	263,493

In first quarter2015, we recorded a gain of $1,176,000 related to the sale of 290 net mineral acres leased from others in North Dakota for $2,000,000.

7

Note 5—Goodwill and Other Intangible Assets

Carrying value of goodwill and other intangible assets follows:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
Goodwill	$	63,423	$	63,423
Identified intangibles, net	2,468		2,708
	$	65,891	$	66,131

At first quarter-end 2015, goodwill related to our oil and gas properties is $59,549,000 and $3,874,000 is associated with a water resources company acquired in 2010.

Identified intangibles include $1,681,000 in indefinite lived groundwater leases associated with a water resources company acquired in 2010, $433,000 related to in-place tenant leases with definite lives associated with the purchase of our partner's interest in the Eleven venture and $354,000 related to patents with definite lives associated with the Calliope Gas Recovery System, a process to increase natural gas production.

Note 6—Equity

A reconciliation of changes in equity at first quarter-end2015 follows:

	Forestar Group Inc.			Noncontrolling Interests			Total
	(In thousands)
Balance at year-end 2014	$	707,202		$	2,540		$	709,742
Net income (loss)	(8,158		)	(79		)	(8,237		)
Distributions to noncontrolling interests	—			(338		)	(338		)
Other (primarily share-based compensation)	2,222			—			2,222
	$	701,266		$	2,123		$	703,389

Note 7—Investment in Unconsolidated Ventures

At first quarter-end2015, we have ownership interests in 15 ventures that we account for using the equity method.

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:

	Venture Assets				Venture Borrowings(a)				Venture Equity						Our Investment
	First Quarter-End		Year-End		First Quarter-End		Year-End		First Quarter-End			Year-End			First Quarter-End		Year-End
	2015		2014		2015		2014		2015			2014			2015		2014
	(In thousands)
242, LLC (b)	$	35,556	$	33,021	$	9,328	$	6,940	$	22,253		$	21,789		$	10,363	$	10,098
CL Ashton Woods, LP (c)	12,649		13,269		—		—		9,479			11,453			4,693		6,015
CL Realty, LLC	7,965		7,960		—		—		7,899			7,738			3,950		3,869
CREA FMF Nashville LLC (b)	50,251		40,014		40,648		29,660		5,874			5,987			5,403		5,516
Elan 99, LLC	12,060		10,070		1		1		10,333			9,643			9,299		8,679
FMF Littleton LLC	32,765		26,953		3,912		—		24,737			24,435			6,362		6,287
FMF Peakview LLC	45,457		43,638		24,774		23,070		17,462			17,464			3,574		3,575
HM Stonewall Estates, Ltd (c)	3,629		3,750		33		669		3,596			3,081			1,982		1,752
LM Land Holdings, LP (c)	30,487		25,561		8,505		4,448		19,750			18,500			9,686		9,322
PSW Communities, LP	18,964		16,045		12,870		10,515		4,610			4,415			4,097		3,924
Temco Associates, LLC	11,734		11,756		—		—		11,556			11,556			5,778		5,778
Other ventures (d)	4,837		8,453		23,437		26,944		(25,752		)	(25,614		)	194		190
	$	266,354	$	240,490	$	123,508	$	102,247	$	111,797		$	110,447		$	65,381	$	65,005

8

Combined summarized income statement information for our ventures accounted for using the equity method follows:

	Venture Revenues				Venture Earnings (Loss)						Our Share of Earnings (Loss)
	First Quarter
	2015		2014		2015			2014			2015			2014
	(In thousands)
242, LLC (b)	$	5,331	$	1,475	$	3,464		$	533		$	1,766		$	277
CL Ashton Woods, LP (c)	1,350		708		527			220			678			318
CL Realty, LLC	279		368		160			230			80			115
CREA FMF Nashville LLC (b)	6		—		(113		)	(25		)	(113		)	(25		)
Elan 99, LLC	—		—		(2		)	—			(2		)	—
FMF Peakview LLC	186		—		(482		)	(73		)	(96		)	(15		)
HM Stonewall Estates, Ltd (c)	1,058		1,001		515			352			230			141
LM Land Holdings, LP (c)	1,976		4,898		1,250			2,927			364			677
PSW Communities, LP	2,427		—		195			(216		)	173			(189		)
Temco Associates, LLC	58		60		(1		)	(18		)	—			(9		)
Other ventures (d)	3,701		385		(203		)	(261		)	(35		)	(299		)
	$	16,372	$	8,895	$	5,310		$	3,669		$	3,045		$	991

 _____________________

^(a)  Total includes current maturities of $78,947,000 at first quarter-end2015, of which $51,788,000 is non-recourse to us, and $65,795,000 at year-end 2014, of which $42,566,000 is non-recourse to us.

^(b)  Includes unamortized deferred gains on real estate contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $1,587,000 are reflected as a reduction to our investment in unconsolidated ventures at first quarter-end2015.

^(c)  Includes unrecognized basis difference of $1,373,000 which is reflected as a reduction of our investment in unconsolidated ventures at first quarter-end2015. The difference will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

^(d)  Our investment in other ventures reflects our ownership interests, excluding venture losses that exceed our investment where we are not obligated to fund those losses. Please read Note 16—Variable Interest Entities for additional information.

In first quarter2015, we invested $831,000 in these ventures and received $3,500,000 in distributions. In first quarter2014, we invested $4,293,000 in these ventures and received $1,173,000 in distributions. Distributions include both return of investments and distribution of earnings.

Note 8—Receivables

Receivables consist of:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Oil and gas revenue accruals	6,811			7,293
Other receivables and accrued interest	4,696			6,505
Oil and gas joint interest billing receivables	2,657			5,738
Other loans secured by real estate, average interest rates of 9.90% at first quarter-end 2015 and 4.41% at year-end 2014	1,879			1,737
Loan secured by real estate	$	—		$	3,574
	16,043			24,847
Allowance for bad debts	(258		)	(258		)
	$	15,785		$	24,589

In second quarter 2011, we acquired a non-performing loan that was secured by a lien on developed and undeveloped real estate located near Houston designated for single-family residential and commercial development.In first quarter2015, the loan was paid in full and we received principal payments of $4,394,000 and interest payments of $49,000.

9

Estimated accretable yield follows:

	First Quarter-End
	2015
	(In thousands)
Beginning of period (year-end 2014)	$	839
Change in accretable yield due to change in timing of estimated cash flows	30
Interest income recognized (in first quarter 2015)	(869		)
End of period	$	—

Other loans secured by real estate generally are secured by a deed of trust and due within three years.

Note 9—Debt

Debt consists of:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
8.50% senior secured notes due 2022	250,000		250,000
3.75% convertible senior notes due 2020, net of discount	104,020		103,194
6.00% tangible equity unit notes, net of discount	15,092		17,154
Secured promissory notes — average interest rates of 3.18% at first quarter-end 2015 and 3.17% at year-end 2014	15,400		15,400
Other indebtedness — interest rates ranging from 2.19% to 5.50% at first quarter-end 2015	49,901		46,996
	$	434,413	$	432,744

Our debt agreements contain financial covenants customary for such agreements including minimum levels of interest coverage and limitations on leverage. At first quarter-end2015, we were in compliance with the financial covenants of these agreements.

At first quarter-end2015, our senior secured credit facility provides for a $300,000,000 revolving line of credit maturing May 15, 2017. The revolving line of credit may be prepaid at any time without penalty. The revolving line of credit includes a $100,000,000 sublimit for letters of credit, of which $15,459,000 is outstanding at first quarter-end2015. Total borrowings under our senior secured credit facility (including the face amount of letters of credit) may not exceed a borrowing base formula. At first quarter-end2015, we had $284,541,000 in net unused borrowing capacity under our senior secured credit facility.

Under the terms of our senior secured credit facility, at our option we can borrow at LIBOR plus 4.0 percent or at the alternate base rate plus 3.0 percent. The alternate base rate is the highest of (i) KeyBank National Association’s base rate, (ii) the federal funds effective rate plus 0.5 percent or (iii) 30 day LIBOR plus 1 percent. Borrowings under the senior secured credit facility are or may be secured by (a) mortgages on the timberland, high value timberland and portions of raw entitled land, as well as pledges of other rights including certain oil and gas operating properties, (b) assignments of current and future leases, rents and contracts, (c) a security interest in our primary operating account, (d) a pledge of the equity interests in current and future material operating subsidiaries and most of our majority-owned joint venture interests, or if such pledge is not permitted, a pledge of the right to distributions from such entities, and (e) a pledge of certain reimbursements payable to us from special improvement district tax collections in connection with our Cibolo Canyons project. The senior secured credit facility provides for releases of real estate and other collateral provided that borrowing base compliance is maintained.

At first quarter-end2015, secured promissory notes represent a $15,400,000 loan collateralized by a 413 guest room hotel located in Austin with a carrying value of $32,505,000. Other indebtedness principally represents $45,714,000 of senior secured loans for two multifamily properties, our 257-unit multifamily project in Austin and our 354-unit multifamily property in Dallas. The combined carrying value of these two multifamily properties is $87,012,000 at first quarter-end2015.

At first quarter-end2015 and year-end 2014, we have $14,276,000 and $15,168,000 in unamortized deferred financing fees which are included in other assets. Amortization of deferred financing fees was $1,156,000 and $901,000 in first quarter2015 and 2014 and is included in interest expense.

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Note 10—Fair Value

Fair value is the exchange price that would be the amount received for an asset or paid to transfer a liability in an orderly transaction between market participants. In arriving at a fair value measurement, we use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of inputs used to establish fair value are the following:

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

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Non-financial assets measured at fair value on a non-recurring basis principally include real estate assets, oil and gas properties, assets held for sale, goodwill and other intangible assets, which are measured for impairment. In first quarter2015, we recognized non-cash asset impairment charges of $504,000 associated with a residential development with golf course and country club property located near Fort Worth. We had no non-cash impairment charges of proved oil and gas properties in first quarter2015.

	First Quarter-End 2015								Year-End 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Non-Financial Assets and Liabilities:
Real estate	$	—	$	1,948	$	—	$	1,948	$	—	$	970	$	—	$	970
Proved oil and gas properties	$	—	$	—	$	—	$	—	$	—	$	—	$	3,655	$	3,655

We elected not to use the fair value option for cash and cash equivalents, accounts receivable, other current assets, variable debt, accounts payable and other current liabilities. The carrying amounts of these financial instruments approximate their fair values due to their short-term nature or variable interest rates. We determine the fair value of fixed rate financial instruments using quoted prices for similar instruments in active markets.

Information about our fixed rate financial instruments not measured at fair value follows:

	First Quarter-End 2015						Year-End 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Valuation Technique
	(In thousands)
Loan secured by real estate	$	—		$	—		$	3,574		$	4,859		Level 2
Fixed rate debt	$	(369,112	)	$	(357,342	)	$	(370,348	)	$	(359,131	)	Level 2

Note 11—Capital Stock

In first quarter 2015, we accelerated the expiration date of our shareholder rights plan from December 11, 2017 to March 13, 2015, resulting in termination of the plan.

Please read Note 17—Share-Based and Long-Term Incentive Compensation for information about additional shares of common stock that could be issued under terms of our share-based compensation plans.

At first quarter-end2015, personnel of former affiliates held options to purchase 510,000 shares of our common stock. The options have a weighted average exercise price of $28.42 and a weighted average remaining contractual term of one year. At first quarter-end2015, the options have an aggregate intrinsic value of $24,600.

Note 12—Net Income (Loss) per Share

Basic and diluted earnings per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security. We have determined that our 6.00% tangible equity units (Units) are participating securities. Per share amounts are computed by dividing earnings available to common shareholders by the weighted average shares outstanding during each period. In periods

11

with a net loss, no such adjustment is made to earnings as the holders of the participating securities have no obligation to fund losses.

Due to a net loss in first quarter 2015, as the effect of potentially dilutive securities would be anti-dilutive, basic and diluted loss per share are the same. The computations of basic and diluted earnings per share are as follows:

	First Quarter
	2015			2014
	(In thousands)
Numerator:
Consolidated net income (loss)	$	(8,237	)	$	9,007
Less: Net loss (income) attributable to noncontrolling interest	79			(673		)
Earnings (loss) available for diluted earnings per share	$	(8,158	)	$	8,334
Less: Undistributed net income allocated to participating securities	—			(1,295		)
Earnings (loss) available to common shareholders for basic earnings per share	$	(8,158	)	$	7,039
Denominator:
Weighted average common shares outstanding — basic	34,168			35,576
Weighted average common shares upon conversion of participating securities (a)	—			7,857
Dilutive effect of stock options, restricted stock and equity-settled awards	—			480
Total weighted average shares outstanding — diluted	34,168			43,913
Anti-dilutive awards excluded from diluted weighted average shares	10,743			2,051

_____________________

^(a)  Our earnings per share calculation reflects the weighted average shares issuable upon settlement of the prepaid stock purchase contract component of our 6.00% tangible equity units, issued November 27, 2013.

The actual number of shares we may issue upon settlement of the stock purchase contract will be between 6,547,800 shares (the minimum settlement rate) and 7,857,000 shares (the maximum settlement rate) based on the applicable market value, as defined in the purchase contract agreement associated with issuance of the Units.

We intend to settle the principal amount of our convertible senior notes (Convertible Notes) in cash upon conversion with only the amount in excess of par value of the Convertible Notes to be settled in shares of our common stock. Therefore, our calculation of diluted net income per share using the treasury stock method includes only the amount, if any, in excess of par value of the Convertible Notes. As such, the Convertible Notes have no impact on diluted net income per share until the price of our common stock exceeds the $24.49 conversion price of the Convertible Notes. The average price of our common stock in first quarter2015 did not exceed the conversion price which resulted in no additional diluted outstanding shares.

Note 13—Income Taxes

Our effective tax rate was 35 percent in first quarter 2015, which includes a two percent benefit for noncontrolling interests and a two percent detriment for share-based compensation benefits that will not be realized. Our effective tax rate was 34 percent in first quarter2014, which included a two percent benefit for noncontrolling interests. Our effective tax rates also include the effect of state income taxes, nondeductible items and benefits of percentage depletion.

We have not provided a valuation allowance for our federal deferred tax asset because we believe it is likely it will be recoverable in future periods.

Note 14—Commitments and Contingencies

Litigation

We are involved in various legal proceedings that arise from time to time in the ordinary course of doing business and believe that adequate reserves have been established for any probable losses. We do not believe that the outcome of any of these proceedings should have a significant adverse effect on our financial position, long-term results of operations or cash flows. However, it is possible that charges related to these matters could be significant to our results or cash flows in any one accounting period.

Environmental

Environmental remediation liabilities arise from time to time in the ordinary course of doing business, and we believe we have established adequate reserves for any probable losses that we can reasonably estimate. We own 288 acres near Antioch,

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California, portions of which were sites of a former paper manufacturing operation that are in remediation. We have received certificates of completion on all but one 80 acre tract, a portion of which includes subsurface contamination. We estimate the remaining cost to complete remediation activities will be approximately $451,000, which is included in other accrued expenses. It is possible that remediation or monitoring activities could be required in addition to those included within our estimate, but we are unable to determine the scope, timing or extent of such activities.

We have asset retirement obligations related to the abandonment and site restoration requirements that result from the acquisition, construction and development of oil and gas properties. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense related to the asset retirement obligation and depletion expense related to capitalized asset retirement cost is included in cost of oil and gas producing activities on our consolidated statements of income and comprehensive income. At first quarter-end2015 and year-end 2014, our asset retirement obligation was $1,877,000 and $1,807,000, which is included in other liabilities.

Oil and Gas Restructuring Costs

In connection with review of strategic alternatives with respect to our oil and gas business that was announced in December 2014, we offered retention bonuses aggregating $1,519,000 to key personnel provided they remain our employees through December 2015. We are expensing retention bonus costs over the retention period. In first quarter 2015, we incurred severance expenses related to staff reductions, paid a portion of the December 2014 accrual under written severance agreements and incurred costs associated with closure of our Fort Worth office. Office closure costs include a $1,750,000 lease termination charge and $391,000 for write off of leasehold improvements which were partially offset by a deferred lease credit of $364,000. These restructuring costs are included in other operating expense on our consolidated statements of income and comprehensive income. We may incur additional costs related to our review of strategic alternatives associated with our oil and gas business.

The following table summarizes activity related to liabilities associated with our oil and gas restructuring activities in first quarter 2015:

	Employee-Related Costs			Facility Closure			Total
	(In thousands)
Balance at year-end 2014	$	(2,367	)	$	—		$	(2,367	)
Additions	(1,068		)	(1,750		)	(2,818		)
Payments	1,894			1,750			3,644
Balance at first quarter-end 2015	$	(1,541	)	$	—		$	(1,541	)

Note 15—Segment Information

We manage our operations through three segments: real estate, oil and gas and other natural resources. Real estate secures entitlements and develops infrastructure on our lands for single-family residential and mixed-use communities, and manages our undeveloped land, commercial and income producing properties, primarily a hotel and our multifamily investments. Oil and gas is an independent oil and gas exploration, development and production operation and manages our owned and leased mineral interests. Other natural resources manages our timber, recreational leases and water resource initiatives.

Total assets allocated by segment are as follows:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
Real estate	$	670,067	$	654,774
Oil and gas	352,695		342,703
Other natural resources	20,077		22,531
Assets not allocated to segments (a)	194,132		238,191
	$	1,236,971	$	1,258,199

  _________________________

^(a)  Assets not allocated to segments at first quarter-end2015 principally consist of cash and cash equivalents of $126,262,000 and a net deferred tax asset of $44,583,000. Assets not allocated to segments at year-end 2014 principally consist of cash and cash equivalents of $170,127,000 and a net deferred tax asset of $40,624,000.

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We evaluate performance based on segment earnings (loss) before unallocated items and income taxes. Segment earnings (loss) consist of operating income, equity in earnings (loss) of unconsolidated ventures, gain on sales of assets, interest income on loans secured by real estate and net (income) loss attributable to noncontrolling interests. Items not allocated to our business segments consist of general and administrative expense, share-based and long-term incentive compensation, gain on sale of strategic timberland, interest expense and other corporate non-operating income and expense. The accounting policies of the segments are the same as those described in Note 1—Basis of Presentation. Our revenues are derived from U.S. operations and all of our assets are located in the U.S. In first quarter2015, no single customer accounted for more than ten percent of our total revenues.

Segment revenues and earnings are as follows:

	First Quarter
	2015			2014
	(In thousands)
Revenues:
Real estate	$	32,830		$	65,480
Oil and gas	13,185			17,554
Other natural resources	1,790			1,571
Total revenues	$	47,805		$	84,605
Segment earnings (loss):
Real estate	$	9,066		$	23,575
Oil and gas	(2,941		)	807
Other natural resources	(391		)	(528		)
Total segment earnings	5,734			23,854
Items not allocated to segments (a)	(18,251		)	(10,862		)
Income (loss) before taxes attributable to Forestar Group Inc.	$	(12,517	)	$	12,992

  _________________________

^(a)  Items not allocated to segments consist of:

	First Quarter
	2015			2014
	(In thousands)
General and administrative expense	$	(6,020	)	$	(5,168	)
Shared-based and long-term incentive compensation expense	(3,458		)	(313		)
Interest expense	(8,821		)	(5,503		)
Other corporate non-operating income	48			122
	$	(18,251	)	$	(10,862	)

Note 16—Variable Interest Entities

We participate in real estate ventures for the purpose of acquiring and developing residential, multifamily and mixed-use communities in which we may or may not have a controlling financial interest. Generally accepted accounting principles require consolidation of VIEs in which an enterprise has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. We examine specific criteria and use judgment when determining whether we are the primary beneficiary and must consolidate a VIE. We perform this review initially at the time we enter into venture agreements and continuously reassess to see if we are the primary beneficiary of a VIE.

At first quarter-end2015, we have four VIEs. We account for these VIEs using the equity method and we are not the primary beneficiary. Although we have certain rights regarding major decisions, we do not have the power to direct the activities that are most significant to the economic performance of these VIEs. At first quarter-end2015, these VIEs have total assets of $73,855,000, substantially all of which represent developed and undeveloped real estate, and total liabilities of $89,317,000, which includes $36,306,000 of borrowings classified as current maturities. These amounts are included in the summarized balance sheet information for ventures accounted for using the equity method in Note 7—Investment in Unconsolidated Ventures. At first quarter-end2015, our investment in these VIEs is $9,567,000 and is included in investment in unconsolidated ventures. In first quarter2015, we contributed $37,000 to these VIEs. Our maximum exposure to loss related to one of these VIEs is estimated at $3,561,000, which exceeds our investment as we have a nominal general partner interest

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and could be held responsible for its liabilities. The maximum exposure to loss represents the maximum loss that we could be required to recognize assuming all the ventures’ assets (principally real estate) are worthless, without consideration of the probability of a loss or of any actions we may take to mitigate any such loss.

Note 17—Share-Based and Long-Term Incentive Compensation

Share-based and long-term incentive compensation expense consists of:

	First Quarter
	2015		2014
	(In thousands)
Cash-settled awards	296		(2,683		)
Equity-settled awards	1,997		2,349
Restricted stock	17		46
Stock options	1,032		601
Total share-based compensation	3,342		313
Deferred cash	116		—
	$	3,458	$	313

Share-based and long-term incentive compensation expense is included in:

	First Quarter
	2015		2014
	(In thousands)
General and administrative expense	$	2,122	$	(23	)
Other operating expense	1,336		336
	$	3,458	$	313

Share-Based Compensation

In first quarter2015, we granted 89,900 cash-settled stock appreciation rights awards and 598,600 equity-settled awards. Cash-settled stock appreciation rights have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, or disability or if there is a change in control. Equity-settled awards granted to employees in the first quarter2015 include market-leveraged stock units (MSUs) and stock options. Equity-settled MSUs will be settled in common stock based upon our stock price performance over 3 years years from the date of grant. Stock options have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, or disability or if there is a change in control. Equity-settled awards in the form of restricted stock units granted to our directors are fully vested at the time of grant and are issued upon retirement.

The fair value of awards granted to retirement eligible employees and expensed at the date of grant was $517,000 and $760,000 in first quarter2015 and 2014. Unrecognized share-based compensation expense related to non-vested equity-settled awards, restricted stock and stock options is $10,177,000 at first quarter-end2015.

In first quarter2015 and 2014, we issued 157,201 and 167,747 shares out of our treasury stock associated with vesting of stock-based awards or exercise of stock options, net of 48,636 and 46,314 shares withheld having a value of $723,000 and $879,000 for payroll taxes in connection with vesting of stock-based awards or exercise of stock options.

Long-Term Incentive Compensation

In first quarter2015, we granted $587,000 of long-term incentive compensation in the form of deferred cash compensation. Deferred cash will be paid out after the earlier of three years or the employee's retirement eligibility date and the expense is recognized ratably over the vesting period. The accrued liability was $116,000 at first quarter-end2015 and is included in other liabilities.

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Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2014 Annual Report on Form 10-K. Unless otherwise indicated, information is presented as of first quarter-end2015, and references to acreage owned includes all acres owned by ventures regardless of our ownership interest in a venture.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and other materials we have filed or may file with the Securities and Exchange Commission contain “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “anticipate,” “could,” “estimate,” “likely,” “intend,” “may,” “plan,” “expect,” and similar expressions, including references to assumptions. These statements reflect our current views with respect to future events and are subject to risks and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements. Factors and uncertainties that might cause such differences include, but are not limited to:

• general economic, market or business conditions in Texas or Georgia, where our real estate activities are concentrated, or on a national or global scale;

• our ability to achieve some or all of our strategic initiatives;

• the opportunities (or lack thereof) that may be presented to us and that we may pursue;

• our ability to hire and retain key personnel;

• significant customer concentration;

• future residential, multifamily or commercial entitlements, development approvals and the ability to obtain such approvals;

• obtaining approvals of reimbursements and other payments from special improvement districts and the timing of such payments;

• accuracy of estimates and other assumptions related to investment in and development of real estate, the expected timing and pricing of land and lot sales and related cost of real estate sales, impairment of long-lived assets, income taxes, share-based compensation, oil and gas reserves, revenues, capital expenditures and lease operating expense accruals associated with our oil and gas working interests, and depletion of our oil and gas properties;

• the levels of resale housing inventory and potential impact of foreclosures in our mixed-use development projects and the regions in which they are located;

• fluctuations in costs and expenses, including impacts from shortages in materials or labor;

• demand for new housing, which can be affected by a number of factors including the availability of mortgage credit, job growth and fluctuations in commodity prices;

• demand for multifamily communities, which can be affected by a number of factors including local markets and economic conditions;

• competitive actions by other companies;

• changes in governmental policies, laws or regulations and actions or restrictions of regulatory agencies;

• risks associated with oil and gas exploration, drilling and production activities;

• fluctuations in oil and gas commodity prices;

• government regulation of exploration and production technology, including hydraulic fracturing;

• the results of financing efforts, including our ability to obtain financing with favorable terms, or at all;

• our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our senior secured credit facility, indentures and other debt agreements;

• our partners’ ability to fund their capital commitments and otherwise fulfill their operating and financial obligations;

• the effect of limitations, restrictions and natural events on our ability to harvest and deliver timber;

• inability to obtain permits for, or changes in laws, governmental policies or regulations affecting, water withdrawal or usage;

• the final resolutions or outcomes with respect to our contingent and other liabilities related to our business; and

• our ability to execute our growth strategy and deliver acceptable returns from acquisitions and other investments.

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Other factors, including the risk factors described in Item 1A of our 2014 Annual Report on Form 10-K, may also cause actual results to differ materially from those projected by our forward-looking statements. New factors emerge from time to time and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

Strategy

Our strategy is:

• Recognizing and responsibly delivering the greatest value from every acre; and

• Growing through strategic and disciplined investments.

On December 8, 2014, we announced that our Board of Directors, working together with our management team and financial advisor, is exploring strategic alternatives to enhance shareholder value. This analysis includes a review of alternatives with respect to our oil and gas business. There is no assurance that exploration of strategic alternatives will result in any transaction being pursued or consummated.

Results of Operations

A summary of our consolidated results by business segment follows:

	First Quarter
	2015			2014
	(In thousands)
Revenues:
Real estate	$	32,830		$	65,480
Oil and gas	13,185			17,554
Other natural resources	1,790			1,571
Total revenues	$	47,805		$	84,605
Segment earnings (loss):
Real estate	$	9,066		$	23,575
Oil and gas	(2,941		)	807
Other natural resources	(391		)	(528		)
Total segment earnings	5,734			23,854
Items not allocated to segments:
General and administrative expense	(6,020		)	(5,168		)
Share-based and long-term incentive compensation expense	(3,458		)	(313		)
Interest expense	(8,821		)	(5,503		)
Other corporate non-operating income	48			122
Income (loss) before taxes	(12,517		)	12,992
Income tax benefit (expense)	4,359			(4,658		)
Net income (loss) attributable to Forestar Group Inc.	$	(8,158	)	$	8,334

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Significant aspects of our results of operations follow:

First Quarter2015

• First quarter 2015 real estate segment earnings were down compared with first quarter 2014 principally due to lower undeveloped land sales and decreased residential lot sales activity.

• First quarter 2015 oil and gas segment earnings (loss) includes lease termination penalty of $1,750,000 associated with closure of our office in Fort Worth, Texas and $1,068,000 of employee severance and retention bonus costs. These costs are related to our initiatives to significantly reduce oil and gas operating costs as part of our announced review of strategic alternatives. These charges are partially offset by a gain of $1,176,000 related to the sale of 290 net mineral leasehold acres in North Dakota. In addition, segment earnings (loss) were negatively impacted by lower realized oil and gas prices despite increase in production volumes when compared with first quarter 2014.

• Share-based and long-term incentive compensation expense increased principally as result of a two percent increase in our stock price since year-end 2014, compared with a 16 percent decrease in our stock price in first quarter 2014 since year-end 2013, which impacted the value of vested cash-settled awards.

• First quarter 2015 interest expense increased primarily due to higher average borrowing rates and increased debt outstanding.

First Quarter2014

• Real estate segment earnings benefited from increased undeveloped land and residential lot sales activity.

• Oil and gas segment earnings decreased principally due to higher exploration, production and operating

expenses which were partially offset by higher working interest production volumes compared with first quarter

2013. In addition, segment earnings were negatively impacted by lower production volumes and delay rental

revenues associated with our owned mineral interests.

• Other natural resources segment earnings decreased primarily due to lower fiber volumes.

• First quarter 2014 share-based compensation expense decreased principally as result of a 16 percent decrease in

our stock price since year-end 2013, compared with a 26 percent increase in our stock price in first quarter 2013

since year-end 2012, which impacted the value of vested cash-settled awards.

• First quarter 2014 net income increased principally due to the reduction in shared-based compensation expense

compared with first quarter 2013.

Current Market Conditions

Sales of new U.S. single-family homes reached a seven-year high of approximately 539,000 units in February 2015, on an annualized basis. However, March new home sales were down 11.4 percent sequentially to 481,000 units, indicating that the housing recovery remains tentative. Inventories of new homes are at historically low levels in many areas. In addition, declining finished lot inventories and supply of economically developable raw land has resulted in demand for our developed lots. However, national and global economic weakness and uncertainty, and a restrictive mortgage lending environment continue to threaten a robust recovery in the housing market, despite low interest rates. Multifamily market conditions continue to be strong, with many markets experiencing healthy occupancy levels and positive rent growth. This improvement has been driven primarily by limited housing inventory, reduced single-family mortgage credit availability, and the increased propensity to rent among the 18 to 34 year old demographic of the U.S. population.

Crude oil prices have declined approximately 30 percent since year-end 2014, driven by a combination of robust global oil production growth and weak market demand, which has resulted in record inventory levels. The International Energy Agency cut its full-year oil-demand growth forecast to the lowest level in five years. Despite the significant decline in crude oil prices, exploration and development activity continues to be liquids focused principally due to the premium price of oil over gas when comparing energy equivalency and current estimates of domestic gas producing supplies are believed to be sufficient. However, the impact of lower oil prices on well economics could impact future exploration and development activity.

Gas prices are down approximately 40 percent compared with year ago levels, and remain significantly lower than realized prices over the last decade.  Prolonged cold weather throughout the previous two heating seasons has taken working gas in storage below the previous five year average (2010 - 2014), however, increasing production levels and sufficient inventories have resulted in lower prices. 

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Business Segments

We manage our operations through three business segments:

• Real estate,

• Oil and gas, and

• Other natural resources.

We evaluate performance based on segment earnings (loss) before unallocated items and income taxes. Segment earnings (loss) consist of operating income, equity in earnings (loss) of unconsolidated ventures, gain on sales of assets, interest income on loans secured by real estate and net (income) loss attributable to noncontrolling interests. Items not allocated to our business segments consist of general and administrative expense, share-based and long-term incentive compensation, gain on sale of strategic timberland, interest expense and other corporate non-operating income and expense. The accounting policies of the segments are the same as those described in the accounting policy note to the consolidated financial statements.

We operate in cyclical industries. Our operations are affected to varying degrees by supply and demand factors and economic conditions including changes in interest rates, availability of mortgage credit, consumer and home builder sentiment, new housing starts, real estate values, employment levels, changes in the market prices for oil, gas and timber, and the overall strength or weakness of the U.S. economy.

Real Estate

We own directly or through ventures approximately 112,000 acres of real estate located in 11 states and 14 markets. Our real estate segment secures entitlements and develops infrastructure on our lands, primarily for single-family residential and mixed-use communities. We own approximately 88,000 acres in a broad area around Atlanta, Georgia, with the balance located primarily in Texas. We target investments principally in our strategic growth corridors, regions across the southern half of the United States that possess key demographic and growth characteristics that we believe make them attractive for long-term real estate investment. We own and manage our projects either directly or through ventures. Our real estate segment revenues are principally derived from the sales of residential single-family lots and tracts, undeveloped land and commercial real estate, and from the operation of income producing properties, primarily a hotel and multifamily properties.

A summary of our real estate results follows:

	First Quarter
	2015			2014
	(In thousands)
Revenues	$	32,830		$	65,480
Cost of sales	(18,054		)	(36,184		)
Operating expenses	(9,602		)	(8,075		)
	5,174			21,221
Interest income on loan secured by real estate	869			2,172
Equity in earnings of unconsolidated ventures	2,944			855
Less: Net (income) loss attributable to noncontrolling interests	79			(673		)
Segment earnings	$	9,066		$	23,575

Revenues in our owned and consolidated ventures consist of:

	First Quarter
	2015		2014
	(In thousands)
Residential real estate	$	18,322	$	35,261
Commercial real estate	1,377		171
Undeveloped land	2,015		19,713
Commercial and income producing properties	10,869		9,933
Other	247		402
	$	32,830	$	65,480

Residential real estate revenues principally consist of the sale of single-family lots to local, regional and national homebuilders. Revenues decreased in first quarter 2015 compared with first quarter 2014 primarily due to lower undeveloped

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land sales and decreased residential lot sales activity which was principally due to the first quarter 2014 bulk sale of 367 residential lots from projects near Atlanta.

In first quarter2015, undeveloped land sales decreased as compared with first quarter2014 due to first quarter 2014 sale of 9,329 acres for $19,713,000, or approximately $2,100 per acre, generating approximately $16,233,000 in segment earnings.

In first quarter 2015, commercial and income producing properties revenues include construction revenues of $2,029,000 associated with our multifamily fixed fee contract as general contractor. We are reimbursed for costs paid to subcontractors plus we may earn a development and construction fee on certain projects, both of which are included in commercial and income producing properties revenue. Revenues associated with multifamily construction contracts for first quarter 2014 were $3,233,000.

Units sold in our owned and consolidated ventures consist of:

	First Quarter
	2015		2014
Owned and consolidated ventures:
Residential lots sold	242		836
Revenue per lot sold	$	73,064	$	40,161
Commercial acres sold	4		—
Revenue per commercial acre sold	$	329,863	$	—
Undeveloped acres sold	731		9,329
Revenue per acre sold	$	2,758	$	2,113
Ventures accounted for using the equity method:
Residential lots sold	47		138
Revenue per lot sold	$	92,551	$	57,410
Commercial acres sold	29		—
Revenue per commercial acre sold	$	312,237	$	—
Undeveloped acres sold	—		—
Revenue per acre sold	$	—	$	—

In first quarter 2015, cost of sales include $2,434,000 related to multifamily construction contract costs we incurred as general contractor and paid to subcontractors associated with our development of a multifamily venture property, compared with $5,502,000 associated with two multifamily venture properties in first quarter 2014, of which one of was completed in second quarter 2014. Included in multifamily construction contract costs are charges of $405,000 in first quarter 2015 reflecting estimated cost increases associated with our fixed fee contracts as general contractor for one multifamily venture property compared with charges of $2,269,000 associated with two multifamily venture properties in first quarter 2014. In addition, first quarter 2015 cost of sales includes $504,000 of non-cash asset impairment charges associated with a residential development with golf course and country club property located near Fort Worth which was sold in April 2015.

Operating expenses consist of:

	First Quarter
	2015		2014
	(In thousands)
Employee compensation and benefits	$	2,299	$	2,858
Property taxes	2,114		1,586
Professional services	680		1,139
Depreciation and amortization	1,724		648
Other	2,785		1,844
	$	9,602	$	8,075

The increase in operating expenses for first quarter 2015 is principally related to increase in depreciation and amortization and property taxes associated with the Eleven project which was completed in second quarter 2014 and Midtown Cedar Hill project which is over 90 percent complete. In third quarter 2014, we acquired full ownership of the Eleven project in Austin in which we previously held a 25 percent interest.

Interest income principally represents earnings from a loan secured by a mixed-use real estate community in Houston. The loan was paid in full in first quarter 2015.

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Increase in equity earnings from our unconsolidated ventures in first quarter 2015 is primarily associated with sale of 15 commercial tract acres from an equity method venture project in Houston, Texas for $5,331,000 generating equity earnings of $1,693,000.

In first quarter 2015, the decrease in net income attributable to noncontrolling interests compared with first quarter 2014 is principally due to the purchase of noncontrolling interests in the Lantana ventures for $7,971,000 in March 2014.

Information about our real estate projects and our real estate ventures follows:

	First Quarter-End
	2015	2014
Owned and consolidated ventures:
Entitled, developed and under development projects
Number of projects	66	63
Residential lots remaining	15,694	15,715
Commercial acres remaining	1,755	1,832
Undeveloped land and land in the entitlement process
Number of projects	11	12
Acres in entitlement process	24,430	25,390
Acres undeveloped	71,910	76,638
Ventures accounted for using the equity method:
Ventures’ entitled, developed and under development projects
Number of projects	8	8
Residential lots remaining	2,842	3,077
Commercial acres remaining	223	240
Ventures’ undeveloped land and land in the entitlement process
Acres undeveloped	4,539	5,547

We underwrite development projects based on a variety of assumptions incorporated into our development plans, including the timing and pricing of sales and leasing and costs to complete development. Our development plans are periodically reviewed in comparison to our return projections and expectations, and we may revise our plans as business conditions warrant. If as a result of changes to our development plans the anticipated future net cash flows are reduced such that our basis in a project is not fully recoverable, we may be required to recognize a non-cash impairment charge for such project.

Our net investment in owned and consolidated real estate by geographic location follows:

State	Entitled, Developed, and Under Development Projects		Undeveloped Land and Land in Entitlement Process		Commercial and Income Producing Properties		Total
	(In thousands)
Texas	$	250,534	$	1,831	$	140,824	$	393,189
Georgia	15,952		67,160		—		83,112
Colorado	25,747		219		—		25,966
California	8,916		23,360		—		32,276
North Carolina	12,148		—		15,456		27,604
Tennessee	10,045		837		7,939		18,821
Other	15,265		51		—		15,316
	$	338,607	$	93,458	$	164,219	$	596,284

Oil and Gas

Our oil and gas segment is focused on the exploration, development and production of oil and gas on our mineral and leasehold interests.

In addition, we lease portions of our 590,000 owned net mineral acres located principally in Texas, Louisiana, Georgia and Alabama to other oil and gas companies in return for a lease bonus, delay rentals and a royalty interest. At first quarter-end2015, we have about 20,000 net acres leased to others, about 36,000 net acres leased to others that are held by production and

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553 gross productive wells operated by others on our owned mineral acres. Most leases are for a three to five year term although all or a portion of a lease may be extended as long as actual production is occurring.

We acquired Credo in third quarter 2012, an independent oil and gas exploration, development and production company. At first quarter-end2015, our leasehold interests include 370,000 net mineral acres leased from others principally located in Nebraska and Kansas primarily targeting the Lansing-Kansas City formation, in the Texas Panhandle primarily targeting the Tonkawa and Cleveland formations, in Oklahoma targeting various formations in the Anadarko Basin and in North Dakota primarily targeting the Bakken and Three Forks formations. Our leasehold interests include 9,000 net mineral acres in the Bakken and Three Forks formation. We have 48,000 net acres held by production and 410 gross oil and gas wells with working interest ownership, of which 154 are operated by us.

A summary of our oil and gas results follows:

	First Quarter
	2015			2014
	(In thousands)
Revenues	$	13,185		$	17,554
Cost of oil and gas producing activities	(11,542		)	(12,620		)
Operating expenses	(5,856		)	(4,259		)
	(4,213		)	675
Gain on sale of assets	1,176			—
Equity in earnings of unconsolidated ventures	96			132
Segment earnings (loss)	$	(2,941	)	$	807

Revenues consist of:

	First Quarter
	2015		2014
	(In thousands)
Oil production (a)	$	11,304	$	14,994
Gas production	1,516		1,941
Other (principally lease bonus and delay rentals)	365		619
	$	13,185	$	17,554

 _________________________

^(a)  Oil production includes revenues from oil, condensate and natural gas liquids (NGLs).

In first quarter2015, oil and gas production revenues decreased principally as a result of lower oil and gas prices despite increase in oil and gas production volumes as compared with first quarter 2014. Decrease in oil prices negatively impacted revenues by $14,296,000, partially offset by $10,606,000 increase in revenues as a result of higher oil production volumes. Decrease in gas prices negatively impacted revenues by $623,000, partially offset by $198,000 increase in revenues as a result of increased gas production volumes.

In first quarter2015, other revenues include $279,000 in lease bonuses received from leasing approximately 800 net mineral acres owned in Texas and Louisiana compared with $598,000 in lease bonuses received from leasing approximately 1,700 net mineral acres owned in Texas and Louisiana in first quarter 2014.

Cost of oil and gas producing activities consists of:

	First Quarter
	2015		2014
	(In thousands)
Depletion and amortization	$	7,204	$	4,596
Production costs	4,102		3,848
Exploration costs	168		3,380
Impairment of unproved leasehold interests	7		755
Other	61		41
	$	11,542	$	12,620

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In first quarter2015, cost of oil and gas producing activities decreased compared with first quarter 2014 primarily due to lower exploration costs, which were partially offset by an increase in depletion expenses due to higher oil and gas production volumes. Depletion and amortization represent the non-cash cost of producing oil and gas associated with our working interests and is computed based on the units of production method.

Exploration costs principally represent exploratory dry hole costs, geological and geophysical and seismic study costs. Dry hole costs in first quarter 2015 decreased because of lower drilling activity of exploratory wells and were $78,000, compared with dry hole costs of $1,626,000 in first quarter 2014.

Production costs principally represent lease operating expenses associated with producing working interest wells and our share of production severance taxes related to both our royalty and working interests.

Oil and gas produced and average unit prices related to our royalty and working interests follows:

	First Quarter
	2015		2014
Consolidated entities:
Oil production (barrels)	269,900		157,000
Average oil price per barrel	$	40.18	$	91.40
NGL production (barrels)	23,700		15,000
Average NGL price per barrel	$	19.28	$	43.11
Total oil production (barrels), including NGLs	293,600		172,000
Average total oil price per barrel, including NGLs	$	38.50	$	87.18
Gas production (millions of cubic feet)	478.1		433.8
Average price per thousand cubic feet	$	3.17	$	4.47
Our share of ventures accounted for using the equity method:
Gas production (millions of cubic feet)	42.3		52.7
Average price per thousand cubic feet	$	3.30	$	3.49
Total consolidated and our share of equity method ventures:
Oil production (barrels)	269,900		157,000
Average oil price per barrel	$	40.18	$	91.40
NGL production (barrels)	23,700		15,000
Average NGL price per barrel	$	19.28	$	43.11
Total oil production (barrels), including NGLs	293,600		172,000
Average total oil price per barrel, including NGLs	$	38.50	$	87.18
Gas production (millions of cubic feet)	520.4		486.5
Average price per thousand cubic feet	$	3.18	$	4.37
Total BOE (barrel of oil equivalent) (a)	380,400		253,100
Average price per barrel of oil equivalent	$	34.07	$	67.64

 _________________________

^(a)  Gas is converted to barrels of oil equivalent (BOE) using a conversion of six Mcf to one barrel of oil.

Operating expenses consist of:

	First Quarter
	2015		2014
	(In thousands)
Employee compensation and benefits	$	2,621	$	2,571
Professional and consulting services	707		389
Depreciation	211		251
Other	2,317		1,048
	$	5,856	$	4,259

First quarter 2015 operating expenses increased as compared with first quarter 2014, primarily as result of one-time restructuring costs of $1,750,000 in lease termination penalty associated with closing our office in Fort Worth, Texas and $1,068,000 of employee severance and retention costs. These one-time restructuring costs were partially offset by lower

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staffing costs in first quarter 2015 as result of a reduction in our workforce and strategy to reduce oil and gas operating expenses.

In first quarter2015, we recorded a gain of $1,176,000 related to the sale of 290 net mineral acres leased from others in North Dakota for approximately $2,000,000.

Other Natural Resources

Our other natural resources segment manages our timber holdings, recreational leases and water resource initiatives. At first quarter-end2015, we have about 101,000 real estate acres with timber we own directly or through ventures, primarily in Georgia and Texas. Our other natural resources segment revenues are principally derived from the sales of wood fiber from our land and leases for recreational uses. We have water interests in approximately 1.5 million acres, including a 45 percent nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes or sold from 1.4 million acres in Texas, Louisiana, Georgia and Alabama, and approximately 20,000 acres of groundwater leases in central Texas.

A summary of our other natural resources results follows:

	First Quarter
	2015			2014
	(In thousands)
Revenues	$	1,790		$	1,571
Cost of sales	(920		)	(776		)
Operating expenses	(1,266		)	(1,327		)
	(396		)	(532		)
Equity in earnings of unconsolidated ventures	5			4
Segment earnings (loss)	$	(391	)	$	(528	)

Revenues consist of:

	First Quarter
	2015		2014
	(In thousands)
Fiber	$	1,245	$	1,303
Water	100		—
Recreational leases and other	445		268
	$	1,790	$	1,571

First quarter 2015 water revenues are associated with a groundwater reservation agreement.

Fiber sold consists of:

	First Quarter
	2015		2014
Pulpwood tons sold	27,500		28,200
Average pulpwood price per ton	$	8.63	$	9.66
Sawtimber tons sold	20,100		28,900
Average sawtimber price per ton	$	21.50	$	21.71
Total tons sold	47,600		57,100
Average stumpage price per ton (a)	$	14.07	$	15.77

 _________________________

^(a)  Average stumpage price per ton is based on gross revenues less cut and haul costs.

Information about our recreational leases follows:

	First Quarter
	2015		2014
Average recreational acres leased	109,700		115,200
Average price per leased acre	$	8.66	$	9.24

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Cost of sales principally includes non-cash cost of timber cut and sold and delay rental payments paid to others related to groundwater leases in central Texas.

Operating expenses consist of:

	First Quarter
	2015		2014
	(In thousands)
Employee compensation and benefits	$	683	$	505
Professional and consulting services	349		675
Other	234		147
	$	1,266	$	1,327

Items Not Allocated to Segments

Unallocated items represent income and expenses managed on a company-wide basis and include general and administrative expenses, share-based and long-term incentive compensation, interest expense and other corporate non-operating income and expense. General and administrative expenses principally consist of accounting and finance, tax, legal, human resources, internal audit, information technology and our board of directors. These functions support all of our business segments and are not allocated.

General and administrative expenses consist of:

	First Quarter
	2015		2014
	(In thousands)
Employee compensation and benefits	$	2,208	$	2,261
Professional and consulting services	1,668		1,005
Facility costs	233		228
Depreciation and amortization	181		144
Insurance costs	151		275
Other	1,579		1,255
	$	6,020	$	5,168

Income Taxes

Our effective tax rate was 35 percent in first quarter 2015, which includes a two percent benefit for noncontrolling interests and a two percent detriment for share-based compensation benefits that will not be realized. Our effective tax rate was 34 percent in first quarter 2014, which included a two percent benefit for noncontrolling interests.

Our 2015 and 2014 effective tax rates also include the effect of state income taxes, nondeductible itemsand benefits of percentage depletion.

We have not provided a valuation allowance for our federal deferred tax asset because we believe it is likely it will be recoverable in future periods based on considerations including taxable income in prior carryback years, future reversals of existing temporary differences, tax planning strategies and future taxable income. If these sources of income are not sufficient in future periods, we may be required to provide a valuation allowance for our federal deferred tax asset.

Capital Resources and Liquidity

Sources and Uses of Cash

We operate in cyclical industries and our cash flows fluctuate accordingly. Our principal sources of cash are proceeds from the sale of real estate and timber, the cash flow from oil and gas and income producing properties, borrowings and reimbursements from utility and improvement districts. Our principal cash requirements are for the acquisition and development of real estate and investment in oil and gas leasing and production activities, either directly or indirectly through ventures, taxes, interest and compensation. Operating cash flows are affected by the timing of the payment of real estate development expenditures and the collection of proceeds from the eventual sale of the real estate, the timing of which can vary substantially depending on many factors including the size of the project, state and local permitting requirements and availability of utilities, and by the timing of oil and gas leasing and production activities. Working capital varies based on a

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variety of factors, including the timing of sales of real estate and timber, oil and gas leasing and production activities, collection of receivables, reimbursement from utility and improvement districts and the payment of payables and expenses.

We regularly evaluate alternatives for managing our capital structure and liquidity profile in consideration of expected cash flows, growth and operating capital requirements and capital market conditions. We may, at any time, be considering or be in discussions with respect to the purchase or sale of our common stock, debt securities, convertible securities or a combination thereof.

Cash Flows from Operating Activities

Cash flows from our real estate development activities, undeveloped land sales, commercial and income producing properties, timber sales, income from oil and gas properties, recreational leases and reimbursements from utility and improvement districts are classified as operating cash flows.

In first quarter2015, net cash used for operating activities was $18,766,000 primarily due to a decrease in undeveloped land sales and lower residential lot sales activity. In addition, our real estate development and acquisition expenditures were $34,769,000 exceeding $9,884,000 of real estate cost of sales. In first quarter2014, net cash provided by operating activities was $5,543,000 principally as result of selling 9,329 acres of undeveloped land for $19,713,000, offset by real estate development and acquisition expenditures of $35,035,000 exceeding $24,812,000 of real estate cost of sales.

Cash Flows from Investing Activities

Capital contributions to and capital distributions from unconsolidated ventures, business acquisitions and investment in oil and gas properties and equipment are classified as investing activities. In addition, proceeds from the sale of property and equipment, software costs and expenditures related to reforestation activities are also classified as investing activities.

In first quarter2015, net cash used for investing activities was $24,703,000 principally due to our investment of $23,718,000 in oil and gas properties associated with our previously committed capital investments related to exploration and production operations. In addition, we invested $2,809,000 in property and equipment, software and reforestation, of which $2,357,000 is related to capital expenditures for our 413 guest room hotel in Austin. These are partially offset by proceeds of $2,000,000 related to sale of certain oil and gas properties in North Dakota. In first quarter2014, net cash used for investing activities was $28,194,000 principally due to our investment of $19,357,000 in oil and gas properties associated with our exploration and production operations. In addition, we invested $4,699,000 in property and equipment, software and reforestation and a net investment in unconsolidated ventures of $4,138,000.

Cash Flows from Financing Activities

In first quarter2015, net cash used for financing activities was $396,000 principally due to payroll taxes on share-settled equity awards and distributions to noncontrolling interests. In first quarter2014, net cash used for financing activities was $21,677,000 principally due to debt payments of $15,711,000, of which $2,878,000 is related to debt outstanding for our Lantana partnerships and $2,700,000 is related to first installment payment of our amortizing notes associated with our tangible equity units, and the remaining associated with payment of other indebtedness.

Real Estate Acquisition and Development Activities

We secure entitlements and develop infrastructure, primarily for single family residential and mixed-use communities. We also develop and own directly or through ventures multifamily communities as income producing properties, primarily in our target markets.

We categorize real estate development and acquisition expenditures as operating activities on the statement of cash flows. These development and acquisition expenditures include costs for development of residential lots and mixed-used communities and multifamily community projects.

In first quarter2015, real estate development and acquisition expenditures were $34,769,000 which includes the acquisition of three new community development sites for $19,100,000 and real estate development costs of $15,669,000.

Oil and Gas Drilling and Other Exploration and Development Activities

At first quarter-end 2015, we have ten Bakken/Three Forks wells waiting on completion and we held interests in 963 gross active wells.

Our planned expenditures for 2015 are expected to be significantly lower compared with 2014 and are primarily related to existing well commitments in the Bakken/Three Forks formation of North Dakota. In first quarter 2015, drilling and completion activity was primarily related to existing well commitments with 17 gross Bakken/Three Forks wells generating

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initial production and ten wells waiting on completion. In addition, in first quarter 2015, we have elected to participate as a non-operator in seven new gross wells for $8,900,000 in the Bakken/Three Forks formation of North Dakota. Regional allocation of our capital expenditures for drilling and completion activities in first quarter 2015 is shown below:

	First Quarter
	2015
	(In thousands)
Bakken and Three Forks formations of North Dakota	$	10,555
Lansing - Kansas City formation of Nebraska and Kansas	2,637
Other formations principally in Oklahoma	10,526
	$	23,718

Our accrued capital expenditures for drilling and completion costs and leasehold acquisitions at first quarter-end2015 were $21,416,000 and are included in other accrued expenses in our consolidated balance sheets. These oil and gas property additions will be reflected as cash used for investing activities in the period the accrued payables are settled.

Our 2015 projected capital expenditures are subject to various conditions, including third-party operator drilling plans, oilfield services and equipment availability, commodity prices and drilling results. Although a portion of our capital expenditure budget is allocated to acquiring additional leasehold interest, we may decide to pursue incremental leasehold acquisitions which would require us to adjust our budget. Other factors that could cause us to adjust our projections include changes in commodity prices, service or material costs, opportunities, changes in conditions, or the performance of wells. We will continue to assess the gas and oil price environment along with our liquidity position and may increase or decrease our capital expenditure budget for exploration, development, or acquisition opportunities accordingly.

Liquidity

At first quarter-end2015, our senior secured credit facility provides for a $300,000,000 revolving line of credit maturing May 15, 2017 (with two one-year extension options). The revolving line of credit may be prepaid at any time without penalty. The revolving line of credit includes a $100,000,000 sublimit for letters of credit, of which $15,459,000 is outstanding at first quarter-end2015. Total borrowings under our senior secured credit facility (including the face amount of letters of credit) may not exceed a borrowing base formula.

At first quarter-end2015, net unused borrowing capacity under our senior secured credit facility is calculated as follows:

	Senior Credit Facility
	(In thousands)
Borrowing base availability	$	300,000
Less: borrowings	—
Less: letters of credit	(15,459		)
	$	284,541

Our net unused borrowing capacity during first quarter2015 ranged from a high of $284,592,000 to a low of $284,293,000. This facility is used primarily to fund our operating cash needs, which fluctuate due to timing of residential and commercial real estate sales, undeveloped land sales, oil and gas leasing, exploration and production activities and mineral lease bonus payments received, timber sales, reimbursements from utility and improvement districts, payment of payables and expenses and capital expenditures.

Our senior secured credit facility and other debt agreements contain financial covenants customary for such agreements including minimum levels of interest coverage and limitations on leverage. At first quarter-end2015, we were in compliance with the financial covenants of these agreements.

The following table details our compliance with the financial covenants calculated as provided in the senior credit facility:

Financial Covenant	Requirement	First Quarter-End 2015
Interest Coverage Ratio (a)	≥2.50:1.0	4.07:1.0
Total Leverage Ratio (b)	≤50%	40.5	%
Net Worth (c)	≥$593.3 million	$664.4 million

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 ___________________________________

^(a)  Calculated as EBITDA (earnings before interest, taxes, depreciation, depletion and amortization), plus non-cash compensation expense, plus other non-cash expenses, divided by interest expense excluding loan fees. This covenant is applied at the end of each quarter on a rolling four quarter basis.

^(b)  Calculated as total funded debt divided by adjusted asset value. Total funded debt includes indebtedness for borrowed funds, secured liabilities, reimbursement obligations with respect to letters of credit or similar instruments, and our pro-rata share of joint venture debt outstanding. Adjusted asset value is defined as the sum of unrestricted cash and cash equivalents, timberlands, high value timberlands, raw entitled lands, entitled land under development, minerals business, Credo asset value, special improvement district receipts (SIDR) reimbursements value and other real estate owned at book value without regard to any indebtedness and our pro rata share of joint ventures’ book value without regard to any indebtedness. This covenant is applied at the end of each quarter.

^(c)  Calculated as the amount by which consolidated total assets (excluding Credo acquisition goodwill over $50,000,000) exceeds consolidated total liabilities. At first quarter-end2015, the requirement is $593,287,000 computed as: $593,287,000 plus 85 percent of the aggregate net proceeds received by us from any equity offering, plus 75 percent of all positive net income, on a cumulative basis. This covenant is applied at the end of each quarter.

To make additional discretionary investments, acquisitions, or distributions, we must maintain available liquidity equal to 10 percent of the aggregate commitments in place. At first quarter-end2015, the minimum liquidity requirement was $30,000,000, compared with $408,654,000 in actual available liquidity based on the unused borrowing capacity under our senior secured credit facility plus unrestricted cash and cash equivalents. The failure to maintain such minimum liquidity does not constitute a default or event of default of our senior secured credit facility.

Discretionary investments in community development may be restricted in the event that the revenue/capital expenditure ratio is less than or equal to 1.0x. At first quarter-end2015, the revenue/capital expenditure ratio was 2.57x. Revenue is defined as total gross revenues (excluding revenues attributed to Credo and multifamily properties), plus our pro rata share of the operating revenues from unconsolidated ventures. Capital expenditures are defined as consolidated development and acquisition expenditures (excluding investments related to Credo and multifamily properties), plus our pro rata share of unconsolidated ventures’ development and acquisition expenditures.

In addition, we may elect to make distributions so long as the total leverage ratio is less than 40 percent, the interest coverage is greater than 3.0:1.0 and available liquidity is not less than $125,000,000. At first quarter-end2015, our total leverage ratio exceeded 40 percent and as a result we are prohibited from making restricted payments until the above conditions are satisfied.

Contractual Obligations and Off-Balance Sheet Arrangements

In 2014, FMF Littleton LLC, an equity method venture in which we own a 25 percent interest, obtained a senior secured construction loan in the amount of $46,384,000 to develop a 385-unit multifamily project located in Littleton, Colorado. The outstanding balance was $3,912,000 at first quarter-end2015. We provided the lender with a guaranty of completion of the improvements; a guaranty for repayment of 25 percent of the principal balance and unpaid accrued interest; and a standard nonrecourse carve-out guaranty. The principal guaranty will reduce from 25 percent of principal to ten percent upon achievement of certain conditions.

In 2014, CREA FMF Nashville LLC, an equity method venture with Massachusetts Mutual Life Insurance Co. (MassMutual) in which we own a 30 percent interest, obtained a senior secured construction loan in the amount of $51,950,000 to develop a 320-unit multifamily project located in Nashville, Tennessee. The outstanding balance at first quarter-end2015 was $40,648,000. MassMutual is obligated to make a capital contribution to the venture in an amount equal to its equity commitment under the construction loan in an amount not to exceed $14,220,000. Such capital contribution shall be paid upon the earlier of (i) March 16, 2016 (ii) two months after the issuance of final certificates of occupancy with respect to the entire project, or (iii) ten business days after the date on which the long-term credit rating of MassMutual is less than AA- from Standard & Poor's or A1 from Moody's. We provided the lender with a guaranty of completion of the improvements; a guaranty for repayment of 25 percent of the principal balance and unpaid accrued interest; and a standard nonrecourse carve-out guaranty. The principal guaranty will reduce from 25 percent of principal to zero percent upon achievement of certain conditions.

In 2012, FMF Peakview LLC, an equity method venture in which we own a 20 percent interest, obtained a senior secured construction loan in the amount of $31,550,000 to develop a 304-unit multifamily property in Denver. The outstanding balance at first quarter-end2015 was $24,774,000. We provided the lender with a construction completion guaranty, a repayment guaranty for 25 percent of the principal and unpaid accrued interest, and a standard non-recourse carve-out guaranty.

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In 2014, Elan 99, LLC was formed with GS Elan 99 Holding, LLC (Greystar) in which we own a 90 percent non-managing member interest and Greystar owns the remaining 10 percent managing member interest. We contributed $9,380,000 in cash to the venture. Upon request we are required to make additional capital contributions pro rata based on our initial ownership percentages, in one or more installments in an aggregate amount not to exceed approximately $14,378,000 to fund the activities contemplated by, and in accordance with, the development budget to develop a 360-unit multifamily property in Katy, Texas.

Cibolo Canyons—San Antonio, Texas

Cibolo Canyons consists of the JW Marriott ^® San Antonio Hill Country Resort & Spa development owned by third parties and a mixed-use development we own. We have $55,501,000 invested in Cibolo Canyons at first quarter-end2015, all of which is related to the mixed-use development.

Resort Hotel, Spa and Golf Development

In 2007, we entered into agreements to facilitate third party construction and ownership of the JW Marriott ^® San Antonio Hill Country Resort & Spa (the Resort), which includes a 1,002 room destination resort and two PGA Tour ^® Tournament Players Club ^® (TPC) golf courses.

In exchange for our commitment to the Resort, the third party owners assigned to us certain rights under an agreement between the third party owners and a legislatively created Cibolo Canyons Special Improvement District (CCSID). This agreement includes the right to receive from CCSID 9 percent of hotel occupancy revenues and 1.5 percent of other resort sales revenues collected as taxes by CCSID through 2034. The amount we receive will be net of annual ad valorem tax reimbursements by CCSID to the third party owners of the resort through 2020. In addition, these payments will be net of debt service on bonds issued by CCSID collateralized by hotel occupancy tax and other resort sales tax through 2034.

The amounts we collect under this agreement are dependent on several factors including the amount of revenues generated by and ad valorem taxes imposed on the Resort and the amount of debt service incurred by CCSID.

In 2014, we received $50,550,000 from CCSID principally related to its issuance of $48,900,000 HOT and Sales and Use Tax Revenue Bonds, resulting in recovery of our full Resort investment. These bonds are obligations solely of CCSID and are payable from HOT and sales and use taxes levied on the Resort by CCSID. To facilitate the issuance of the bonds, we provided a $6,846,000 letter of credit to the bond trustee as security for certain debt service fund obligations in the event CCSID tax collections are not sufficient to support payment of the bonds in accordance with their terms. The letter of credit must be maintained until the earlier of redemption of the bonds or scheduled bond maturity in 2034. We also entered into an agreement with the owner of the Resort, to assign its senior rights to us in exchange for consideration provided by us, including a surety bond to be drawn if CCSID tax collections are not sufficient to support ad valorem tax rebates payable. The surety bond has a balance of $9,010,000 at first quarter-end2015. The surety bond will decrease as CCSID makes annual ad valorem tax rebate payments, which obligation is scheduled to be retired in full by 2020. All future receipts are expected to be recognized as gains in the period collected.

Mixed-Use Development

The mixed-use development we own consists of 2,100 acres planned to include approximately 1,769 residential lots and 150 commercial acres designated for multifamily and retail uses, of which 921 lots and 130 commercial acres have been sold through first quarter-end2015.

In 2007, we entered into an agreement with CCSID providing for reimbursement of certain infrastructure costs related to the mixed-use development. Reimbursements are subject to review and approval by CCSID and unreimbursed amounts accrue interest at 9.75 percent. CCSID’s funding for reimbursements is principally derived from its ad valorem tax collections and bond proceeds collateralized by ad valorem taxes, less debt service on these bonds and annual administrative and public service expenses.

Because the amount of each reimbursement is dependent on several factors, including timing of CCSID approval and CCSID having an adequate tax base to generate funds that can be used to reimburse us, there is uncertainty as to the amount and timing of reimbursements under this agreement. We expect to recover our investment from lot and tract sales and reimbursement of approved infrastructure costs from CCSID. We have not recognized income from interest due, but not collected. As these uncertainties are clarified, we will modify our accounting accordingly.

Through first quarter-end2015, we have submitted for and were approved for reimbursement of approximately $65,438,000 of infrastructure costs, of which we have received reimbursements totaling $33,552,000. We did not receive any

29

reimbursements from CCSID in first quarter2015. At first quarter-end2015, we have $31,886,000 in pending reimbursements, excluding interest.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies or estimates from those disclosed in our 2014 Annual Report on Form 10-K.

New and Pending Accounting Pronouncements

Please read Note 2—New and Pending Accounting Pronouncements to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Statistical and Other Data

A summary of our real estate projects in the entitlement process ^(a) at first quarter-end2015 follows:

Project	County	Market	Project Acres (b)
California
Hidden Creek Estates	Los Angeles	Los Angeles	700
Terrace at Hidden Hills	Los Angeles	Los Angeles	30
Georgia
Ball Ground	Cherokee	Atlanta	500
Crossing	Coweta	Atlanta	230
Fincher Road	Cherokee	Atlanta	3,890
Garland Mountain	Cherokee/Bartow	Atlanta	350
Martin’s Bridge	Banks	Atlanta	970
Mill Creek	Coweta	Atlanta	770
Wolf Creek	Carroll/Douglas	Atlanta	12,230
Yellow Creek	Cherokee	Atlanta	1,060
Texas
Lake Houston	Harris/Liberty	Houston	3,700
Total			24,430

 _________________________

^(a)  A project is deemed to be in the entitlement process when customary steps necessary for the preparation of an application for governmental land-use approvals, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed. Projects listed may have significant steps remaining, and there is no assurance that entitlements ultimately will be received.

^(b)  Project acres, which are the total for the project regardless of our ownership interest, are approximate. The actual number of acres entitled may vary.

30

A summary of activity within our active projects in the development process, which includes entitled ^(a), developed and under development real estate projects, at first quarter-end2015 follows:

				Residential Lots (c)		Commercial Acres (d)
Project	County	Interest     Owned (b)		Lots Sold Since Inception	Lots Remaining	Acres Sold Since Inception	Acres Remaining(e)
Projects we own
California
San Joaquin River	Contra Costa/Sacramento	100	%	—	—	—	288
Colorado
Buffalo Highlands	Weld	100	%	—	164	—	—
Johnstown Farms	Weld	100	%	281	313	2	3
Pinery West	Douglas	100	%	45	41	20	106
Stonebraker	Weld	100	%	—	603	—	—
Georgia
Seven Hills	Paulding	100	%	806	277	26	113
The Villages at Burt Creek	Dawson	100	%	—	1,715	—	57
Other projects (17)	Various	100	%	207	2,765	—	705
North & South Carolina
Habersham	York	100	%	—	187	—	—
Walden	Mecklenburg	100	%	—	387	—	—
Tennessee
Beckwith Crossing	Wilson	100	%	—	99	—	—
Morgan Farms	Williamson	100	%	71	102	—	—
Weatherford Estates	Williamson	100	%	—	17	—	—
Texas
Arrowhead Ranch	Hays	100	%	—	381	—	11
Bar C Ranch	Tarrant	100	%	339	766	—	—
Barrington Kingwood	Harris	100	%	160	20	—	—
Cibolo Canyons	Bexar	100	%	921	848	130	56
Harbor Lakes	Hood	100	%	223	226	13	8
Hunter’s Crossing	Bastrop	100	%	510	—	41	62
Imperial Forest	Harris	100	%	—	428	—	—
La Conterra	Williamson	100	%	202	—	3	55
Lakes of Prosper	Collin	100	%	120	167	4	—
Lantana	Denton	100	%	1,168	613	11	1
Maxwell Creek	Collin	100	%	941	60	10	—
Oak Creek Estates	Comal	100	%	242	312	13	—
Parkside	Collin	100	%	—	200	—	—
River's Edge	Denton	100	%	—	202	—	—
Stoney Creek	Dallas	100	%	221	487	—	—
Summer Creek Ranch	Tarrant	100	%	982	269	35	44
Summer Lakes	Fort Bend	100	%	617	452	56	—
Summer Park	Fort Bend	100	%	69	130	28	68
The Colony	Bastrop	100	%	454	1,431	22	31
The Preserve at Pecan Creek	Denton	100	%	556	226	—	7
Village Park	Collin	100	%	567	—	3	2
Westside at Buttercup Creek	Williamson	100	%	1,496	1	66	—
Other projects (7)	Various	100	%	1,561	22	133	7
Other
Other projects (3)	Various	100	%	543	320	—	—
				13,302	14,231	616	1,624

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				Residential Lots (c)		Commercial Acres (d)
Project	County	Interest     Owned (b)		Lots Sold Since Inception	Lots Remaining	Acres Sold Since Inception	Acres Remaining(e)
Projects in entities we consolidate
Texas
City Park	Harris	75	%	1,311	504	52	113
Timber Creek	Collin	88	%	—	601	—	—
Willow Creek Farms II	Waller/Fort Bend	90	%	90	160	—	—
Other projects (2)	Various	Various		10	198	—	18
				1,411	1,463	52	131
Total owned and consolidated				14,713	15,694	668	1,755
Projects in ventures that we account for using the equity method
Texas
Entrada	Travis	50	%	—	821	—	—
Fannin Farms West	Tarrant	50	%	324	—	—	12
Harper’s Preserve	Montgomery	50	%	315	1,413	30	49
Lantana - Rayzor Ranch	Denton	25	%	1,163	—	30	28
Long Meadow Farms	Fort Bend	38	%	1,423	381	187	118
Southern Trails	Brazoria	80	%	810	186	—	1
Stonewall Estates	Bexar	50	%	349	41	—	—
Other projects (2)	Various	Various		—	—	—	15
Total in ventures				4,384	2,842	247	223
Combined total				19,097	18,536	915	1,978

 _________________________

^(a)  A project is deemed entitled when all major discretionary governmental land-use approvals have been received. Some projects may require additional permits and/or non-governmental authorizations for development.

^(b)  Interest owned reflects our net equity interest in the project, whether owned directly or indirectly. There are some projects that have multiple ownership structures within them. Accordingly, portions of these projects may appear as owned, consolidated or accounted for using the equity method.

^(c)  Lots are for the total project, regardless of our ownership interest. Lots remaining represent vacant developed lots, lots under development and future planned lots and are subject to change based on business plan revisions.

^(d)  Commercial acres are for the total project, regardless of our ownership interest, and are net developable acres, which may be fewer than the gross acres available in the project.

^(e)  Excludes acres associated with commercial and income producing properties.

A summary of our significant commercial and income producing properties at first quarter-end2015 follows:

Project	Market	Interest     Owned (a)		Type	Acres	Description
Radisson Hotel	Austin	100	%	Hotel	2	413 guest rooms and suites
Eleven	Austin	100	%	Multifamily	3	257-unit luxury apartment
Midtown	Dallas	100	%	Multifamily	13	354-unit luxury apartment
360° (b)	Denver	20	%	Multifamily	4	304-unit luxury apartment
Acklen (b)	Nashville	30	%	Multifamily	6	320-unit luxury apartment
HiLine (b)	Denver	25	%	Multifamily	6	385-unit luxury apartment
Elan 99 (b)	Houston	90	%	Multifamily	14	360-unit luxury apartment

 _________________________

^(a)  Interest owned reflects our total interest in the project, whether owned directly or indirectly.

^(b)  Construction in progress.

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Oil and Gas Owned Mineral Interests

A summary of our oil and gas owned mineral interests ^(a) at first quarter-end2015 follows:

State	Unleased	Leased (b)	Held By Production (c)	Total (d)
		(Net acres)
Texas	209,000	16,000	27,000	252,000
Louisiana	131,000	4,000	9,000	144,000
Georgia	152,000	—	—	152,000
Alabama	40,000	—	—	40,000
California	1,000	—	—	1,000
Indiana	1,000	—	—	1,000
	534,000	20,000	36,000	590,000

 _________________________

^(a)  Includes ventures.

^(b)  Includes leases in primary lease term or for which a delay rental payment has been received. In the ordinary course of business, leases covering a significant portion of leased net mineral acres may expire from time to time in a single reporting period.

^(c)  Acres being held by production are producing oil or gas in paying quantities.

^(d)  Texas, Louisiana, California and Indiana net acres are calculated as the gross number of surface acres multiplied by our percentage ownership of the mineral interest. Georgia and Alabama net acres are calculated as the gross number of surface acres multiplied by our estimated percentage ownership of the mineral interest based on county sampling.

A summary of our Texas and Louisiana owned mineral acres ^(a) by county or parish at first quarter-end2015 follows:

Texas		Louisiana
County	Net Acres	Parish	Net Acres
Trinity	46,000	Beauregard	79,000
Angelina	42,000	Vernon	39,000
Houston	29,000	Calcasieu	17,000
Anderson	25,000	Allen	7,000
Cherokee	24,000	Rapides	1,000
Sabine	23,000	Other	1,000
Red River	14,000		144,000
Newton	13,000
San Augustine	13,000
Jasper	12,000
Other	11,000
	252,000

 _________________________

^(a)  Includes ventures.

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Oil and Gas Mineral Interests Leased

A summary of our net oil and gas mineral acres leased from others at first quarter-end2015 follows:

State	Undeveloped	Held By Production (a)	Total
Nebraska	249,000	11,000	260,000
Kansas	16,000	8,000	24,000
Oklahoma	23,000	18,000	41,000
Texas	11,000	2,000	13,000
North Dakota	4,000	5,000	9,000
Other	19,000	4,000	23,000
	322,000	48,000	370,000

 _________________________

^(a)  Excludes approximately 8,000 net acres of overriding royalty interests.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity

Our interest rate risk is principally related to our variable-rate debt. Interest rate changes impact earnings due to the resulting increase or decrease in our variable-rate debt, which was $65,301,000 at first quarter-end2015.

The following table illustrates the estimated effect on our pre-tax income of immediate, parallel, and sustained shifts in interest rates for the next 12 months on our variable-rate debt at first quarter-end2015. This estimate assumes that debt reductions from contractual payments will be replaced with short-term, variable-rate debt; however, that may not be the financing alternative we choose.

	First Quarter-End
Change in Interest Rates	2015
	(In thousands)
2%	$	(1,122	)
1%	$	(653	)
(1)%	$	653
(2)%	$	1,306

Foreign Currency Risk

We have no exposure to foreign currency fluctuations.

Commodity Price Risk

We have exposure to commodity price fluctuations from our oil and gas production which can materially affect our revenues and cash flows. The prices we receive for our production depend on numerous factors beyond our control. Based on our first quarter2015 production, a 10% decrease in our average realized oil and gas prices would have reduced our oil and gas production revenues by $1,283,000. To manage our exposure to commodity price risks associated with the sale of oil and gas, we may periodically enter into derivative hedging transactions for a portion of our estimated production. We do not have any commodity derivative positions outstanding at first quarter-end2015.

Item 4.Controls and Procedures

(a) Disclosure Controls and Procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (or the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is

34

accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.Legal Proceedings

We are involved directly or through ventures in various legal proceedings that arise from time to time in the ordinary course of doing business. We believe we have established adequate reserves for any probable losses and that the outcome of any of the proceedings should not have a material adverse effect on our financial position, long-term results of operations or cash flows. It is possible, however, that circumstances beyond our control or significant subsequent developments could result in additional charges related to these matters that could be significant to results of operations or cash flow in any single accounting period.

Item 1A.Risk Factors

There are no material changes from the risk factors disclosed in our 2014 Annual Report on Form 10-K.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities ^(a) 

Period	Total Number of Shares Purchased (b)	Average Price Paid per Share		Total Number of  Shares Purchased as Part of  Publicly Announced Plans  or Programs	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
Month 1 (1/1/2015 — 1/31/2015)	—	$	—	—	3,506,668
Month 2 (2/1/2015 — 2/28/2015)	48,636	$	14.86	—	3,506,668
Month 3 (3/1/2015 — 3/31/2015)	—	$	—	—	3,506,668
	48,636	$	14.86	—

 _________________________

^(a)  On February 11, 2009, we announced that our Board of Directors authorized the repurchase of up to 7,000,000 shares of our common stock. We have purchased 3,493,332 shares under this authorization, which has no expiration date. We have no repurchase plans or programs that expired during the period covered by the table above and no repurchase plans or programs that we intend to terminate prior to expiration or under which we no longer intend to make further purchases.

^(b)  Represents shares withheld to pay taxes in connection with vesting of equity-settled stock awards and exercises of stock options.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

35

Item 6.Exhibits

Exhibit	Description
3.1	Certificate of Elimination, dated as of March 13, 2015 (incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed with the Commission on March 13, 2015).
4.1	Amendment and Termination of Rights Agreement, dated as of March 13, 2015, by and between Forestar Group Inc. and Computershare Trust Company, N.A., as Rights Agent (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed with the Commission on March 13, 2015).
10.1	Separation Agreement and Release of All Claims dated January 8, 2015 between Flavious J. Smith, Jr. and Forestar Group Inc. (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Commission on January 14, 2015).
10.2	Director Nomination Agreement, dated as of February 9, 2015, by and among Forestar Group Inc., SpringOwl Associates LLC and Cove Street Capital, LLC (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Commission on February 9, 2015).
31.1	Certification of Chief Executive Officer pursuant to Exchange Act rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Exchange Act rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	The following materials from Forestar’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements.

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FORESTAR GROUP INC.
Date: May 8, 2015	By:	/s/ Christopher L. Nines
		Christopher L. Nines
		Chief Financial Officer
	By:	/s/ Sabita C. Reddy
		Sabita C. Reddy
		Principal Accounting Officer

37

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, James M. DeCosmo, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Forestar Group 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 registrant's other certifying officer(s) 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 registrant's 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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's 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 registrant's 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 registrant's internal control over financial reporting.

/s/ James M. DeCosmo

James M. DeCosmo

Chief Executive Officer

Date: May 8, 2015

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, Christopher L. Nines, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Forestar Group 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 registrant's other certifying officer(s) 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 registrant's 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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's 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 registrant's 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 registrant's internal control over financial reporting.

/s/ Christopher L. Nines

Christopher L. Nines

Chief Financial Officer

Date: May 8, 2015

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, James M. DeCosmo, Chief Executive Officer of Forestar Group Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, this quarterly report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Forestar Group Inc.

/s/ James M. DeCosmo

James M. DeCosmo

Date: May 8, 2015

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Christopher L. Nines, Chief Financial Officer of Forestar Group Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, this quarterly report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Forestar Group Inc.

/s/ Christopher L. Nines

Christopher L. Nines

Date: May 8, 2015

XML

Oil and Gas Properties Additional Details (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Proceeds from sales of oil and gas properties, net	$ 2,000	$ 0
NORTH DAKOTA
Gain (Loss) on Disposition of Proved Property	1,176
Gas and Oil Area, Undeveloped, Net	290
Proceeds from sales of oil and gas properties, net	$ 2,000

XML

Fair Value Disclosures, Non-recurring (Details) (Fair Value, Measurements, Nonrecurring [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 1,948	$ 970
Real Estate [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Real Estate [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	1,948	970
Real Estate [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Oil and Gas Properties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0	3,655
Oil and Gas Properties [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Oil and Gas Properties [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Oil and Gas Properties [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 0	$ 3,655

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Receivables - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Due period of notes receivable as secured by deed of trust	3 years
Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal amount of loan received	4,394,000
Interest amount of loan received	49,000

XML

Fair Value - Information About Our Fixed Rate Financial Instruments Not Measured at Fair Value (Detail) (Fair Value, Inputs, Level 2 [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Reported Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loan secured by real estate	$ 0	$ 3,574
Fixed rate debt	(369,112)	(370,348)
Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loan secured by real estate	0	4,859
Fixed rate debt	$ (357,342)	$ (359,131)

XML

Investment in Unconsolidated Ventures - Summarized Income Statement Information additional information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Deferred Gain on Sale	$ 1,587,000
Unrecognized basis difference on equity method investment	1,373,000
Equity Method Investments [Member]
Schedule of Equity Method Investments [Line Items]
Long-term Debt, Current Maturities	78,947,000	65,795,000
Equity Method Investments [Member] | Non-recourse Debt [Member]
Schedule of Equity Method Investments [Line Items]
Long-term Debt, Current Maturities	$ 51,788,000	$ 42,566,000

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Restructuring and Related Costs

The following table summarizes activity related to liabilities associated with our oil and gas restructuring activities in first quarter 2015:

	Employee-Related Costs			Facility Closure			Total
	(In thousands)
Balance at year-end 2014	$	(2,367	)	$	—		$	(2,367	)
Additions	(1,068		)	(1,750		)	(2,818		)
Payments	1,894			1,750			3,644
Balance at first quarter-end 2015	$	(1,541	)	$	—		$	(1,541	)

XML

Net Income per Share - Earnings Attributable to Common Shareholders and Weighted Average Common Shares Outstanding (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings available to common shareholders:
Consolidated net income (loss)	$ (8,237)	$ 9,007
Less: Net (income) loss attributable to noncontrolling interests	79	(673)
NET INCOME (LOSS) ATTRIBUTABLE TO FORESTAR GROUP INC.	(8,158)	8,334
Less: Undistributed net income allocated to participating securities	0	(1,295)
Earnings (loss) available to common shareholders for basic earnings per share	$ (8,158)	$ 7,039
Weighted average common shares outstanding - basic	34,168	35,576
Weighted average common shares upon conversion of participating securities	0	7,857
Dilutive effect of stock options, restricted stock and equity-settled awards	0	480
Weighted average common shares outstanding - diluted	34,168	43,913
Anti-dilutive awards excluded from diluted weighted average shares	10,743	2,051

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Oil and Gas Properties (Tables)

3 Months Ended

Mar. 31, 2015

Extractive Industries [Abstract]

Net Capitalized Costs Related to Oil and Gas Producing Activities

Net capitalized costs, utilizing the successful efforts method of accounting, related to our oil and gas producing activities follows:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Unproved oil and gas properties	$	85,771		$	90,446
Proved oil and gas properties	249,601			221,299
Total costs	335,372			311,745
Less: accumulated depreciation, depletion and amortization	(55,418		)	(48,252		)
	$	279,954		$	263,493

XML

Debt - Debt (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Line of Credit Facility [Line Items]
Debt	$ 434,413	$ 432,744
Senior Notes [Member]
Line of Credit Facility [Line Items]
Debt	250,000	250,000
Convertible Debt [Member]
Line of Credit Facility [Line Items]
Debt	104,020	103,194
Secured Debt [Member]
Line of Credit Facility [Line Items]
Debt	15,400	15,400
Other indebtedness [Member]
Line of Credit Facility [Line Items]
Debt	49,901	46,996
Six Percent Tangible Equity Units [Member]
Line of Credit Facility [Line Items]
Debt	$ 15,092	$ 17,154

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Equity - Reconciliation of Changes in Equity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	$ 709,742
Consolidated net income (loss)	(8,237)	9,007
Distributions to noncontrolling interests	(338)
Other (primarily share-based compensation)	2,222
Ending balance	703,389
Forestar Group Inc. [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	707,202
Consolidated net income (loss)	(8,158)
Distributions to noncontrolling interests	0
Other (primarily share-based compensation)	2,222
Ending balance	701,266
Noncontrolling Interest [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	2,540
Consolidated net income (loss)	(79)
Distributions to noncontrolling interests	(338)
Other (primarily share-based compensation)	0
Ending balance	$ 2,123

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Real Estate - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Real Estate Properties [Line Items]
Costs relate to water, sewer and other infrastructure assets	$ 1,520,000
Reimbursements from utility and improvement districts	(4,130,000)	(1,536,000)
Real Estate Investment Property, Net	164,219,000		161,301,000
Utility and Improvement District [Member]
Real Estate Properties [Line Items]
Cost of asset in developed and under development projects	90,506,000		65,212,000
Cibolo Canyons Project [Member]
Real Estate Properties [Line Items]
Return of reimbursements received in relation to direct costs and expenses previously paid or incurred for development of real estate projects	33,552,000		33,552,000
Costs relate to water, sewer and other infrastructure assets	15,189,000
Consolidated Properties [Member]
Real Estate Properties [Line Items]
Reimbursements from utility and improvement districts	4,130,000
Multi Family Development Properties [Member]
Real Estate Properties [Line Items]
Real Estate Investment Property, Net	78,566,000
San Antonio Texas [Member] | Cibolo Canyons Project [Member]
Real Estate Properties [Line Items]
Cost of asset in developed and under development projects	47,075,000		31,913,000
Cumulative Reimbursable Cost Associated with Real Estate Projects in Development	65,438,000		65,465,000
Austin, Texas [Member] | Multi Family Property [Member]
Real Estate Properties [Line Items]
Real Estate Investment Property, Net	52,742,000
Number Of Units Of Multifamily Project	257
Austin, Texas [Member] | Hotel Property [Member]
Real Estate Properties [Line Items]
Real Estate Investment Property, Net	32,505,000
Commercial and income producing properties, investment unit	413
Fort Worth [Member] | 713910 Golf Courses and Country Clubs [Member]
Real Estate Properties [Line Items]
Real Estate Investment Property, Net	$ 406,000

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Debt - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Line of Credit Facility [Line Items]
Debt	$ 434,413,000		$ 432,744,000
Deferred Finance Costs, Net	14,276,000		15,168,000
Amortization of deferred financing fees	1,156,000	901,000
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity under term Loan facility	300,000,000
Maturity period of revolving line of credit	May 15, 2017
Sublimit for letters of credit outstanding	15,459,000
Net unused borrowing capacity	284,541,000
Percentage of spread on federal funds effective rate	0.50%
Austin, Texas [Member]
Line of Credit Facility [Line Items]
Guest room hotel	413
Carrying value of multifamily project to secure non recourse loan	32,505,000
Austin, Texas [Member] | Multi Family Property [Member]
Line of Credit Facility [Line Items]
Number Of Units Of Multifamily Project	257
Secured Debt [Member]
Line of Credit Facility [Line Items]
Debt	15,400,000		15,400,000
Secured Debt [Member] | Austin, Texas [Member]
Line of Credit Facility [Line Items]
Debt	15,400,000
Other indebtedness [Member]
Line of Credit Facility [Line Items]
Debt	49,901,000		46,996,000
Other indebtedness [Member] | Multi Family Property [Member]
Line of Credit Facility [Line Items]
Carrying value of property to secure borrowing	87,012,000
Letter of Credit [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Line Of Credit Facility Letters Of Credit Sublimit	100,000,000
LIBOR [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate	4.00%
Base Rate [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Percentage Of Variable Spread On Base Rate	3.00%
30 day LIBOR rate [Domain] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.00%
Construction Loans [Member] | Other indebtedness [Member]
Line of Credit Facility [Line Items]
Debt	$ 45,714,000

XML

Share Based Compensation - Share Based Compensation Expense (Income) Included in Operating Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share based and Long Term Incentive Compensation	$ 3,458	$ 313
General and administrative expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share based and Long Term Incentive Compensation	2,122	(23)
Other Operating Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share based and Long Term Incentive Compensation	$ 1,336	$ 336

XML

Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Restructuring Reserve [Roll Forward]
Restructuring Reserve	$ (2,367)
Restructuring Charges	(2,818)
Payments for Restructuring	3,644
Restructuring Reserve	(1,541)
Special Termination Benefits [Member]
Restructuring Reserve [Roll Forward]
Restructuring Reserve	(2,367)
Restructuring Charges	(1,068)
Payments for Restructuring	1,894
Restructuring Reserve	(1,541)
Facility Closing [Member]
Restructuring Reserve [Roll Forward]
Restructuring Reserve	0
Restructuring Charges	(1,750)
Payments for Restructuring	1,750
Restructuring Reserve	$ 0

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Receivables - Receivables (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 16,043		$ 24,847
Oil and Gas Joint Interest Billing Receivables	2,657		5,738
Allowance for bad debts	(258)		(258)
Receivables, net	15,785		24,589
Oil and gas revenue accrual receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	6,811		7,293
Receivables and accrued interest [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	4,696		6,505
Notes receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	1,879		1,737
Average interest rate	9.90%	4.41%
Loan secured by real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 0		$ 3,574

XML

Oil and Gas Properties

3 Months Ended

Mar. 31, 2015

Extractive Industries [Abstract]

Oil and Gas Properties

Oil and Gas Properties and Equipment, net

Net capitalized costs, utilizing the successful efforts method of accounting, related to our oil and gas producing activities follows:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Unproved oil and gas properties	$	85,771		$	90,446
Proved oil and gas properties	249,601			221,299
Total costs	335,372			311,745
Less: accumulated depreciation, depletion and amortization	(55,418		)	(48,252		)
	$	279,954		$	263,493

In first quarter2015, we recorded a gain of $1,176,000 related to the sale of 290 net mineral acres leased from others in North Dakota for $2,000,000.

XML

Segment Information - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015 Customer Segment
Segment Reporting [Abstract]
Number of business segments	3
Number of customer who contributed more than 10 percent of revenue	0
Maximum percentage of revenue from customer	10.00%

XML

Investment in Unconsolidated Ventures - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Schedule of Equity Method Investments [Line Items]
Investment in unconsolidated ventures	$ 831	$ 4,293
Distributions of return on investments and earnings	$ 3,500	$ 1,173
Equity Method Investments [Member]
Schedule of Equity Method Investments [Line Items]
Number of ventures under ownership interest using equity method	15

XML

Receivables (Tables)

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Receivables

Receivables consist of:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Oil and gas revenue accruals	6,811			7,293
Other receivables and accrued interest	4,696			6,505
Oil and gas joint interest billing receivables	2,657			5,738
Other loans secured by real estate, average interest rates of 9.90% at first quarter-end 2015 and 4.41% at year-end 2014	1,879			1,737
Loan secured by real estate	$	—		$	3,574
	16,043			24,847
Allowance for bad debts	(258		)	(258		)
	$	15,785		$	24,589

Estimated Accretable Yield

Estimated accretable yield follows:

	First Quarter-End
	2015
	(In thousands)
Beginning of period (year-end 2014)	$	839
Change in accretable yield due to change in timing of estimated cash flows	30
Interest income recognized (in first quarter 2015)	(869		)
End of period	$	—

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Investment in Unconsolidated Ventures (Tables)

3 Months Ended

Mar. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Summarized Balance Sheet Information

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:

	Venture Assets				Venture Borrowings(a)				Venture Equity						Our Investment
	First Quarter-End		Year-End		First Quarter-End		Year-End		First Quarter-End			Year-End			First Quarter-End		Year-End
	2015		2014		2015		2014		2015			2014			2015		2014
	(In thousands)
242, LLC (b)	$	35,556	$	33,021	$	9,328	$	6,940	$	22,253		$	21,789		$	10,363	$	10,098
CL Ashton Woods, LP (c)	12,649		13,269		—		—		9,479			11,453			4,693		6,015
CL Realty, LLC	7,965		7,960		—		—		7,899			7,738			3,950		3,869
CREA FMF Nashville LLC (b)	50,251		40,014		40,648		29,660		5,874			5,987			5,403		5,516
Elan 99, LLC	12,060		10,070		1		1		10,333			9,643			9,299		8,679
FMF Littleton LLC	32,765		26,953		3,912		—		24,737			24,435			6,362		6,287
FMF Peakview LLC	45,457		43,638		24,774		23,070		17,462			17,464			3,574		3,575
HM Stonewall Estates, Ltd (c)	3,629		3,750		33		669		3,596			3,081			1,982		1,752
LM Land Holdings, LP (c)	30,487		25,561		8,505		4,448		19,750			18,500			9,686		9,322
PSW Communities, LP	18,964		16,045		12,870		10,515		4,610			4,415			4,097		3,924
Temco Associates, LLC	11,734		11,756		—		—		11,556			11,556			5,778		5,778
Other ventures (d)	4,837		8,453		23,437		26,944		(25,752		)	(25,614		)	194		190
	$	266,354	$	240,490	$	123,508	$	102,247	$	111,797		$	110,447		$	65,381	$	65,005

Summarized Income Statement Information

Combined summarized income statement information for our ventures accounted for using the equity method follows:

	Venture Revenues				Venture Earnings (Loss)						Our Share of Earnings (Loss)
	First Quarter
	2015		2014		2015			2014			2015			2014
	(In thousands)
242, LLC (b)	$	5,331	$	1,475	$	3,464		$	533		$	1,766		$	277
CL Ashton Woods, LP (c)	1,350		708		527			220			678			318
CL Realty, LLC	279		368		160			230			80			115
CREA FMF Nashville LLC (b)	6		—		(113		)	(25		)	(113		)	(25		)
Elan 99, LLC	—		—		(2		)	—			(2		)	—
FMF Peakview LLC	186		—		(482		)	(73		)	(96		)	(15		)
HM Stonewall Estates, Ltd (c)	1,058		1,001		515			352			230			141
LM Land Holdings, LP (c)	1,976		4,898		1,250			2,927			364			677
PSW Communities, LP	2,427		—		195			(216		)	173			(189		)
Temco Associates, LLC	58		60		(1		)	(18		)	—			(9		)
Other ventures (d)	3,701		385		(203		)	(261		)	(35		)	(299		)
	$	16,372	$	8,895	$	5,310		$	3,669		$	3,045		$	991

 _____________________

^(a)  Total includes current maturities of $78,947,000 at first quarter-end2015, of which $51,788,000 is non-recourse to us, and $65,795,000 at year-end 2014, of which $42,566,000 is non-recourse to us.

^(b)  Includes unamortized deferred gains on real estate contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $1,587,000 are reflected as a reduction to our investment in unconsolidated ventures at first quarter-end2015.

^(c)  Includes unrecognized basis difference of $1,373,000 which is reflected as a reduction of our investment in unconsolidated ventures at first quarter-end2015. The difference will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

^(d)  Our investment in other ventures reflects our ownership interests, excluding venture losses that exceed our investment where we are not obligated to fund those losses. Please read Note 16—Variable Interest Entities for additional information.

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Capital Stock - Additional Information (Detail) (Employees of former affliate [Member], Employee Stock Option [Member], USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Employees of former affliate [Member] | Employee Stock Option [Member]
Equity [Line Items]
Options to purchase shares of common stock	510,000
Exercisable at end of period, Weighted Average Remaining Contractual Term	1 year
Weighted average exercise price	$ 28.42
Aggregate intrinsic value	$ 25

XML

Investment in Unconsolidated Ventures - Summarized Balance Sheet Information (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Schedule of Equity Method Investments [Line Items]
Venture Assets	$ 266,354	$ 240,490
Venture Borrowings	123,508	102,247
Venture Equity	111,797	110,447
Investment in venture	65,381	65,005
242, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	35,556	33,021
Venture Borrowings	9,328	6,940
Venture Equity	22,253	21,789
Investment in venture	10,363	10,098
CL Ashton Woods [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	12,649	13,269
Venture Borrowings	0	0
Venture Equity	9,479	11,453
Investment in venture	4,693	6,015
CL Realty [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	7,965	7,960
Venture Borrowings	0	0
Venture Equity	7,899	7,738
Investment in venture	3,950	3,869
CREA FMF [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	50,251	40,014
Venture Borrowings	40,648	29,660
Venture Equity	5,874	5,987
Investment in venture	5,403	5,516
Elan 99, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	12,060	10,070
Venture Borrowings	1	1
Venture Equity	10,333	9,643
Investment in venture	9,299	8,679
FMF Littleton [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	32,765	26,953
Venture Borrowings	3,912	0
Venture Equity	24,737	24,435
Investment in venture	6,362	6,287
FMF Peakview [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	45,457	43,638
Venture Borrowings	24,774	23,070
Venture Equity	17,462	17,464
Investment in venture	3,574	3,575
HM Stonewall Estates [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	3,629	3,750
Venture Borrowings	33	669
Venture Equity	3,596	3,081
Investment in venture	1,982	1,752
LM Land Holdings [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	30,487	25,561
Venture Borrowings	8,505	4,448
Venture Equity	19,750	18,500
Investment in venture	9,686	9,322
PSW Communities [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	18,964	16,045
Venture Borrowings	12,870	10,515
Venture Equity	4,610	4,415
Investment in venture	4,097	3,924
Temco [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	11,734	11,756
Venture Borrowings	0	0
Venture Equity	11,556	11,556
Investment in venture	5,778	5,778
Other ventures [Member]
Schedule of Equity Method Investments [Line Items]
Venture Assets	4,837	8,453
Venture Borrowings	23,437	26,944
Venture Equity	(25,752)	(25,614)
Investment in venture	$ 194	$ 190

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Debt (Tables)

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt

Debt consists of:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
8.50% senior secured notes due 2022	250,000		250,000
3.75% convertible senior notes due 2020, net of discount	104,020		103,194
6.00% tangible equity unit notes, net of discount	15,092		17,154
Secured promissory notes — average interest rates of 3.18% at first quarter-end 2015 and 3.17% at year-end 2014	15,400		15,400
Other indebtedness — interest rates ranging from 2.19% to 5.50% at first quarter-end 2015	49,901		46,996
	$	434,413	$	432,744

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements, Nonrecurring

Non-financial assets measured at fair value on a non-recurring basis principally include real estate assets, oil and gas properties, assets held for sale, goodwill and other intangible assets, which are measured for impairment. In first quarter2015, we recognized non-cash asset impairment charges of $504,000 associated with a residential development with golf course and country club property located near Fort Worth. We had no non-cash impairment charges of proved oil and gas properties in first quarter2015.

	First Quarter-End 2015								Year-End 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Non-Financial Assets and Liabilities:
Real estate	$	—	$	1,948	$	—	$	1,948	$	—	$	970	$	—	$	970
Proved oil and gas properties	$	—	$	—	$	—	$	—	$	—	$	—	$	3,655	$	3,655

Information About Our Fixed Rate Financial Instruments Not Measured at Fair Value

Information about our fixed rate financial instruments not measured at fair value follows:

	First Quarter-End 2015						Year-End 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Valuation Technique
	(In thousands)
Loan secured by real estate	$	—		$	—		$	3,574		$	4,859		Level 2
Fixed rate debt	$	(369,112	)	$	(357,342	)	$	(370,348	)	$	(359,131	)	Level 2

XML

Real Estate

3 Months Ended

Mar. 31, 2015

Real Estate [Abstract]

Real Estate

Real Estate

Real estate consists of:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Entitled, developed and under development projects	$	338,607		$	321,273
Undeveloped land (includes land in entitlement)	93,458			93,182
Commercial and income producing properties
Carrying value	196,348			192,678
Less: accumulated depreciation	(32,129		)	(31,377		)
Net carrying value	164,219			161,301
	$	596,284		$	575,756

Our estimated costs of assets for which we expect to be reimbursed by utility and improvement districts were $90,506,000 at first quarter-end2015 and $65,212,000 at year-end 2014, including $47,075,000 at first quarter-end2015 and $31,913,000 at year-end 2014 related to our Cibolo Canyons project near San Antonio, Texas. At first quarter-end2015,$47,075,000 of reimbursable costs for the Cibolo Canyons project were related to submitted and approved reimbursements of $65,438,000 net of collections totaling $33,552,000 plus $15,189,000 of additional reimbursable costs we incurred which we plan to submit for approval from the district. At year-end 2014, $31,913,000 of reimbursable costs for the Cibolo Canyons project were related to costs of $65,465,000 that were submitted, net of collections totaling $33,552,000. These costs are principally for water, sewer and other infrastructure assets that we have incurred and submitted or will submit to utility or improvement districts for approval and reimbursement. We expect to be reimbursed by utility and improvement districts when these districts achieve adequate tax basis or otherwise have funds available to support payment. In first quarter2015, our submitted reimbursements to these districts for all real estate projects excluding Cibolo Canyons project were $1,520,000 and we have collected and $4,130,000 in reimbursements that were previously submitted to these districts.

At first quarter-end2015, commercial and income producing properties represents our investment of $78,566,000 in multifamily development sites located in Austin, Charlotte, Dallas and Nashville, $52,742,000 investment in a 257-unit multifamily project in Austin, $32,505,000 investment in a 413 guest room hotel in Austin and $406,000 investment in a golf course and a country club property located near Fort Worth.

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Net Income per Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings Attributable to Common Shareholders and Weighted Average Common Shares Outstanding

The computations of basic and diluted earnings per share are as follows:

	First Quarter
	2015			2014
	(In thousands)
Numerator:
Consolidated net income (loss)	$	(8,237	)	$	9,007
Less: Net loss (income) attributable to noncontrolling interest	79			(673		)
Earnings (loss) available for diluted earnings per share	$	(8,158	)	$	8,334
Less: Undistributed net income allocated to participating securities	—			(1,295		)
Earnings (loss) available to common shareholders for basic earnings per share	$	(8,158	)	$	7,039
Denominator:
Weighted average common shares outstanding — basic	34,168			35,576
Weighted average common shares upon conversion of participating securities (a)	—			7,857
Dilutive effect of stock options, restricted stock and equity-settled awards	—			480
Total weighted average shares outstanding — diluted	34,168			43,913
Anti-dilutive awards excluded from diluted weighted average shares	10,743			2,051

_____________________

^(a)  Our earnings per share calculation reflects the weighted average shares issuable upon settlement of the prepaid stock purchase contract component of our 6.00% tangible equity units, issued November 27, 2013.

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Goodwill and Other Intangibles (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 63,423	$ 63,423
Identified intangibles, net	2,468	2,708
Goodwill and other intangible assets	$ 65,891	$ 66,131

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Fair Value - Additional Information (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Fair Value Disclosures [Abstract]
Asset Impairment Charges	$ 504,000	$ 0

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 126,262	$ 170,127
Real estate, net	596,284	575,756
Oil and gas properties and equipment, net	279,954	263,493
Investment in unconsolidated ventures	65,381	65,005
Timber	8,430	8,315
Receivables, net	15,785	24,589
Prepaid expenses	3,379	6,000
Income taxes receivable	2,092	7,503
Property and equipment, net	11,104	11,627
Deferred tax asset, net	44,583	40,624
Goodwill and other intangible assets	65,891	66,131
Other assets	17,826	19,029
TOTAL ASSETS	1,236,971	1,258,199
LIABILITIES AND EQUITY
Accounts payable	11,123	20,400
Accrued employee compensation and benefits	2,807	8,323
Accrued property taxes	3,092	5,966
Accrued interest	7,551	3,451
Earnest money deposits	10,113	10,045
Other accrued expenses	33,964	35,729
Other liabilities	30,519	31,799
Debt	434,413	432,744
TOTAL LIABILITIES	533,582	548,457
COMMITMENTS AND CONTINGENCIES
Forestar Group Inc. shareholders’ equity:
Common stock, par value $1.00 per share, 200,000,000 authorized shares, 36,946,603 issued at first quarter-end 2015 and year-end 2014	36,947	36,947
Additional paid-in capital	558,600	558,945
Retained earnings	158,843	167,001
Treasury stock, at cost, 3,328,077 shares at first quarter-end 2015 and 3,485,278 shares at year-end 2014	(53,124)	(55,691)
Total Forestar Group Inc. shareholders’ equity	701,266	707,202
Noncontrolling interests	2,123	2,540
TOTAL EQUITY	703,389	709,742
TOTAL LIABILITIES AND EQUITY	$ 1,236,971	$ 1,258,199

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Investment in Unconsolidated Ventures - Summarized Income Statement Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Schedule of Equity Method Investments [Line Items]
Revenues	$ 16,372	$ 8,895
Earnings (loss)	5,310	3,669
Equity in earnings of unconsolidated ventures	3,045	991
242, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	5,331	1,475
Earnings (loss)	3,464	533
Equity in earnings of unconsolidated ventures	1,766	277
CL Ashton Woods [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	1,350	708
Earnings (loss)	527	220
Equity in earnings of unconsolidated ventures	678	318
CL Realty [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	279	368
Earnings (loss)	160	230
Equity in earnings of unconsolidated ventures	80	115
CREA FMF [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	6	0
Earnings (loss)	(113)	(25)
Equity in earnings of unconsolidated ventures	(113)	(25)
Elan 99, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	0	0
Earnings (loss)	(2)	0
Equity in earnings of unconsolidated ventures	(2)	0
FMF Peakview [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	186	0
Earnings (loss)	(482)	(73)
Equity in earnings of unconsolidated ventures	(96)	(15)
HM Stonewall Estates [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	1,058	1,001
Earnings (loss)	515	352
Equity in earnings of unconsolidated ventures	230	141
LM Land Holdings [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	1,976	4,898
Earnings (loss)	1,250	2,927
Equity in earnings of unconsolidated ventures	364	677
PSW Communities [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	2,427	0
Earnings (loss)	195	(216)
Equity in earnings of unconsolidated ventures	173	(189)
Temco [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	58	60
Earnings (loss)	(1)	(18)
Equity in earnings of unconsolidated ventures	0	(9)
Other ventures [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	3,701	385
Earnings (loss)	(203)	(261)
Equity in earnings of unconsolidated ventures	$ (35)	$ (299)

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Basis of Presentation

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Our consolidated financial statements include the accounts of Forestar Group Inc., all subsidiaries, ventures and other entities in which we have a controlling interest. We account for our investment in other entities in which we have significant influence over operations and financial policies using the equity method. We eliminate all material intercompany accounts and transactions. Noncontrolling interests in consolidated pass-through entities are recognized before income taxes.

We prepare our unaudited interim financial statements in accordance with U.S. generally accepted accounting principles and Securities and Exchange Commission requirements for interim financial statements. As a result, they do not include all the information and disclosures required for complete financial statements. However, in our opinion, all adjustments considered necessary for a fair presentation have been included. Such adjustments consist only of normal recurring items unless otherwise noted. We make estimates and assumptions about future events. Actual results can, and probably will, differ from those we currently estimate including those principally related to allocating costs to real estate, measuring long-lived assets for impairment, oil and gas revenue accruals, capital expenditure and lease operating expense accruals associated with our oil and gas production activities, oil and gas reserves and depletion of our oil and gas properties. These interim operating results are not necessarily indicative of the results that may be expected for the entire year. For further information, please read the financial statements included in our 2014 Annual Report on Form 10-K.

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Income Taxes - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Tax Disclosure [Abstract]
Effective Income Tax Rate Reconciliation, Percent	35.00%	34.00%
Benefit for noncontrolling interests	2.00%	2.00%
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Amount	2.00%

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Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Components of Share-Based Compensation Expense (Income)

Share-based and long-term incentive compensation expense consists of:

	First Quarter
	2015		2014
	(In thousands)
Cash-settled awards	296		(2,683		)
Equity-settled awards	1,997		2,349
Restricted stock	17		46
Stock options	1,032		601
Total share-based compensation	3,342		313
Deferred cash	116		—
	$	3,458	$	313

Share-Based Compensation Expense (Income) Included in Operating Expense

Share-based and long-term incentive compensation expense is included in:

	First Quarter
	2015		2014
	(In thousands)
General and administrative expense	$	2,122	$	(23	)
Other operating expense	1,336		336
	$	3,458	$	313

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Variable Interest Entities - Additional Information (Detail) (Variable Interest Entity, Not Primary Beneficiary [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 Entity
Variable Interest Entity [Line Items]
Number of primary beneficiary	4
Total assets of developed and under developed real estate	$ 73,855
Total liabilities of developed and under developed real estate	89,317
Investment in VIEs	9,567
Contributed to VIE	37
Maximum Exposure to loss related to VIEs	3,561
Current Maturities of Borrowings [Member]
Variable Interest Entity [Line Items]
Total liabilities of developed and under developed real estate	$ 36,306

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Share-Based Compensation

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based and Long-Term Incentive Compensation

Share-based and long-term incentive compensation expense consists of:

	First Quarter
	2015		2014
	(In thousands)
Cash-settled awards	296		(2,683		)
Equity-settled awards	1,997		2,349
Restricted stock	17		46
Stock options	1,032		601
Total share-based compensation	3,342		313
Deferred cash	116		—
	$	3,458	$	313

Share-based and long-term incentive compensation expense is included in:

	First Quarter
	2015		2014
	(In thousands)
General and administrative expense	$	2,122	$	(23	)
Other operating expense	1,336		336
	$	3,458	$	313

Share-Based Compensation

In first quarter2015, we granted 89,900 cash-settled stock appreciation rights awards and 598,600 equity-settled awards. Cash-settled stock appreciation rights have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, or disability or if there is a change in control. Equity-settled awards granted to employees in the first quarter2015 include market-leveraged stock units (MSUs) and stock options. Equity-settled MSUs will be settled in common stock based upon our stock price performance over 3 years years from the date of grant. Stock options have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, or disability or if there is a change in control. Equity-settled awards in the form of restricted stock units granted to our directors are fully vested at the time of grant and are issued upon retirement.

The fair value of awards granted to retirement eligible employees and expensed at the date of grant was $517,000 and $760,000 in first quarter2015 and 2014. Unrecognized share-based compensation expense related to non-vested equity-settled awards, restricted stock and stock options is $10,177,000 at first quarter-end2015.

In first quarter2015 and 2014, we issued 157,201 and 167,747 shares out of our treasury stock associated with vesting of stock-based awards or exercise of stock options, net of 48,636 and 46,314 shares withheld having a value of $723,000 and $879,000 for payroll taxes in connection with vesting of stock-based awards or exercise of stock options.

Long-Term Incentive Compensation

In first quarter2015, we granted $587,000 of long-term incentive compensation in the form of deferred cash compensation. Deferred cash will be paid out after the earlier of three years or the employee's retirement eligibility date and the expense is recognized ratably over the vesting period. The accrued liability was $116,000 at first quarter-end2015 and is included in other liabilities.

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Real Estate - Real Estate (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Real Estate [Abstract]
Entitled, developed and under development projects	$ 338,607	$ 321,273
Undeveloped land (includes land in entitlement)	93,458	93,182
Carrying value	196,348	192,678
Less: accumulated depreciation	(32,129)	(31,377)
Net carrying value	164,219	161,301
Total Real Estate	$ 596,284	$ 575,756

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Real Estate (Tables)

3 Months Ended

Mar. 31, 2015

Real Estate [Abstract]

Real Estate

Real estate consists of:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Entitled, developed and under development projects	$	338,607		$	321,273
Undeveloped land (includes land in entitlement)	93,458			93,182
Commercial and income producing properties
Carrying value	196,348			192,678
Less: accumulated depreciation	(32,129		)	(31,377		)
Net carrying value	164,219			161,301
	$	596,284		$	575,756

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Share Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of awards granted to retirement eligible employees and expensed at date of grant	$ 517,000	$ 760,000
Unrecognized share-based compensation expense related to non-vested equity-settled awards, restricted stock and stock options	10,177,000
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures	157,201	167,747
Shares withheld for payroll taxes	48,636	46,314
Value of shares withheld for payroll taxes	723,000	879,000
Deferred Compensation Arrangement with Individual, Cash Award Granted, Amount	587,000
Deferred Compensation Cash-based Arrangements, Liability, Current and Noncurrent	$ 116,000
Cash Settled Restricted Stock Unit [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Equivalent Units	89,900
Stock Appreciation Rights (SARs) [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Employee Stock Option [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Market Leveraged Stock Units [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Equity-settled awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Equivalent Units	598,600

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New and Pending Accounting Pronouncements

3 Months Ended

Mar. 31, 2015

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New and Pending Accounting Pronouncements

New and Pending Accounting Pronouncements

Pending Accounting Standards

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2016. On April 1, the FASB voted to propose a deferral of the effective date of the new standard by one year. This proposed deferral would result in the new standard being effective after December 15, 2017. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, requiring entities to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The revised consolidation model: (1) modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (2) eliminates the presumption that a general partner should consolidate a limited partnership, (3) affects the consolidation analysis of reporting entities that are involved with VIEs, and (4) provides a scope exception from consolidation guidance for reporting entities with interests in certain legal entities. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The updated standard may be applied retrospectively or using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. We are currently evaluating the effect that the updated standard will have on our financial position and disclosures.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	36,946,603	36,946,603
Treasury stock, common shares	3,328,077	3,485,278

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Net Income per Share

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Net Income per Share

Net Income (Loss) per Share

Basic and diluted earnings per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security. We have determined that our 6.00% tangible equity units (Units) are participating securities. Per share amounts are computed by dividing earnings available to common shareholders by the weighted average shares outstanding during each period. In periods with a net loss, no such adjustment is made to earnings as the holders of the participating securities have no obligation to fund losses.

Due to a net loss in first quarter 2015, as the effect of potentially dilutive securities would be anti-dilutive, basic and diluted loss per share are the same. The computations of basic and diluted earnings per share are as follows:

	First Quarter
	2015			2014
	(In thousands)
Numerator:
Consolidated net income (loss)	$	(8,237	)	$	9,007
Less: Net loss (income) attributable to noncontrolling interest	79			(673		)
Earnings (loss) available for diluted earnings per share	$	(8,158	)	$	8,334
Less: Undistributed net income allocated to participating securities	—			(1,295		)
Earnings (loss) available to common shareholders for basic earnings per share	$	(8,158	)	$	7,039
Denominator:
Weighted average common shares outstanding — basic	34,168			35,576
Weighted average common shares upon conversion of participating securities (a)	—			7,857
Dilutive effect of stock options, restricted stock and equity-settled awards	—			480
Total weighted average shares outstanding — diluted	34,168			43,913
Anti-dilutive awards excluded from diluted weighted average shares	10,743			2,051

_____________________

^(a)  Our earnings per share calculation reflects the weighted average shares issuable upon settlement of the prepaid stock purchase contract component of our 6.00% tangible equity units, issued November 27, 2013.

The actual number of shares we may issue upon settlement of the stock purchase contract will be between 6,547,800 shares (the minimum settlement rate) and 7,857,000 shares (the maximum settlement rate) based on the applicable market value, as defined in the purchase contract agreement associated with issuance of the Units.

We intend to settle the principal amount of our convertible senior notes (Convertible Notes) in cash upon conversion with only the amount in excess of par value of the Convertible Notes to be settled in shares of our common stock. Therefore, our calculation of diluted net income per share using the treasury stock method includes only the amount, if any, in excess of par value of the Convertible Notes. As such, the Convertible Notes have no impact on diluted net income per share until the price of our common stock exceeds the $24.49 conversion price of the Convertible Notes. The average price of our common stock in first quarter2015 did not exceed the conversion price which resulted in no additional diluted outstanding shares.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 04, 2015
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	FOR
Entity Registrant Name	FORESTAR GROUP INC.
Entity Central Index Key	0001406587
Current Fiscal Year End Date	--03-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,618,526

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our effective tax rate was 35 percent in first quarter 2015, which includes a two percent benefit for noncontrolling interests and a two percent detriment for share-based compensation benefits that will not be realized. Our effective tax rate was 34 percent in first quarter2014, which included a two percent benefit for noncontrolling interests. Our effective tax rates also include the effect of state income taxes, nondeductible items and benefits of percentage depletion.

We have not provided a valuation allowance for our federal deferred tax asset because we believe it is likely it will be recoverable in future periods.

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Consolidated Statements of Income and Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
REVENUES
Real estate sales and other	$ 21,961	$ 55,547
Commercial and income producing properties	10,869	9,933
Real estate	32,830	65,480
Oil and gas	13,185	17,554
Other natural resources	1,790	1,571
Total revenues	47,805	84,605
COSTS AND EXPENSES
Cost of real estate sales and other	(10,362)	(26,064)
Cost of commercial and income producing properties	(7,692)	(10,120)
Cost of oil and gas producing activities	(11,542)	(12,620)
Cost of other natural resources	(920)	(776)
Other operating	(18,060)	(13,997)
General and administrative	(8,142)	(5,145)
Total expenses	(56,718)	(68,722)
Gain on asset exchange and sales	1,176	0
OPERATING INCOME (LOSS)	(7,737)	15,883
Equity in earnings of unconsolidated ventures	3,045	991
Interest expense	(8,821)	(5,503)
Other non-operating income	917	2,294
INCOME (LOSS) BEFORE TAXES	(12,596)	13,665
Income tax benefit (expense)	4,359	(4,658)
CONSOLIDATED NET INCOME (LOSS)	(8,237)	9,007
Less: Net (income) loss attributable to noncontrolling interests	79	(673)
NET INCOME (LOSS) ATTRIBUTABLE TO FORESTAR GROUP INC.	(8,158)	8,334
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic (in shares)	34,168	35,576
Diluted (in shares)	34,168	43,913
NET INCOME PER COMMON SHARE
Basic (usd per share)	$ (0.24)	$ 0.20
Diluted (usd per share)	$ (0.24)	$ 0.19
TOTAL COMPREHENSIVE INCOME (LOSS)	$ (8,158)	$ 8,334

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Investment in Unconsolidated Ventures

3 Months Ended

Mar. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated Ventures

Investment in Unconsolidated Ventures

At first quarter-end2015, we have ownership interests in 15 ventures that we account for using the equity method.

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:

	Venture Assets				Venture Borrowings(a)				Venture Equity						Our Investment
	First Quarter-End		Year-End		First Quarter-End		Year-End		First Quarter-End			Year-End			First Quarter-End		Year-End
	2015		2014		2015		2014		2015			2014			2015		2014
	(In thousands)
242, LLC (b)	$	35,556	$	33,021	$	9,328	$	6,940	$	22,253		$	21,789		$	10,363	$	10,098
CL Ashton Woods, LP (c)	12,649		13,269		—		—		9,479			11,453			4,693		6,015
CL Realty, LLC	7,965		7,960		—		—		7,899			7,738			3,950		3,869
CREA FMF Nashville LLC (b)	50,251		40,014		40,648		29,660		5,874			5,987			5,403		5,516
Elan 99, LLC	12,060		10,070		1		1		10,333			9,643			9,299		8,679
FMF Littleton LLC	32,765		26,953		3,912		—		24,737			24,435			6,362		6,287
FMF Peakview LLC	45,457		43,638		24,774		23,070		17,462			17,464			3,574		3,575
HM Stonewall Estates, Ltd (c)	3,629		3,750		33		669		3,596			3,081			1,982		1,752
LM Land Holdings, LP (c)	30,487		25,561		8,505		4,448		19,750			18,500			9,686		9,322
PSW Communities, LP	18,964		16,045		12,870		10,515		4,610			4,415			4,097		3,924
Temco Associates, LLC	11,734		11,756		—		—		11,556			11,556			5,778		5,778
Other ventures (d)	4,837		8,453		23,437		26,944		(25,752		)	(25,614		)	194		190
	$	266,354	$	240,490	$	123,508	$	102,247	$	111,797		$	110,447		$	65,381	$	65,005

Combined summarized income statement information for our ventures accounted for using the equity method follows:

	Venture Revenues				Venture Earnings (Loss)						Our Share of Earnings (Loss)
	First Quarter
	2015		2014		2015			2014			2015			2014
	(In thousands)
242, LLC (b)	$	5,331	$	1,475	$	3,464		$	533		$	1,766		$	277
CL Ashton Woods, LP (c)	1,350		708		527			220			678			318
CL Realty, LLC	279		368		160			230			80			115
CREA FMF Nashville LLC (b)	6		—		(113		)	(25		)	(113		)	(25		)
Elan 99, LLC	—		—		(2		)	—			(2		)	—
FMF Peakview LLC	186		—		(482		)	(73		)	(96		)	(15		)
HM Stonewall Estates, Ltd (c)	1,058		1,001		515			352			230			141
LM Land Holdings, LP (c)	1,976		4,898		1,250			2,927			364			677
PSW Communities, LP	2,427		—		195			(216		)	173			(189		)
Temco Associates, LLC	58		60		(1		)	(18		)	—			(9		)
Other ventures (d)	3,701		385		(203		)	(261		)	(35		)	(299		)
	$	16,372	$	8,895	$	5,310		$	3,669		$	3,045		$	991

 _____________________

^(a)  Total includes current maturities of $78,947,000 at first quarter-end2015, of which $51,788,000 is non-recourse to us, and $65,795,000 at year-end 2014, of which $42,566,000 is non-recourse to us.

^(b)  Includes unamortized deferred gains on real estate contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $1,587,000 are reflected as a reduction to our investment in unconsolidated ventures at first quarter-end2015.

^(c)  Includes unrecognized basis difference of $1,373,000 which is reflected as a reduction of our investment in unconsolidated ventures at first quarter-end2015. The difference will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

^(d)  Our investment in other ventures reflects our ownership interests, excluding venture losses that exceed our investment where we are not obligated to fund those losses. Please read Note 16—Variable Interest Entities for additional information.

In first quarter2015, we invested $831,000 in these ventures and received $3,500,000 in distributions. In first quarter2014, we invested $4,293,000 in these ventures and received $1,173,000 in distributions. Distributions include both return of investments and distribution of earnings.

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Equity

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Equity

Equity

A reconciliation of changes in equity at first quarter-end2015 follows:

	Forestar Group Inc.			Noncontrolling Interests			Total
	(In thousands)
Balance at year-end 2014	$	707,202		$	2,540		$	709,742
Net income (loss)	(8,158		)	(79		)	(8,237		)
Distributions to noncontrolling interests	—			(338		)	(338		)
Other (primarily share-based compensation)	2,222			—			2,222
	$	701,266		$	2,123		$	703,389

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Our consolidated financial statements include the accounts of Forestar Group Inc., all subsidiaries, ventures and other entities in which we have a controlling interest. We account for our investment in other entities in which we have significant influence over operations and financial policies using the equity method. We eliminate all material intercompany accounts and transactions. Noncontrolling interests in consolidated pass-through entities are recognized before income taxes.

We prepare our unaudited interim financial statements in accordance with U.S. generally accepted accounting principles and Securities and Exchange Commission requirements for interim financial statements. As a result, they do not include all the information and disclosures required for complete financial statements. However, in our opinion, all adjustments considered necessary for a fair presentation have been included. Such adjustments consist only of normal recurring items unless otherwise noted. We make estimates and assumptions about future events. Actual results can, and probably will, differ from those we currently estimate including those principally related to allocating costs to real estate, measuring long-lived assets for impairment, oil and gas revenue accruals, capital expenditure and lease operating expense accruals associated with our oil and gas production activities, oil and gas reserves and depletion of our oil and gas properties. These interim operating results are not necessarily indicative of the results that may be expected for the entire year. For further information, please read the financial statements included in our 2014 Annual Report on Form 10-K.

New and Pending Accounting Pronouncements

Pending Accounting Standards

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2016. On April 1, the FASB voted to propose a deferral of the effective date of the new standard by one year. This proposed deferral would result in the new standard being effective after December 15, 2017. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, requiring entities to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The revised consolidation model: (1) modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (2) eliminates the presumption that a general partner should consolidate a limited partnership, (3) affects the consolidation analysis of reporting entities that are involved with VIEs, and (4) provides a scope exception from consolidation guidance for reporting entities with interests in certain legal entities. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The updated standard may be applied retrospectively or using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. We are currently evaluating the effect that the updated standard will have on our financial position and disclosures.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

We are involved in various legal proceedings that arise from time to time in the ordinary course of doing business and believe that adequate reserves have been established for any probable losses. We do not believe that the outcome of any of these proceedings should have a significant adverse effect on our financial position, long-term results of operations or cash flows. However, it is possible that charges related to these matters could be significant to our results or cash flows in any one accounting period.

Environmental

Environmental remediation liabilities arise from time to time in the ordinary course of doing business, and we believe we have established adequate reserves for any probable losses that we can reasonably estimate. We own 288 acres near Antioch, California, portions of which were sites of a former paper manufacturing operation that are in remediation. We have received certificates of completion on all but one 80 acre tract, a portion of which includes subsurface contamination. We estimate the remaining cost to complete remediation activities will be approximately $451,000, which is included in other accrued expenses. It is possible that remediation or monitoring activities could be required in addition to those included within our estimate, but we are unable to determine the scope, timing or extent of such activities.

We have asset retirement obligations related to the abandonment and site restoration requirements that result from the acquisition, construction and development of oil and gas properties. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense related to the asset retirement obligation and depletion expense related to capitalized asset retirement cost is included in cost of oil and gas producing activities on our consolidated statements of income and comprehensive income. At first quarter-end2015 and year-end 2014, our asset retirement obligation was $1,877,000 and $1,807,000, which is included in other liabilities.

Oil and Gas Restructuring Costs

In connection with review of strategic alternatives with respect to our oil and gas business that was announced in December 2014, we offered retention bonuses aggregating $1,519,000 to key personnel provided they remain our employees through December 2015. We are expensing retention bonus costs over the retention period. In first quarter 2015, we incurred severance expenses related to staff reductions, paid a portion of the December 2014 accrual under written severance agreements and incurred costs associated with closure of our Fort Worth office. Office closure costs include a $1,750,000 lease termination charge and $391,000 for write off of leasehold improvements which were partially offset by a deferred lease credit of $364,000. These restructuring costs are included in other operating expense on our consolidated statements of income and comprehensive income. We may incur additional costs related to our review of strategic alternatives associated with our oil and gas business.

The following table summarizes activity related to liabilities associated with our oil and gas restructuring activities in first quarter 2015:

	Employee-Related Costs			Facility Closure			Total
	(In thousands)
Balance at year-end 2014	$	(2,367	)	$	—		$	(2,367	)
Additions	(1,068		)	(1,750		)	(2,818		)
Payments	1,894			1,750			3,644
Balance at first quarter-end 2015	$	(1,541	)	$	—		$	(1,541	)

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Fair Value

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Fair value is the exchange price that would be the amount received for an asset or paid to transfer a liability in an orderly transaction between market participants. In arriving at a fair value measurement, we use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of inputs used to establish fair value are the following:

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

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Non-financial assets measured at fair value on a non-recurring basis principally include real estate assets, oil and gas properties, assets held for sale, goodwill and other intangible assets, which are measured for impairment. In first quarter2015, we recognized non-cash asset impairment charges of $504,000 associated with a residential development with golf course and country club property located near Fort Worth. We had no non-cash impairment charges of proved oil and gas properties in first quarter2015.

	First Quarter-End 2015								Year-End 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Non-Financial Assets and Liabilities:
Real estate	$	—	$	1,948	$	—	$	1,948	$	—	$	970	$	—	$	970
Proved oil and gas properties	$	—	$	—	$	—	$	—	$	—	$	—	$	3,655	$	3,655

We elected not to use the fair value option for cash and cash equivalents, accounts receivable, other current assets, variable debt, accounts payable and other current liabilities. The carrying amounts of these financial instruments approximate their fair values due to their short-term nature or variable interest rates. We determine the fair value of fixed rate financial instruments using quoted prices for similar instruments in active markets.

Information about our fixed rate financial instruments not measured at fair value follows:

	First Quarter-End 2015						Year-End 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Valuation Technique
	(In thousands)
Loan secured by real estate	$	—		$	—		$	3,574		$	4,859		Level 2
Fixed rate debt	$	(369,112	)	$	(357,342	)	$	(370,348	)	$	(359,131	)	Level 2

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015 acre	Mar. 31, 2014	Dec. 31, 2014
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Area for which certificate of completion received	288
Portion of site for which certificate not received	80
Cost to complete remediation activities	$ 451
Asset Retirement Obligation	1,877		1,807
Compensation Expense	116	0
Restructuring Charges	2,818
Deferred Bonus [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Compensation Expense			1,519
Facility Closing [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Restructuring Charges	1,750
Other Restructuring [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Restructuring Charges	364
Leasehold Improvements [Member] | Other Restructuring [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Restructuring Charges	$ 391

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Receivables

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Receivables

Receivables

Receivables consist of:

	First Quarter-End			Year-End
	2015			2014
	(In thousands)
Oil and gas revenue accruals	6,811			7,293
Other receivables and accrued interest	4,696			6,505
Oil and gas joint interest billing receivables	2,657			5,738
Other loans secured by real estate, average interest rates of 9.90% at first quarter-end 2015 and 4.41% at year-end 2014	1,879			1,737
Loan secured by real estate	$	—		$	3,574
	16,043			24,847
Allowance for bad debts	(258		)	(258		)
	$	15,785		$	24,589

In second quarter 2011, we acquired a non-performing loan that was secured by a lien on developed and undeveloped real estate located near Houston designated for single-family residential and commercial development.In first quarter2015, the loan was paid in full and we received principal payments of $4,394,000 and interest payments of $49,000.

Estimated accretable yield follows:

	First Quarter-End
	2015
	(In thousands)
Beginning of period (year-end 2014)	$	839
Change in accretable yield due to change in timing of estimated cash flows	30
Interest income recognized (in first quarter 2015)	(869		)
End of period	$	—

Other loans secured by real estate generally are secured by a deed of trust and due within three years.

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Debt

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt

Debt

Debt consists of:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
8.50% senior secured notes due 2022	250,000		250,000
3.75% convertible senior notes due 2020, net of discount	104,020		103,194
6.00% tangible equity unit notes, net of discount	15,092		17,154
Secured promissory notes — average interest rates of 3.18% at first quarter-end 2015 and 3.17% at year-end 2014	15,400		15,400
Other indebtedness — interest rates ranging from 2.19% to 5.50% at first quarter-end 2015	49,901		46,996
	$	434,413	$	432,744

Our debt agreements contain financial covenants customary for such agreements including minimum levels of interest coverage and limitations on leverage. At first quarter-end2015, we were in compliance with the financial covenants of these agreements.

At first quarter-end2015, our senior secured credit facility provides for a $300,000,000 revolving line of credit maturing May 15, 2017. The revolving line of credit may be prepaid at any time without penalty. The revolving line of credit includes a $100,000,000 sublimit for letters of credit, of which $15,459,000 is outstanding at first quarter-end2015. Total borrowings under our senior secured credit facility (including the face amount of letters of credit) may not exceed a borrowing base formula. At first quarter-end2015, we had $284,541,000 in net unused borrowing capacity under our senior secured credit facility.

Under the terms of our senior secured credit facility, at our option we can borrow at LIBOR plus 4.0 percent or at the alternate base rate plus 3.0 percent. The alternate base rate is the highest of (i) KeyBank National Association’s base rate, (ii) the federal funds effective rate plus 0.5 percent or (iii) 30 day LIBOR plus 1 percent. Borrowings under the senior secured credit facility are or may be secured by (a) mortgages on the timberland, high value timberland and portions of raw entitled land, as well as pledges of other rights including certain oil and gas operating properties, (b) assignments of current and future leases, rents and contracts, (c) a security interest in our primary operating account, (d) a pledge of the equity interests in current and future material operating subsidiaries and most of our majority-owned joint venture interests, or if such pledge is not permitted, a pledge of the right to distributions from such entities, and (e) a pledge of certain reimbursements payable to us from special improvement district tax collections in connection with our Cibolo Canyons project. The senior secured credit facility provides for releases of real estate and other collateral provided that borrowing base compliance is maintained.

At first quarter-end2015, secured promissory notes represent a $15,400,000 loan collateralized by a 413 guest room hotel located in Austin with a carrying value of $32,505,000. Other indebtedness principally represents $45,714,000 of senior secured loans for two multifamily properties, our 257-unit multifamily project in Austin and our 354-unit multifamily property in Dallas. The combined carrying value of these two multifamily properties is $87,012,000 at first quarter-end2015.

At first quarter-end2015 and year-end 2014, we have $14,276,000 and $15,168,000 in unamortized deferred financing fees which are included in other assets. Amortization of deferred financing fees was $1,156,000 and $901,000 in first quarter2015 and 2014 and is included in interest expense.

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Capital Stock

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Capital Stock

Capital Stock

In first quarter 2015, we accelerated the expiration date of our shareholder rights plan from December 11, 2017 to March 13, 2015, resulting in termination of the plan.

Please read Note 17—Share-Based and Long-Term Incentive Compensation for information about additional shares of common stock that could be issued under terms of our share-based compensation plans.

At first quarter-end2015, personnel of former affiliates held options to purchase 510,000 shares of our common stock. The options have a weighted average exercise price of $28.42 and a weighted average remaining contractual term of one year. At first quarter-end2015, the options have an aggregate intrinsic value of $24,600.

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Segment Information - Segment Revenues and Earnings (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Total revenues	$ 47,805	$ 84,605
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	(12,517)	12,992
Segment Earnings [Member]
Segment Reporting Information [Line Items]
Total revenues	47,805	84,605
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	5,734	23,854
Segment Earnings [Member] | Real estate [Member]
Segment Reporting Information [Line Items]
Total revenues	32,830	65,480
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	9,066	23,575
Segment Earnings [Member] | Oil And Gas [Member]
Segment Reporting Information [Line Items]
Total revenues	13,185	17,554
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	(2,941)	807
Segment Earnings [Member] | Other natural resources [Member]
Segment Reporting Information [Line Items]
Total revenues	1,790	1,571
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	(391)	(528)
Items not allocated to segments [Member]
Segment Reporting Information [Line Items]
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	(18,251)	(10,862)
Items not allocated to segments [Member] | General and administrative expense [Member]
Segment Reporting Information [Line Items]
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	(6,020)	(5,168)
Items not allocated to segments [Member] | Share-based compensation expense [Member]
Segment Reporting Information [Line Items]
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	(3,458)	(313)
Items not allocated to segments [Member] | Interest expense [Member]
Segment Reporting Information [Line Items]
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	(8,821)	(5,503)
Items not allocated to segments [Member] | Other corporate non-operating income [Member]
Segment Reporting Information [Line Items]
Segment Reporting Information Income (Loss) From Continuing Operations Before Income Taxes Attributable To Parent	$ 48	$ 122

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Share Based Compensation - Components of Share-Based Compensation Expense (Income) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total share-based compensation	$ 3,342	$ 313
Compensation Expense	116	0
Share based and Long Term Incentive Compensation	3,458	313
Cash Settled Awards [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total share-based compensation	296	(2,683)
Equity-settled awards [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total share-based compensation	1,997	2,349
Restricted Stock [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total share-based compensation	17	46
Employee Stock Option [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total share-based compensation	$ 1,032	$ 601

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Segment Information - Assets Allocated by Segment (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015		Dec. 31, 2014		Mar. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Total Assets	$ 1,236,971		$ 1,258,199
Cash and cash equivalents	126,262		170,127		147,979	192,307
Deferred tax asset, net	44,583		40,624
Operating Segments [Member] | Real estate [Member]
Segment Reporting Information [Line Items]
Total Assets	670,067		654,774
Operating Segments [Member] | Oil And Gas [Member]
Segment Reporting Information [Line Items]
Total Assets	352,695		342,703
Operating Segments [Member] | Other natural resources [Member]
Segment Reporting Information [Line Items]
Total Assets	20,077		22,531
Items not allocated to segments [Member] | Assets not allocated to segments [Member]
Segment Reporting Information [Line Items]
Total Assets	$ 194,132	[1]	$ 238,191	[1]

[1] Assets not allocated to segments at first quarter-end 2015 principally consist of cash and cash equivalents of $126,262,000 and a net deferred tax asset of $44,583,000. Assets not allocated to segments at year-end 2014 principally consist of cash and cash equivalents of $170,127,000 and a net deferred tax asset of $40,624,000.

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Assets Allocated by Segment

Total assets allocated by segment are as follows:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
Real estate	$	670,067	$	654,774
Oil and gas	352,695		342,703
Other natural resources	20,077		22,531
Assets not allocated to segments (a)	194,132		238,191
	$	1,236,971	$	1,258,199

  _________________________

^(a)  Assets not allocated to segments at first quarter-end2015 principally consist of cash and cash equivalents of $126,262,000 and a net deferred tax asset of $44,583,000. Assets not allocated to segments at year-end 2014 principally consist of cash and cash equivalents of $170,127,000 and a net deferred tax asset of $40,624,000.

Segment Revenues and Earnings

Segment revenues and earnings are as follows:

	First Quarter
	2015			2014
	(In thousands)
Revenues:
Real estate	$	32,830		$	65,480
Oil and gas	13,185			17,554
Other natural resources	1,790			1,571
Total revenues	$	47,805		$	84,605
Segment earnings (loss):
Real estate	$	9,066		$	23,575
Oil and gas	(2,941		)	807
Other natural resources	(391		)	(528		)
Total segment earnings	5,734			23,854
Items not allocated to segments (a)	(18,251		)	(10,862		)
Income (loss) before taxes attributable to Forestar Group Inc.	$	(12,517	)	$	12,992

  _________________________

^(a)  Items not allocated to segments consist of:

	First Quarter
	2015			2014
	(In thousands)
General and administrative expense	$	(6,020	)	$	(5,168	)
Shared-based and long-term incentive compensation expense	(3,458		)	(313		)
Interest expense	(8,821		)	(5,503		)
Other corporate non-operating income	48			122
	$	(18,251	)	$	(10,862	)

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Debt - Debt additional information (Detail)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Senior Notes [Member]
Line of Credit Facility [Line Items]
Interest Rate Percentage	8.50%
Debt Instrument, Maturity Date	Jun. 01, 2022
Six Percent Tangible Equity Units [Member]
Line of Credit Facility [Line Items]
Average interest rate	6.00%	6.00%
Debt Instrument, Maturity Date	Dec. 15, 2016
Secured Debt [Member]
Line of Credit Facility [Line Items]
Average interest rate	3.18%	3.17%
Other indebtedness [Member]
Line of Credit Facility [Line Items]
Variable and fixed interest rates ranging, minimum	2.19%
Variable and fixed interest rates ranging, maximum	5.50%
Convertible Debt [Member]
Line of Credit Facility [Line Items]
Interest Rate Percentage	3.75%
Debt Instrument, Maturity Date	Mar. 01, 2020

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Variable Interest Entities

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

Variable Interest Entities

We participate in real estate ventures for the purpose of acquiring and developing residential, multifamily and mixed-use communities in which we may or may not have a controlling financial interest. Generally accepted accounting principles require consolidation of VIEs in which an enterprise has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. We examine specific criteria and use judgment when determining whether we are the primary beneficiary and must consolidate a VIE. We perform this review initially at the time we enter into venture agreements and continuously reassess to see if we are the primary beneficiary of a VIE.

At first quarter-end2015, we have four VIEs. We account for these VIEs using the equity method and we are not the primary beneficiary. Although we have certain rights regarding major decisions, we do not have the power to direct the activities that are most significant to the economic performance of these VIEs. At first quarter-end2015, these VIEs have total assets of $73,855,000, substantially all of which represent developed and undeveloped real estate, and total liabilities of $89,317,000, which includes $36,306,000 of borrowings classified as current maturities. These amounts are included in the summarized balance sheet information for ventures accounted for using the equity method in Note 7—Investment in Unconsolidated Ventures. At first quarter-end2015, our investment in these VIEs is $9,567,000 and is included in investment in unconsolidated ventures. In first quarter2015, we contributed $37,000 to these VIEs. Our maximum exposure to loss related to one of these VIEs is estimated at $3,561,000, which exceeds our investment as we have a nominal general partner interest and could be held responsible for its liabilities. The maximum exposure to loss represents the maximum loss that we could be required to recognize assuming all the ventures’ assets (principally real estate) are worthless, without consideration of the probability of a loss or of any actions we may take to mitigate any such loss.

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Goodwill and Other Intangibles (Tables)

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying value of goodwill and other intangible assets

Carrying value of goodwill and other intangible assets follows:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
Goodwill	$	63,423	$	63,423
Identified intangibles, net	2,468		2,708
	$	65,891	$	66,131

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Receivables - Estimated Accretable Yield (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Beginning of period	$ 839
Change in accretable yield due to change in timing of estimated cash flows	(30)
Interest income recognized	(869)
End of period	$ 0

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Goodwill and Other Intangibles Additional Information (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Goodwill	$ 63,423,000	$ 63,423,000
Austin, Texas [Member] | Multi Family Property [Member]
Business Acquisition [Line Items]
Finite-Lived Intangible Assets, Net	433,000
Credo [Member]
Business Acquisition [Line Items]
Goodwill	59,549,000
Credo [Member] | Patents [Member]
Business Acquisition [Line Items]
Finite-Lived Intangible Assets, Net	354,000
Water Resource Company [Member]
Business Acquisition [Line Items]
Goodwill	3,874,000
Indefinite-Lived Intangible Assets (Excluding Goodwill)	$ 1,681,000

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$ (8,237)	$ 9,007
Adjustments:
Depreciation, depletion and amortization	11,325	7,439
Change in deferred income taxes	(4,359)	2,976
Equity in earnings of unconsolidated ventures	(3,045)	(991)
Distributions of earnings of unconsolidated ventures	2,845	1,018
Share-based compensation	3,342	313
Real estate cost of sales	9,884	24,812
Dry hole and leasehold abandonment costs	86	2,381
Real estate development and acquisition expenditures, net	(34,769)	(35,035)
Reimbursements from utility and improvement districts	4,130	1,536
Other changes in real estate	667	652
Changes in deferred income	81	(132)
Gain on sale of assets	(1,176)	0
Other	982	615
Changes in:
Notes and accounts receivable	7,016	7,433
Prepaid expenses and other	2,695	790
Accounts payable and other accrued liabilities	(15,644)	(15,104)
Income taxes	5,411	(2,167)
Net cash provided by (used for) operating activities	(18,766)	5,543
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, equipment, software, reforestation and other	(2,809)	(4,699)
Oil and gas properties and equipment	(23,718)	(19,357)
Investment in unconsolidated ventures	(831)	(4,293)
Proceeds from sales of oil and gas properties, net	2,000	0
Return of investment in unconsolidated ventures	655	155
Net cash used for investing activities	(24,703)	(28,194)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt	(2,463)	(15,711)
Additions to debt	3,119	2,608
Deferred financing fees	(6)	0
Distributions to noncontrolling interests, net	(338)	(498)
Purchase of noncontrolling interests	0	(7,971)
Exercise of stock options	14	754
Payroll taxes on issuance of stock-based awards	(723)	(879)
Excess income tax benefit from share-based compensation	1	20
Net cash used for financing activities	(396)	(21,677)
Net decrease in cash and cash equivalents	(43,865)	(44,328)
Cash and cash equivalents at beginning of period	170,127	192,307
Cash and cash equivalents at end of period	$ 126,262	$ 147,979

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Goodwill and Other Intangibles

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Carrying value of goodwill and other intangible assets follows:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
Goodwill	$	63,423	$	63,423
Identified intangibles, net	2,468		2,708
	$	65,891	$	66,131

At first quarter-end 2015, goodwill related to our oil and gas properties is $59,549,000 and $3,874,000 is associated with a water resources company acquired in 2010.

Identified intangibles include $1,681,000 in indefinite lived groundwater leases associated with a water resources company acquired in 2010, $433,000 related to in-place tenant leases with definite lives associated with the purchase of our partner's interest in the Eleven venture and $354,000 related to patents with definite lives associated with the Calliope Gas Recovery System, a process to increase natural gas production.

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Net Income per Share Additional Information (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Nov. 27, 2013
Six Percent Tangible Equity Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Interest Rate Percentage		6.00%
Convertible Debt [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Interest Rate Percentage	3.75%
Conversion price of Convertible Notes	24.49
Minimum [Member] | Six Percent Tangible Equity Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Debt And Equity Instruments, shares to be Issued	6,547,800
Maximum [Member] | Six Percent Tangible Equity Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Debt And Equity Instruments, shares to be Issued	7,857,000

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Equity (Tables)

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Reconciliation of Changes in Equity

A reconciliation of changes in equity at first quarter-end2015 follows:

	Forestar Group Inc.			Noncontrolling Interests			Total
	(In thousands)
Balance at year-end 2014	$	707,202		$	2,540		$	709,742
Net income (loss)	(8,158		)	(79		)	(8,237		)
Distributions to noncontrolling interests	—			(338		)	(338		)
Other (primarily share-based compensation)	2,222			—			2,222
	$	701,266		$	2,123		$	703,389

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Oil and Gas Properties - Net Capitalized Costs Related to Oil and Gas Producing Activities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Extractive Industries [Abstract]
Unproved oil and gas properties	$ 85,771	$ 90,446
Proved oil and gas properties	249,601	221,299
Total costs	335,372	311,745
Less: accumulated depreciation, depletion and amortization	(55,418)	(48,252)
Net capitalized costs	$ 279,954	$ 263,493

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Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

We manage our operations through three segments: real estate, oil and gas and other natural resources. Real estate secures entitlements and develops infrastructure on our lands for single-family residential and mixed-use communities, and manages our undeveloped land, commercial and income producing properties, primarily a hotel and our multifamily investments. Oil and gas is an independent oil and gas exploration, development and production operation and manages our owned and leased mineral interests. Other natural resources manages our timber, recreational leases and water resource initiatives.

Total assets allocated by segment are as follows:

	First Quarter-End		Year-End
	2015		2014
	(In thousands)
Real estate	$	670,067	$	654,774
Oil and gas	352,695		342,703
Other natural resources	20,077		22,531
Assets not allocated to segments (a)	194,132		238,191
	$	1,236,971	$	1,258,199

  _________________________

^(a)  Assets not allocated to segments at first quarter-end2015 principally consist of cash and cash equivalents of $126,262,000 and a net deferred tax asset of $44,583,000. Assets not allocated to segments at year-end 2014 principally consist of cash and cash equivalents of $170,127,000 and a net deferred tax asset of $40,624,000.

We evaluate performance based on segment earnings (loss) before unallocated items and income taxes. Segment earnings (loss) consist of operating income, equity in earnings (loss) of unconsolidated ventures, gain on sales of assets, interest income on loans secured by real estate and net (income) loss attributable to noncontrolling interests. Items not allocated to our business segments consist of general and administrative expense, share-based and long-term incentive compensation, gain on sale of strategic timberland, interest expense and other corporate non-operating income and expense. The accounting policies of the segments are the same as those described in Note 1—Basis of Presentation. Our revenues are derived from U.S. operations and all of our assets are located in the U.S. In first quarter2015, no single customer accounted for more than ten percent of our total revenues.

Segment revenues and earnings are as follows:

	First Quarter
	2015			2014
	(In thousands)
Revenues:
Real estate	$	32,830		$	65,480
Oil and gas	13,185			17,554
Other natural resources	1,790			1,571
Total revenues	$	47,805		$	84,605
Segment earnings (loss):
Real estate	$	9,066		$	23,575
Oil and gas	(2,941		)	807
Other natural resources	(391		)	(528		)
Total segment earnings	5,734			23,854
Items not allocated to segments (a)	(18,251		)	(10,862		)
Income (loss) before taxes attributable to Forestar Group Inc.	$	(12,517	)	$	12,992

  _________________________

^(a)  Items not allocated to segments consist of:

	First Quarter
	2015			2014
	(In thousands)
General and administrative expense	$	(6,020	)	$	(5,168	)
Shared-based and long-term incentive compensation expense	(3,458		)	(313		)
Interest expense	(8,821		)	(5,503		)
Other corporate non-operating income	48			122
	$	(18,251	)	$	(10,862	)