☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Virginia | 54-1394360 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification Number) | |
11700 Plaza America Drive, Suite 500 Reston, Virginia | 20190 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |
Common stock, par value $0.01 per share | New York Stock Exchange |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☐ |
Emerging growth company | ☐ |
Page | ||
PART I | ||
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
PART III | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
PART IV | ||
Item 15. |
Mid Atlantic: | Maryland, Virginia, West Virginia, Delaware and Washington, D.C. | |
North East: | New Jersey and Eastern Pennsylvania | |
Mid East: | New York, Ohio, Western Pennsylvania, Indiana and Illinois | |
South East: | North Carolina, South Carolina, Florida and Tennessee |
• | actual and expected direction of interest rates, which affect our costs, the availability of construction financing, and long-term financing for potential purchasers of homes; |
• | the availability of mortgage financing; |
• | the availability of adequate land in desirable locations on favorable terms; |
• | unexpected changes in customer preferences; and |
• | changes in the national economy and in the local economies of the markets in which we operate. |
• | for suitable and desirable lots at acceptable prices; |
• | from selling incentives offered by competing builders within and across developments; and |
• | from the existing home resale market. |
Name | Age | Positions | ||
Paul C. Saville | 62 | President and Chief Executive Officer of NVR | ||
Daniel D. Malzahn | 48 | Senior Vice President, Chief Financial Officer and Treasurer of NVR | ||
Jeffrey D. Martchek | 52 | President of Homebuilding Operations of NVR | ||
Robert W. Henley | 51 | President of NVRM | ||
Eugene J. Bredow | 48 | Vice President, Chief Accounting Officer and Controller of NVR |
High | Low | |||||||
Prices per share: | ||||||||
2017 | ||||||||
Fourth Quarter | $ | 3,536.97 | $ | 2,828.00 | ||||
Third Quarter | $ | 2,891.43 | $ | 2,393.82 | ||||
Second Quarter | $ | 2,510.76 | $ | 2,028.99 | ||||
First Quarter | $ | 2,115.00 | $ | 1,631.78 | ||||
2016 | ||||||||
Fourth Quarter | $ | 1,695.41 | $ | 1,478.04 | ||||
Third Quarter | $ | 1,845.37 | $ | 1,633.00 | ||||
Second Quarter | $ | 1,801.94 | $ | 1,606.75 | ||||
First Quarter | $ | 1,820.00 | $ | 1,462.02 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
October 1 - 31, 2017 | — | $ | — | — | $ | 253,660 | ||||||||
November 1 - 30, 2017 | 6,000 | $ | 3,333.05 | 6,000 | $ | 233,662 | ||||||||
December 1 - 31, 2017 | 50,128 | $ | 3,430.60 | 50,128 | $ | 361,693 | ||||||||
Total | 56,128 | $ | 3,420.17 | 56,128 |
For the Year Ended December 31, | ||||||||||||||||||||||||
Comparison of 5 Year Cumulative Total Return | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||||
NVR, Inc. | $ | 100 | $ | 112 | $ | 139 | $ | 179 | $ | 181 | $ | 381 | ||||||||||||
S&P 500 | $ | 100 | $ | 132 | $ | 151 | $ | 153 | $ | 171 | $ | 208 | ||||||||||||
Dow Jones US Home Construction | $ | 100 | $ | 110 | $ | 119 | $ | 131 | $ | 122 | $ | 215 |
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Consolidated income statement data: | ||||||||||||||||||||
Homebuilding data: | ||||||||||||||||||||
Revenues | $ | 6,175,521 | $ | 5,709,223 | $ | 5,065,200 | $ | 4,375,059 | $ | 4,134,481 | ||||||||||
Gross profit | $ | 1,185,143 | $ | 1,001,362 | $ | 946,418 | $ | 806,473 | $ | 710,277 | ||||||||||
Homebuilding income | $ | 776,370 | $ | 601,102 | $ | 555,329 | $ | 427,884 | $ | 379,370 | ||||||||||
Mortgage Banking data: | ||||||||||||||||||||
Mortgage banking fees | $ | 130,319 | $ | 113,321 | $ | 93,808 | $ | 69,509 | $ | 76,786 | ||||||||||
Mortgage banking income | $ | 70,541 | $ | 60,595 | $ | 47,883 | $ | 25,662 | $ | 39,326 | ||||||||||
Consolidated data: | ||||||||||||||||||||
Net income | $ | 537,521 | $ | 425,262 | $ | 382,927 | $ | 281,630 | $ | 266,477 | ||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | 144.00 | $ | 110.53 | $ | 95.21 | $ | 65.83 | $ | 56.25 | ||||||||||
Diluted | $ | 126.77 | $ | 103.61 | $ | 89.99 | $ | 63.50 | $ | 54.81 | ||||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||
Basic | 3,733 | 3,847 | 4,022 | 4,278 | 4,737 | |||||||||||||||
Diluted | 4,240 | 4,104 | 4,255 | 4,435 | 4,862 | |||||||||||||||
December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Consolidated balance sheet data: | ||||||||||||||||||||
Homebuilding inventory | $ | 1,246,199 | $ | 1,092,100 | $ | 1,006,526 | $ | 869,486 | $ | 738,565 | ||||||||||
Contract land deposits, net | $ | 370,429 | $ | 379,844 | $ | 343,295 | $ | 294,676 | $ | 236,885 | ||||||||||
Total assets | $ | 2,989,279 | $ | 2,643,943 | $ | 2,511,718 | $ | 2,347,413 | $ | 2,481,718 | ||||||||||
Notes and loans payable (1) | $ | 597,066 | $ | 596,455 | $ | 595,847 | $ | 595,244 | $ | 594,760 | ||||||||||
Shareholders’ equity | $ | 1,605,492 | $ | 1,304,441 | $ | 1,239,165 | $ | 1,124,255 | $ | 1,261,352 | ||||||||||
Cash dividends per share | $ | — | $ | — | $ | — | $ | — | $ | — |
(1) | Balance does not include non-recourse debt related to the consolidated variable interest entity. |
Mid Atlantic: | Maryland, Virginia, West Virginia, Delaware and Washington, D.C. | |
North East: | New Jersey and Eastern Pennsylvania | |
Mid East: | New York, Ohio, Western Pennsylvania, Indiana and Illinois | |
South East: | North Carolina, South Carolina, Florida and Tennessee |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Financial data: | ||||||||||||
Revenues | $ | 6,175,521 | $ | 5,709,223 | $ | 5,065,200 | ||||||
Cost of sales | $ | 4,990,378 | $ | 4,707,861 | $ | 4,118,782 | ||||||
Gross profit margin percentage | 19.2 | % | 17.5 | % | 18.7 | % | ||||||
Selling, general and administrative expenses | $ | 392,272 | $ | 382,459 | $ | 371,127 | ||||||
Operating data: | ||||||||||||
New orders (units) | 17,608 | 15,583 | 14,080 | |||||||||
Average new order price | $ | 383.2 | $ | 386.4 | $ | 378.7 | ||||||
Settlements (units) | 15,961 | 14,928 | 13,326 | |||||||||
Average settlement price | $ | 386.9 | $ | 381.2 | $ | 379.9 | ||||||
Backlog (units) | 8,531 | 6,884 | 6,229 | |||||||||
Average backlog price | $ | 384.2 | $ | 392.8 | $ | 381.3 | ||||||
New order cancellation rate | 14.0 | % | 15.5 | % | 14.5 | % |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Revenues: | ||||||||||||
Mid Atlantic | $ | 3,543,687 | $ | 3,319,776 | $ | 3,022,789 | ||||||
North East | 517,141 | 462,385 | 432,145 | |||||||||
Mid East | 1,250,165 | 1,192,472 | 1,014,920 | |||||||||
South East | 864,528 | 734,590 | 595,346 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Gross profit margin: | ||||||||||||
Mid Atlantic | $ | 663,650 | $ | 561,857 | $ | 563,299 | ||||||
North East | 104,501 | 68,808 | 79,588 | |||||||||
Mid East | 244,832 | 215,335 | 178,508 | |||||||||
South East | 173,961 | 137,787 | 113,210 |
Year Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Gross profit margin percentage: | |||||||||
Mid Atlantic | 18.7 | % | 16.9 | % | 18.6 | % | |||
North East | 20.2 | % | 14.9 | % | 18.4 | % | |||
Mid East | 19.6 | % | 18.1 | % | 17.6 | % | |||
South East | 20.1 | % | 18.8 | % | 19.0 | % |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Segment profit: | ||||||||||||
Mid Atlantic | $ | 398,494 | $ | 301,173 | $ | 322,829 | ||||||
North East | 60,218 | 21,947 | 37,914 | |||||||||
Mid East | 149,639 | 121,166 | 86,336 | |||||||||
South East | 95,826 | 71,098 | 57,384 |
Year Ended December 31, | |||||||||||||||||||||
2017 | 2016 | 2015 | |||||||||||||||||||
Units | Average Price | Units | Average Price | Units | Average Price | ||||||||||||||||
New orders, net of cancellations: | |||||||||||||||||||||
Mid Atlantic | 8,654 | $ | 438.9 | 7,916 | $ | 443.1 | 7,070 | $ | 439.5 | ||||||||||||
North East | 1,362 | $ | 409.7 | 1,314 | $ | 387.1 | 1,173 | $ | 365.9 | ||||||||||||
Mid East | 4,171 | $ | 332.7 | 3,659 | $ | 329.2 | 3,485 | $ | 321.4 | ||||||||||||
South East | 3,421 | $ | 293.5 | 2,694 | $ | 296.9 | 2,352 | $ | 287.3 | ||||||||||||
Total | 17,608 | $ | 383.2 | 15,583 | $ | 386.4 | 14,080 | $ | 378.7 |
Year Ended December 31, | |||||||||||||||||||||
2017 | 2016 | 2015 | |||||||||||||||||||
Units | Average Price | Units | Average Price | Units | Average Price | ||||||||||||||||
Settlements: | |||||||||||||||||||||
Mid Atlantic | 7,971 | $ | 444.5 | 7,512 | $ | 439.6 | 6,879 | $ | 439.2 | ||||||||||||
North East | 1,288 | $ | 401.5 | 1,246 | $ | 371.1 | 1,221 | $ | 353.9 | ||||||||||||
Mid East | 3,772 | $ | 331.4 | 3,658 | $ | 325.7 | 3,137 | $ | 323.5 | ||||||||||||
South East | 2,930 | $ | 295.1 | 2,512 | $ | 292.4 | 2,089 | $ | 284.9 | ||||||||||||
Total | 15,961 | $ | 386.9 | 14,928 | $ | 381.2 | 13,326 | $ | 379.9 |
Year Ended December 31, | |||||||||||||||||||||
2017 | 2016 | 2015 | |||||||||||||||||||
Units | Average Price | Units | Average Price | Units | Average Price | ||||||||||||||||
Backlog: | |||||||||||||||||||||
Mid Atlantic | 4,224 | $ | 432.2 | 3,541 | $ | 443.4 | 3,137 | $ | 435.3 | ||||||||||||
North East | 682 | $ | 424.3 | 608 | $ | 408.7 | 540 | $ | 374.7 | ||||||||||||
Mid East | 1,898 | $ | 341.2 | 1,499 | $ | 340.1 | 1,498 | $ | 331.7 | ||||||||||||
South East | 1,727 | $ | 298.4 | 1,236 | $ | 304.1 | 1,054 | $ | 294.6 | ||||||||||||
Total | 8,531 | $ | 384.2 | 6,884 | $ | 392.8 | 6,229 | $ | 381.3 |
Year Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
New order cancellation rate: | |||||||||
Mid Atlantic | 15.2 | % | 15.7 | % | 15.2 | % | |||
North East | 13.3 | % | 15.1 | % | 14.3 | % | |||
Mid East | 11.5 | % | 14.4 | % | 13.4 | % | |||
South East | 14.3 | % | 16.5 | % | 14.2 | % |
Year Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Average active communities: | |||||||||
Mid Atlantic | 238 | 239 | 233 | ||||||
North East | 42 | 42 | 38 | ||||||
Mid East | 121 | 128 | 130 | ||||||
South East | 84 | 76 | 71 | ||||||
Total | 485 | 485 | 472 |
As of December 31, | ||||||||
2017 | 2016 | |||||||
Sold inventory: | ||||||||
Mid Atlantic | $ | 617,471 | $ | 544,840 | ||||
North East | 96,412 | 79,751 | ||||||
Mid East | 173,572 | 141,033 | ||||||
South East | 151,219 | 107,967 | ||||||
Total (1) | $ | 1,038,674 | $ | 873,591 |
As of December 31, | ||||||||
2017 | 2016 | |||||||
Unsold lots and housing units inventory: | ||||||||
Mid Atlantic | $ | 118,209 | $ | 117,920 | ||||
North East | 6,666 | 6,370 | ||||||
Mid East | 7,112 | 7,218 | ||||||
South East | 13,511 | 10,872 | ||||||
Total (1) | $ | 145,498 | $ | 142,380 |
(1) | Total segment inventory differs from consolidated inventory due to certain consolidation adjustments necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes. These consolidation adjustments are not allocated to our operating segments. |
As of December 31, | ||||||
2017 | 2016 | |||||
Total lots controlled: | ||||||
Mid Atlantic | 38,450 | 35,350 | ||||
North East | 7,000 | 6,200 | ||||
Mid East | 22,250 | 19,050 | ||||
South East | 21,000 | 17,400 | ||||
Total | 88,700 | 78,000 |
As of December 31, | ||||||||
2017 | 2016 | |||||||
Contract land deposits, net: | ||||||||
Mid Atlantic | $ | 209,759 | $ | 239,588 | ||||
North East | 29,851 | 27,648 | ||||||
Mid East | 49,838 | 44,394 | ||||||
South East | 82,977 | 70,593 | ||||||
Total | $ | 372,425 | $ | 382,223 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Contract land deposit impairments, net: | ||||||||||||
Mid Atlantic | $ | 2,945 | $ | 2,240 | $ | 1,840 | ||||||
North East | 290 | 3,530 | 279 | |||||||||
Mid East | 11 | 303 | 409 | |||||||||
South East | 99 | 791 | 250 | |||||||||
Total | $ | 3,345 | $ | 6,864 | $ | 2,778 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Homebuilding consolidated gross profit: | ||||||||||||
Mid Atlantic | $ | 663,650 | $ | 561,857 | $ | 563,299 | ||||||
North East | 104,501 | 68,808 | 79,588 | |||||||||
Mid East | 244,832 | 215,335 | 178,508 | |||||||||
South East | 173,961 | 137,787 | 113,210 | |||||||||
Consolidation adjustments and other | (1,801 | ) | 17,575 | 11,813 | ||||||||
Homebuilding consolidated gross profit | $ | 1,185,143 | $ | 1,001,362 | $ | 946,418 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Homebuilding consolidated profit before taxes: | ||||||||||||
Mid Atlantic | $ | 398,494 | $ | 301,173 | $ | 322,829 | ||||||
North East | 60,218 | 21,947 | 37,914 | |||||||||
Mid East | 149,639 | 121,166 | 86,336 | |||||||||
South East | 95,826 | 71,098 | 57,384 | |||||||||
Reconciling items: | ||||||||||||
Contract land deposit impairment reserve (1) | 1,307 | 10,933 | 13,805 | |||||||||
Equity-based compensation expense | (41,144 | ) | (40,482 | ) | (50,738 | ) | ||||||
Corporate capital allocation (2) | 198,384 | 189,992 | 171,170 | |||||||||
Unallocated corporate overhead | (89,514 | ) | (89,376 | ) | (83,124 | ) | ||||||
Consolidation adjustments and other | 26,143 | 35,204 | 22,622 | |||||||||
Corporate interest expense | (22,983 | ) | (20,553 | ) | (22,869 | ) | ||||||
Reconciling items sub-total | 72,193 | 85,718 | 50,866 | |||||||||
Homebuilding consolidated profit before taxes | $ | 776,370 | $ | 601,102 | $ | 555,329 |
(1) | This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. |
(2) | This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance and is as follows for the years presented: |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Corporate capital allocation charge: | ||||||||||||
Mid Atlantic | $ | 123,028 | $ | 119,758 | $ | 107,705 | ||||||
North East | 16,115 | 18,132 | 16,987 | |||||||||
Mid East | 29,663 | 28,303 | 27,263 | |||||||||
South East | 29,578 | 23,799 | 19,215 | |||||||||
Total corporate capital allocation charge | $ | 198,384 | $ | 189,992 | $ | 171,170 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Loan closing volume: | ||||||||||||
Total principal | $ | 4,229,507 | $ | 3,952,575 | $ | 3,492,342 | ||||||
Loan volume mix: | ||||||||||||
Adjustable rate mortgages | 9 | % | 5 | % | 14 | % | ||||||
Fixed-rate mortgages | 91 | % | 95 | % | 86 | % | ||||||
Operating profit: | ||||||||||||
Segment profit | $ | 73,959 | $ | 63,711 | $ | 51,236 | ||||||
Equity-based compensation expense | (3,418 | ) | (3,116 | ) | (3,353 | ) | ||||||
Mortgage banking income | $ | 70,541 | $ | 60,595 | $ | 47,883 | ||||||
Capture rate: | 88 | % | 88 | % | 88 | % | ||||||
Mortgage banking fees: | ||||||||||||
Net gain on sale of loans | $ | 99,132 | $ | 85,535 | $ | 67,891 | ||||||
Title services | 30,626 | 27,233 | 25,427 | |||||||||
Servicing fees | 561 | 553 | 490 | |||||||||
$ | 130,319 | $ | 113,321 | $ | 93,808 |
• | The enactment of the Tax Cuts and Jobs Act (the "Act") in December 2017, which required a remeasurement of our net deferred tax assets, resulted in a charge to income tax expense of $62,702 in the fourth quarter, and |
• | Our adoption of ASU 2016-09, which resulted in the recognition of an income tax benefit of $58,681 related to excess tax benefits from stock option exercises in 2017. Excess tax benefits in 2015 and 2016 were recorded to additional paid-in capital within shareholders' equity on the consolidated balance sheet. |
Payments due by year | ||||||||||||||||||||
Total | 2018 | 2019 to 2020 | 2021 to 2022 | 2023 and Later | ||||||||||||||||
Debt (1) | $ | 600,000 | $ | — | $ | — | $ | 600,000 | $ | — | ||||||||||
Interest on debt (1) | 111,522 | 23,700 | 47,400 | 40,422 | ||||||||||||||||
Operating leases (2) | 110,152 | 29,366 | 39,368 | 24,216 | 17,202 | |||||||||||||||
Purchase obligations (3) | 147,311 | * | * | * | * | |||||||||||||||
Uncertain tax positions (4) | 35,816 | * | * | * | * | |||||||||||||||
Total | $ | 1,004,801 | $ | 53,066 | $ | 86,768 | $ | 664,638 | $ | 17,202 |
(1) | See Note 9 in the accompanying consolidated financial statements for additional information regarding the Senior Notes. |
(2) | See Note 13 in the accompanying consolidated financial statements for additional information regarding operating leases. |
(3) | Amount represents expected payments of forfeitable deposits with land developers under existing Lot Purchase Agreements assuming that contractual development milestones are met by the developers and we exercise our option, specific performance guarantees and estimated contractual obligations for land development agreements. We expect to make the majority of payments of the deposits with land developers within the next three years, but due to the nature of the contractual development milestones that must be met we are unable to accurately estimate the portion of the deposit obligation that will be made within one year and that portion that will be made within one to three years. |
(4) | Due to the nature of the uncertain tax positions, we are unable to make a reasonable estimate as to the period of settlement with the respective taxing authorities. |
Maturities (000's) | |||||||||||||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | Fair Value | ||||||||||||||||||||
Mortgage banking segment | |||||||||||||||||||||||||||
Interest rate sensitive assets: | |||||||||||||||||||||||||||
Mortgage loans held for sale | $ | 350,558 | — | — | — | — | — | $ | 350,558 | $ | 352,489 | ||||||||||||||||
Average interest rate | 4.0 | % | — | — | — | — | — | 4.0 | % | ||||||||||||||||||
Other: | |||||||||||||||||||||||||||
Forward trades of mortgage-backed securities (a) | $ | 325 | — | — | — | — | — | $ | 325 | $ | 325 | ||||||||||||||||
Forward loan commitments (a) | $ | 3,568 | — | — | — | — | — | $ | 3,568 | $ | 3,568 | ||||||||||||||||
Homebuilding segment | |||||||||||||||||||||||||||
Interest rate sensitive assets: | |||||||||||||||||||||||||||
Interest-bearing deposits | $ | 526,093 | — | — | — | — | — | $ | 526,093 | $ | 526,093 | ||||||||||||||||
Average interest rate | 1.2 | % | — | — | — | — | — | 1.2 | % | ||||||||||||||||||
Interest rate sensitive liabilities: | |||||||||||||||||||||||||||
Fixed rate obligations | $ | — | — | — | — | 600,000 | — | $ | 600,000 | $ | 630,000 | ||||||||||||||||
Average interest rate | — | — | — | — | 4.0 | % | — | 4.0 | % |
(a) | Represents the fair value recorded pursuant to ASC 815, Derivatives and Hedging. |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) | |||||||
Equity compensation plans approved by security holders (1) | 836,474 | $ | 1,151.14 | 314,281 | ||||||
Equity compensation plans not approved by security holders | 89,382 | $ | 703.00 | — | ||||||
Total | 925,856 | $ | 1,107.87 | 314,281 |
(1) | This category includes the restricted share units (“RSUs”) authorized to be issued under the 2010 Equity Incentive Plan, which was approved by our shareholders at our May 4, 2010 Annual Meeting. At December 31, 2017, there are 9,961 RSUs outstanding. Of the total 314,281 shares remaining available for future issuance under the shareholder approved plans, up to 37,774 may be issued as RSUs. The weighted-average exercise price of outstanding options under security holder approved plans, excluding outstanding RSUs, was $1,165.01. |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit Number | Filing Date | |||||
3.1 | 10-K | 3.1 | 2/25/2011 | |||||||
3.2 | 8-K | 3.1 | 3/17/2016 | |||||||
4.1 | 8-K | 4.3 | 4/23/1998 | |||||||
4.2 | 8-K | 4.5 | 4/23/1998 | |||||||
4.3 | 8-K | 4.1 | 9/10/2012 | |||||||
4.4 | 8-K | 4.2 | 9/10/2012 | |||||||
10.1* | 10-Q | 10.1 | 11/6/2015 | |||||||
10.2* | 10-Q | 10.2 | 11/6/2015 | |||||||
10.3* | 10-Q | 10.3 | 11/6/2015 | |||||||
10.4* | 10-Q | 10.4 | 11/6/2015 | |||||||
10.5* | 10-K | 10.5 | 2/17/2016 | |||||||
10.6* | 8-K | 10.1 | 4/18/2017 | |||||||
10.7* | S-8 | 333-29241 | 4.1 | 6/13/1997 | ||||||
10.8* | Employee Stock Ownership Plan of NVR, Inc. | 10-K/A | 12/31/1994 | |||||||
10.9* | S-8 | 333-79951 | 4 | 6/4/1999 | ||||||
10.10* | S-8 | 333-56732 | 99.1 | 3/8/2001 | ||||||
10.11* | 10-Q | 10.5 | 11/6/2015 | |||||||
10.12* | 10-K | 10.36 | 2/15/2017 | |||||||
10.13* | 10-K | 10.27 | 2/28/2005 |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit Number | Filing Date | |||||
10.14* | S-8 | 333-195756 | 10.1 | 5/7/2014 | ||||||
10.15* | ||||||||||
10.16* | 8-K | 10.2 | 5/7/2014 | |||||||
10.17* | ||||||||||
10.18* | 8-K | 10.4 | 5/7/2014 | |||||||
10.19* | S-8 | 333-166512 | 10.1 | 5/4/2010 | ||||||
10.20* | 10-Q | 10.1 | 7/30/2013 | |||||||
10.21* | 8-K | 10.2 | 5/6/2010 | |||||||
10.22* | 10-Q | 10.2 | 7/30/2013 | |||||||
10.23* | 8-K | 10.4 | 5/6/2010 | |||||||
10.24* | 8-K | 10.1 | 1/7/2008 | |||||||
10.25 | 8-K | 10.1 | 1/21/2016 | |||||||
10.26 | 8-K | 10.2 | 1/21/2016 | |||||||
10.27 | 8-K | 10.3 | 1/21/2016 | |||||||
10.28 | 8-K | 10.4 | 1/21/2016 | |||||||
10.29 | 8-K | 10.5 | 1/21/2016 | |||||||
10.30 | 8-K | 10.6 | 1/21/2016 | |||||||
10.31 | 8-K | 10.7 | 1/21/2016 |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit Number | Filing Date | |||||
10.32 | 8-K | 10.8 | 1/21/2016 | |||||||
10.33 | 10-Q | 10.2 | 7/28/2016 | |||||||
10.34 | 10-Q | 10.1 | 7/28/2017 | |||||||
10.35 | 8-K | 10.1 | 7/18/2016 | |||||||
10.36* | ||||||||||
21 | ||||||||||
23 | ||||||||||
31.1 | ||||||||||
31.2 | ||||||||||
32 | ||||||||||
101.INS | XBRL Instance Document | |||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||
* Exhibit is a management contract or compensatory plan or arrangement. | ||||||||||
NVR, Inc. | |||
By: | /s/ Paul C. Saville | ||
Paul C. Saville | |||
President and Chief Executive Officer |
Signature | Title | Date | ||
/s/ Dwight C. Schar | Chairman | February 14, 2018 | ||
Dwight C. Schar | ||||
/s/ C. E. Andrews | Director | February 14, 2018 | ||
C. E. Andrews | ||||
/s/ Timothy M. Donahue | Director | February 14, 2018 | ||
Timothy M. Donahue | ||||
/s/ Thomas D. Eckert | Director | February 14, 2018 | ||
Thomas D. Eckert | ||||
/s/ Alfred E. Festa | Director | February 14, 2018 | ||
Alfred E. Festa | ||||
/s/ Ed Grier | Director | February 14, 2018 | ||
Ed Grier | ||||
/s/ Manuel H. Johnson | Director | February 14, 2018 | ||
Manuel H. Johnson | ||||
/s/ Mel Martinez | Director | February 14, 2018 | ||
Mel Martinez | ||||
/s/ William A. Moran | Director | February 14, 2018 | ||
William A. Moran | ||||
/s/ David A. Preiser | Director | February 14, 2018 | ||
David A. Preiser | ||||
/s/ W. Grady Rosier | Director | February 14, 2018 | ||
W. Grady Rosier | ||||
/s/ Susan Williamson Ross | Director | February 14, 2018 | ||
Susan Williamson Ross | ||||
/s/ Paul W. Whetsell | Director | February 14, 2018 | ||
Paul W. Whetsell | ||||
/s/ Paul C. Saville | Principal Executive Officer | February 14, 2018 | ||
Paul C. Saville | ||||
/s/ Daniel D. Malzahn | Principal Financial Officer | February 14, 2018 | ||
Daniel D. Malzahn | ||||
/s/ Eugene J. Bredow | Principal Accounting Officer | February 14, 2018 | ||
Eugene J. Bredow |
December 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Homebuilding: | |||||||
Cash and cash equivalents | $ | 645,087 | $ | 375,748 | |||
Restricted cash | 19,438 | 17,561 | |||||
Receivables | 20,026 | 18,937 | |||||
Inventory: | |||||||
Lots and housing units, covered under sales agreements with customers | 1,046,094 | 883,868 | |||||
Unsold lots and housing units | 148,620 | 145,065 | |||||
Land under development | 34,212 | 46,999 | |||||
Building materials and other | 17,273 | 16,168 | |||||
1,246,199 | 1,092,100 | ||||||
Contract land deposits, net | 370,429 | 379,844 | |||||
Property, plant and equipment, net | 43,191 | 45,915 | |||||
Reorganization value in excess of amounts allocable to identifiable assets, net | 41,580 | 41,580 | |||||
Deferred tax assets, net | 111,953 | 170,652 | |||||
Other assets | 86,977 | 91,009 | |||||
2,584,880 | 2,233,346 | ||||||
Mortgage Banking: | |||||||
Cash and cash equivalents | 21,707 | 19,657 | |||||
Restricted cash | 2,256 | 1,857 | |||||
Mortgage loans held for sale, net | 352,489 | 351,958 | |||||
Property and equipment, net | 6,327 | 4,903 | |||||
Reorganization value in excess of amounts allocable to identifiable assets, net | 7,347 | 7,347 | |||||
Other assets | 14,273 | 24,875 | |||||
404,399 | 410,597 | ||||||
Total assets | $ | 2,989,279 | $ | 2,643,943 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Homebuilding: | |||||||
Accounts payable | $ | 261,973 | $ | 251,212 | |||
Accrued expenses and other liabilities | 341,891 | 337,200 | |||||
Customer deposits | 150,033 | 122,236 | |||||
Senior notes | 597,066 | 596,455 | |||||
1,350,963 | 1,307,103 | ||||||
Mortgage Banking: | |||||||
Accounts payable and other liabilities | 32,824 | 32,399 | |||||
32,824 | 32,399 | ||||||
Total liabilities | 1,383,787 | 1,339,502 | |||||
Commitments and contingencies | |||||||
Shareholders' equity: | |||||||
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares issued as of both December 31, 2017 and December 31, 2016 | 206 | 206 | |||||
Additional paid-in capital | 1,644,197 | 1,515,828 | |||||
Deferred compensation trust – 108,640 shares of NVR, Inc. common stock as of both December 31, 2017 and December 31, 2016 | (17,383 | ) | (17,375 | ) | |||
Deferred compensation liability | 17,383 | 17,375 | |||||
Retained earnings | 6,231,940 | 5,695,376 | |||||
Less treasury stock at cost – 16,864,324 and 16,862,327 shares as of December 31, 2017 and December 31, 2016, respectively | (6,270,851 | ) | (5,906,969 | ) | |||
Total shareholders' equity | 1,605,492 | 1,304,441 | |||||
Total liabilities and shareholders' equity | $ | 2,989,279 | $ | 2,643,943 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Homebuilding: | |||||||||||
Revenues | $ | 6,175,521 | $ | 5,709,223 | $ | 5,065,200 | |||||
Other income | 6,536 | 2,820 | 2,956 | ||||||||
Cost of sales | (4,990,378 | ) | (4,707,861 | ) | (4,118,782 | ) | |||||
Selling, general and administrative | (392,272 | ) | (382,459 | ) | (371,127 | ) | |||||
Operating income | 799,407 | 621,723 | 578,247 | ||||||||
Interest expense | (23,037 | ) | (20,621 | ) | (22,918 | ) | |||||
Homebuilding income | 776,370 | 601,102 | 555,329 | ||||||||
Mortgage Banking: | |||||||||||
Mortgage banking fees | 130,319 | 113,321 | 93,808 | ||||||||
Interest income | 7,850 | 7,569 | 6,485 | ||||||||
Other income | 2,048 | 1,652 | 1,113 | ||||||||
General and administrative | (68,528 | ) | (60,861 | ) | (52,882 | ) | |||||
Interest expense | (1,148 | ) | (1,086 | ) | (641 | ) | |||||
Mortgage banking income | 70,541 | 60,595 | 47,883 | ||||||||
Income before taxes | 846,911 | 661,697 | 603,212 | ||||||||
Income tax expense | (309,390 | ) | (236,435 | ) | (220,285 | ) | |||||
Net income | $ | 537,521 | $ | 425,262 | $ | 382,927 | |||||
Basic earnings per share | $ | 144.00 | $ | 110.53 | $ | 95.21 | |||||
Diluted earnings per share | $ | 126.77 | $ | 103.61 | $ | 89.99 | |||||
Basic weighted average shares outstanding | 3,733 | 3,847 | 4,022 | ||||||||
Diluted weighted average shares outstanding | 4,240 | 4,104 | 4,255 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Deferred Compensation Trust | Deferred Compensation Liability | Total | |||||||||||||||||||||
Balance, December 31, 2014 | $ | 206 | $ | 1,325,495 | $ | 4,887,187 | $ | (5,088,633 | ) | $ | (17,333 | ) | $ | 17,333 | $ | 1,124,255 | |||||||||||
Net income | — | — | 382,927 | — | — | — | 382,927 | ||||||||||||||||||||
Purchase of common stock for treasury | — | — | — | (431,367 | ) | — | — | (431,367 | ) | ||||||||||||||||||
Equity-based compensation | — | 54,091 | — | — | — | — | 54,091 | ||||||||||||||||||||
Tax benefit from equity benefit plan activity | — | 23,311 | — | — | — | — | 23,311 | ||||||||||||||||||||
Proceeds from stock options exercised | — | 85,948 | — | — | — | — | 85,948 | ||||||||||||||||||||
Treasury stock issued upon option exercise and restricted share vesting | — | (41,050 | ) | — | 41,050 | — | — | — | |||||||||||||||||||
Balance, December 31, 2015 | 206 | 1,447,795 | 5,270,114 | (5,478,950 | ) | (17,333 | ) | 17,333 | 1,239,165 | ||||||||||||||||||
Net income | — | — | 425,262 | — | — | — | 425,262 | ||||||||||||||||||||
Deferred compensation activity | — | — | — | — | (42 | ) | 42 | — | |||||||||||||||||||
Purchase of common stock for treasury | — | — | — | (455,351 | ) | — | — | (455,351 | ) | ||||||||||||||||||
Equity-based compensation | — | 43,598 | — | — | — | — | 43,598 | ||||||||||||||||||||
Tax benefit from equity benefit plan activity | — | 13,661 | — | — | — | — | 13,661 | ||||||||||||||||||||
Proceeds from stock options exercised | — | 38,106 | — | — | — | — | 38,106 | ||||||||||||||||||||
Treasury stock issued upon option exercise and restricted share vesting | — | (27,332 | ) | — | 27,332 | — | — | — | |||||||||||||||||||
Balance, December 31, 2016 | 206 | 1,515,828 | 5,695,376 | (5,906,969 | ) | (17,375 | ) | 17,375 | 1,304,441 | ||||||||||||||||||
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax | — | 1,566 | (957 | ) | — | — | — | 609 | |||||||||||||||||||
Net income | — | — | 537,521 | — | — | — | 537,521 | ||||||||||||||||||||
Deferred compensation activity | — | — | — | — | (8 | ) | 8 | — | |||||||||||||||||||
Purchase of common stock for treasury | — | — | — | (422,166 | ) | — | — | (422,166 | ) | ||||||||||||||||||
Equity-based compensation | — | 44,562 | — | — | — | — | 44,562 | ||||||||||||||||||||
Proceeds from stock options exercised | — | 140,525 | — | — | — | — | 140,525 | ||||||||||||||||||||
Treasury stock issued upon option exercise and restricted share vesting | — | (58,284 | ) | — | 58,284 | — | — | — | |||||||||||||||||||
Balance, December 31, 2017 | $ | 206 | $ | 1,644,197 | $ | 6,231,940 | $ | (6,270,851 | ) | $ | (17,383 | ) | $ | 17,383 | $ | 1,605,492 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 537,521 | $ | 425,262 | $ | 382,927 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 22,667 | 22,269 | 21,534 | ||||||||
Equity-based compensation expense | 44,562 | 43,598 | 54,091 | ||||||||
Contract land deposit impairments (recoveries), net | 1,238 | (4,269 | ) | (11,058 | ) | ||||||
Gain on sale of loans, net | (99,132 | ) | (85,535 | ) | (67,891 | ) | |||||
Deferred tax expense (benefit) | 61,290 | (10,024 | ) | 1,902 | |||||||
Mortgage loans closed | (4,077,372 | ) | (3,660,269 | ) | (3,111,413 | ) | |||||
Mortgage loans sold and principal payments on mortgage loans held for sale | 4,182,220 | 3,710,250 | 3,059,889 | ||||||||
Distribution of earnings from unconsolidated joint ventures | 5,614 | 9,094 | 15,511 | ||||||||
Net change in assets and liabilities: | |||||||||||
Increase in inventory | (154,099 | ) | (85,194 | ) | (134,803 | ) | |||||
Decrease (increase) in contract land deposits | 8,177 | (32,280 | ) | (37,561 | ) | ||||||
Increase in receivables | (502 | ) | (9,083 | ) | (1,527 | ) | |||||
Increase in accounts payable and accrued expenses | 10,789 | 58,532 | 55,404 | ||||||||
Increase in customer deposits | 27,797 | 11,271 | 4,210 | ||||||||
Other, net | (1,866 | ) | 4,504 | (4,513 | ) | ||||||
Net cash provided by operating activities | 568,904 | 398,126 | 226,702 | ||||||||
Cash flows from investing activities: | |||||||||||
Investments in and advances to unconsolidated joint ventures | (3,800 | ) | (653 | ) | (1,917 | ) | |||||
Distribution of capital from unconsolidated joint ventures | 7,203 | 12,594 | 18,489 | ||||||||
Purchase of property, plant and equipment | (20,269 | ) | (22,369 | ) | (18,277 | ) | |||||
Proceeds from the sale of property, plant and equipment | 847 | 1,000 | 683 | ||||||||
Net cash used in investing activities | (16,019 | ) | (9,428 | ) | (1,022 | ) | |||||
Cash flows from financing activities: | |||||||||||
Purchase of treasury stock | (422,166 | ) | (455,351 | ) | (431,367 | ) | |||||
Repayments under non-recourse debt related to consolidated variable interest entity | — | — | (64 | ) | |||||||
Distributions to partner in consolidated variable interest entity | — | (150 | ) | (300 | ) | ||||||
Proceeds from the exercise of stock options | 140,525 | 38,106 | 85,948 | ||||||||
Net cash used in financing activities | (281,641 | ) | (417,395 | ) | (345,783 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 271,244 | (28,697 | ) | (120,103 | ) | ||||||
Cash and cash equivalents, beginning of the year | 396,619 | 425,316 | 545,419 | ||||||||
Cash and cash equivalents, end of the year | $ | 667,863 | $ | 396,619 | $ | 425,316 | |||||
Supplemental disclosures of cash flow information: | |||||||||||
Interest paid during the year, net of interest capitalized | $ | 23,251 | $ | 20,922 | $ | 24,546 | |||||
Income taxes paid during the year, net of refunds | $ | 260,232 | $ | 218,984 | $ | 194,670 |
Year Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Weighted average number of shares outstanding used to calculate basic EPS | 3,733 | 3,847 | 4,022 | ||||||
Dilutive securities: | |||||||||
Stock options and restricted share units | 507 | 257 | 233 | ||||||
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS | 4,240 | 4,104 | 4,255 |
Year Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Anti-dilutive securities | 15 | 87 | 50 |
• | Recorded the excess tax benefit from stock option exercises as a reduction to income tax expense prospectively beginning January 1, 2017. In 2016 and 2015, the excess tax benefit was recorded to additional paid-in capital within shareholders’ equity. The excess tax benefit recognized during 2017, 2016 and 2015 was $58,681, $13,661 and $23,311, respectively. |
• | Presented the aforementioned excess tax benefit recognized as an operating activity on the statement of cash flows and retrospectively adjusted the prior year Statement of Cash Flows accordingly. In the prior years, the excess tax benefit was recognized as a cash inflow from financing activities and a corresponding cash outflow from operating activities. The retrospective adjustment to the prior year Statement of Cash Flows resulted in increases of $13,661 and $23,311 to net cash provided by operating activities in 2016 and 2015, respectively, and increases of $13,661 and $23,311 to net cash used in financing activities in 2016 and 2015, respectively. |
• | Made the election to recognize forfeitures of equity-based awards in the period in which they occur. This election was applied using the modified retrospective transition method, which resulted in the Company recording a cumulative-effect adjustment, net of tax, to reduce beginning retained earnings as of January 1, 2017 by $957. In prior years, the Company estimated forfeitures based on its historical forfeiture rate. |
Mid Atlantic: | Maryland, Virginia, West Virginia, Delaware and Washington, D.C. | |
North East: | New Jersey and Eastern Pennsylvania | |
Mid East: | New York, Ohio, Western Pennsylvania, Indiana and Illinois | |
South East: | North Carolina, South Carolina, Florida and Tennessee |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Revenues: | ||||||||||||
Homebuilding Mid Atlantic | $ | 3,543,687 | $ | 3,319,776 | $ | 3,022,789 | ||||||
Homebuilding North East | 517,141 | 462,385 | 432,145 | |||||||||
Homebuilding Mid East | 1,250,165 | 1,192,472 | 1,014,920 | |||||||||
Homebuilding South East | 864,528 | 734,590 | 595,346 | |||||||||
Mortgage Banking | 130,319 | 113,321 | 93,808 | |||||||||
Consolidated revenues | $ | 6,305,840 | $ | 5,822,544 | $ | 5,159,008 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Profit before taxes: | ||||||||||||
Homebuilding Mid Atlantic | $ | 398,494 | $ | 301,173 | $ | 322,829 | ||||||
Homebuilding North East | 60,218 | 21,947 | 37,914 | |||||||||
Homebuilding Mid East | 149,639 | 121,166 | 86,336 | |||||||||
Homebuilding South East | 95,826 | 71,098 | 57,384 | |||||||||
Mortgage Banking | 73,959 | 63,711 | 51,236 | |||||||||
Total segment profit | 778,136 | 579,095 | 555,699 | |||||||||
Reconciling items: | ||||||||||||
Contract land deposit reserve adjustment (1) | 1,307 | 10,933 | 13,805 | |||||||||
Equity-based compensation expense | (44,562 | ) | (43,598 | ) | (54,091 | ) | ||||||
Corporate capital allocation (2) | 198,384 | 189,992 | 171,170 | |||||||||
Unallocated corporate overhead | (89,514 | ) | (89,376 | ) | (83,124 | ) | ||||||
Consolidation adjustments and other | 26,143 | 35,204 | 22,622 | |||||||||
Corporate interest expense | (22,983 | ) | (20,553 | ) | (22,869 | ) | ||||||
Reconciling items sub-total | 68,775 | 82,602 | 47,513 | |||||||||
Consolidated profit before taxes | $ | 846,911 | $ | 661,697 | $ | 603,212 |
As of December 31, | ||||||||
2017 | 2016 | |||||||
Assets: | ||||||||
Homebuilding Mid Atlantic | $ | 1,079,225 | $ | 1,054,779 | ||||
Homebuilding North East | 143,008 | 126,720 | ||||||
Homebuilding Mid East | 263,019 | 222,736 | ||||||
Homebuilding South East | 277,705 | 214,225 | ||||||
Mortgage Banking | 397,052 | 403,250 | ||||||
Total segment assets | 2,160,009 | 2,021,710 | ||||||
Reconciling items: | ||||||||
Cash and cash equivalents | 645,087 | 375,748 | ||||||
Deferred taxes | 111,953 | 170,652 | ||||||
Intangible assets and goodwill | 50,144 | 51,526 | ||||||
Contract land deposit reserve | (29,999 | ) | (31,306 | ) | ||||
Consolidation adjustments and other | 52,085 | 55,613 | ||||||
Reconciling items sub-total | 829,270 | 622,233 | ||||||
Consolidated assets | $ | 2,989,279 | $ | 2,643,943 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Interest income: | ||||||||||||
Mortgage Banking | $ | 7,850 | $ | 7,569 | $ | 6,485 | ||||||
Total segment interest income | 7,850 | 7,569 | 6,485 | |||||||||
Other unallocated interest income | 4,554 | 1,111 | 1,211 | |||||||||
Consolidated interest income | $ | 12,404 | $ | 8,680 | $ | 7,696 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Interest expense: | ||||||||||||
Homebuilding Mid Atlantic | $ | 123,075 | $ | 119,808 | $ | 107,748 | ||||||
Homebuilding North East | 16,117 | 18,141 | 16,991 | |||||||||
Homebuilding Mid East | 29,663 | 28,307 | 27,263 | |||||||||
Homebuilding South East | 29,583 | 23,804 | 19,217 | |||||||||
Mortgage Banking | 1,148 | 1,086 | 641 | |||||||||
Total segment interest expense | 199,586 | 191,146 | 171,860 | |||||||||
Corporate capital allocation (2) | (198,384 | ) | (189,992 | ) | (171,170 | ) | ||||||
Senior Notes and other interest | 22,983 | 20,553 | 22,869 | |||||||||
Consolidated interest expense | $ | 24,185 | $ | 21,707 | $ | 23,559 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Depreciation and amortization: | ||||||||||||
Homebuilding Mid Atlantic | $ | 8,095 | $ | 8,089 | $ | 7,876 | ||||||
Homebuilding North East | 2,034 | 2,053 | 1,571 | |||||||||
Homebuilding Mid East | 3,590 | 3,748 | 4,003 | |||||||||
Homebuilding South East | 2,531 | 2,276 | 2,191 | |||||||||
Mortgage Banking | 1,297 | 1,117 | 1,136 | |||||||||
Total segment depreciation and amortization | 17,547 | 17,283 | 16,777 | |||||||||
Unallocated corporate | 5,120 | 4,986 | 4,757 | |||||||||
Consolidated depreciation and amortization | $ | 22,667 | $ | 22,269 | $ | 21,534 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Expenditures for property and equipment: | ||||||||||||
Homebuilding Mid Atlantic | $ | 9,257 | $ | 8,838 | $ | 8,287 | ||||||
Homebuilding North East | 1,299 | 3,423 | 2,220 | |||||||||
Homebuilding Mid East | 3,117 | 4,027 | 3,774 | |||||||||
Homebuilding South East | 3,313 | 3,594 | 1,753 | |||||||||
Mortgage Banking | 2,723 | 726 | 265 | |||||||||
Total segment expenditures for property and equipment | 19,709 | 20,608 | 16,299 | |||||||||
Unallocated corporate | 560 | 1,761 | 1,978 | |||||||||
Consolidated expenditures for property and equipment | $ | 20,269 | $ | 22,369 | $ | 18,277 |
(1) | This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. |
(2) | This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the years presented: |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Corporate capital allocation charge: | ||||||||||||
Homebuilding Mid Atlantic | $ | 123,028 | $ | 119,758 | $ | 107,705 | ||||||
Homebuilding North East | 16,115 | 18,132 | 16,987 | |||||||||
Homebuilding Mid East | 29,663 | 28,303 | 27,263 | |||||||||
Homebuilding South East | 29,578 | 23,799 | 19,215 | |||||||||
Total corporate capital allocation charge | $ | 198,384 | $ | 189,992 | $ | 171,170 |
December 31, | ||||||||
2017 | 2016 | |||||||
Contract land deposits | $ | 400,428 | $ | 411,150 | ||||
Loss reserve on contract land deposits | (29,999 | ) | (31,306 | ) | ||||
Contract land deposits, net | 370,429 | 379,844 | ||||||
Contingent obligations in the form of letters of credit | 1,996 | 2,379 | ||||||
Contingent specific performance obligations (1) | 1,505 | 1,505 | ||||||
Total risk of loss | $ | 373,930 | $ | 383,728 |
(1) | As of both December 31, 2017 and 2016, the Company was committed to purchase 10 finished lots under specific performance obligations. |
December 31, | ||||||||
2017 | 2016 | |||||||
Assets: | ||||||||
Cash | $ | 1,069 | $ | 1,214 | ||||
Other assets | 37 | 37 | ||||||
Total assets | $ | 1,106 | $ | 1,251 | ||||
Liabilities and equity: | ||||||||
Accrued expenses | 487 | 550 | ||||||
Equity | 619 | 701 | ||||||
Total liabilities and equity | $ | 1,106 | $ | 1,251 |
December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Interest capitalized, beginning of year | $ | 5,106 | $ | 4,434 | $ | 4,072 | ||||||
Interest incurred | 26,384 | 25,951 | 25,155 | |||||||||
Interest charged to interest expense | (24,185 | ) | (21,707 | ) | (23,559 | ) | ||||||
Interest charged to cost of sales | (1,722 | ) | (3,572 | ) | (1,234 | ) | ||||||
Interest capitalized, end of year | $ | 5,583 | $ | 5,106 | $ | 4,434 |
December 31, | ||||||||
2017 | 2016 | |||||||
Homebuilding: | ||||||||
Office facilities and other | $ | 35,219 | $ | 33,352 | ||||
Model home furniture and fixtures | 33,901 | 34,924 | ||||||
Production facilities | 61,348 | 58,068 | ||||||
Gross Homebuilding PP&E | 130,468 | 126,344 | ||||||
Less: accumulated depreciation | (87,277 | ) | (80,429 | ) | ||||
Net Homebuilding PP&E | $ | 43,191 | $ | 45,915 | ||||
Mortgage Banking: | ||||||||
Office facilities and other | $ | 14,069 | $ | 11,379 | ||||
Less: accumulated depreciation | (7,742 | ) | (6,476 | ) | ||||
Net Mortgage Banking PP&E | $ | 6,327 | $ | 4,903 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Aggregate purchase price | $ | 422,166 | $ | 455,351 | $ | 431,367 | ||||||
Number of shares repurchased | 167 | 280 | 290 |
• | The enactment of the Tax Cuts and Jobs Act in December 2017 required a remeasurement of the Company's net deferred tax assets and resulted in additional income tax expense of $62,702. |
• | The Company's January 1, 2017 adoption of ASU 2016-09 (see Note 1) resulted in the Company recognizing a current income tax benefit of $58,681 related to excess tax benefits from equity-based compensation in 2017. |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Current: | ||||||||||||
Federal | $ | 211,641 | $ | 209,454 | $ | 180,895 | ||||||
State | 37,006 | 38,095 | 36,142 | |||||||||
Deferred: | ||||||||||||
Federal | 60,785 | (9,230 | ) | 2,681 | ||||||||
State | (42 | ) | (1,884 | ) | 567 | |||||||
$ | 309,390 | $ | 236,435 | $ | 220,285 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Income tax benefits arising from compensation expense for tax purposes in excess of amounts recognized for financial statement purposes (1) | $ | — | $ | 13,661 | $ | 23,311 |
December 31, | ||||||||
2017 | 2016 | |||||||
Deferred tax assets: | ||||||||
Other accrued expenses and contract land deposit reserve | $ | 49,063 | $ | 76,498 | ||||
Deferred compensation | 4,743 | 7,075 | ||||||
Equity-based compensation expense | 36,799 | 55,077 | ||||||
Inventory | 9,393 | 13,514 | ||||||
Unrecognized tax benefit | 14,351 | 23,954 | ||||||
Other | 9,681 | 10,106 | ||||||
Total deferred tax assets | 124,030 | 186,224 | ||||||
Less: Deferred tax liabilities | 4,511 | 5,414 | ||||||
Net deferred tax asset | $ | 119,519 | $ | 180,810 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Income taxes computed at the federal statutory rate | $ | 296,419 | $ | 231,595 | $ | 211,124 | ||||||
State income taxes, net of federal income tax benefit (1) | 30,046 | 23,738 | 23,919 | |||||||||
Excess tax benefits from equity-based compensation | (58,681 | ) | — | — | ||||||||
Remeasurement of net deferred tax assets due to enactment of Tax Cut and Jobs Act | 62,702 | — | — | |||||||||
Other, net (2) | (21,096 | ) | (18,898 | ) | (14,758 | ) | ||||||
$ | 309,390 | $ | 236,435 | $ | 220,285 |
(1) | Excludes state excess tax benefits from equity-based compensation included in the line below. |
(2) | Primarily attributable to tax benefits from the domestic production activities deduction. |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Balance at beginning of year | $ | 46,110 | $ | 46,591 | ||||
Additions based on tax positions related to the current year | 4,793 | 4,440 | ||||||
Reductions for tax positions of prior years | (5,566 | ) | (4,921 | ) | ||||
Settlements | — | — | ||||||
Balance at end of year | $ | 45,337 | $ | 46,110 |
Equity-Based Compensation Plans | Shares Authorized | Options/RSUs Outstanding | Shares Available to Issue | ||||||
1998 Management Long-Term Stock Option Plan | 1,000 | 6 | — | ||||||
2000 Broadly-Based Stock Option Plan | 2,000 | 89 | — | ||||||
2010 Equity Incentive Plan (1) | 700 | 218 | 38 | ||||||
2014 Equity Incentive Plan (2) | 950 | 613 | 276 |
(1) | During 2010, the Company’s shareholders approved the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan authorizes the Company to issue Options and RSUs to key management employees, including executive officers and Board members. Of the 700 aggregate shares available to issue, up to 240 may be granted in the form of RSUs. There were 208 Options and 10 RSUs outstanding as of December 31, 2017. Of the 38 shares available to be issued under the 2010 Plan, substantially all may be granted as RSUs. |
(2) | During 2014, the Company’s shareholders approved the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan authorizes the Company to issue Options to key management employees, including executive officers and Board members. Option grants under the 2014 Plan are generally divided such that vesting for 50% of the Option grant is solely contingent upon continued employment or continued service as a Director, while vesting for the remaining 50% of the Option grant is contingent upon both continued employment or service as a Director and the achievement of a performance metric. The performance metric is based on the Company’s return on capital performance relative to a peer group during a specified three year period based on the date of Option grant, with the initial performance period being 2014 through 2016. Based on the Company's return on capital performance, the initial performance period metric was met. Future vesting of Option grants subject to the initial performance period are subject only to continued employment or continued service as a director. Options granted under the 2014 Plan vest annually over four years in 25% increments beginning on December 31, 2016, or later based on the date of grant. |
Shares | Weighted Avg. Per Share Exercise Price | Weighted Avg. Remaining Contract Life (years) | Aggregate Intrinsic Value | ||||||||||
Stock Options | |||||||||||||
Outstanding at December 31, 2016 | 1,076 | $ | 1,048.38 | ||||||||||
Granted | 30 | 2,431.54 | |||||||||||
Exercised | (159 | ) | 886.41 | ||||||||||
Forfeited | (31 | ) | 1,099.68 | ||||||||||
Outstanding at December 31, 2017 | 916 | $ | 1,119.92 | 6.0 | $ | 2,187,430 | |||||||
Exercisable at December 31, 2017 | 461 | $ | 957.50 | 5.0 | $ | 1,176,843 | |||||||
RSUs | |||||||||||||
Outstanding at December 31, 2016 | 16 | ||||||||||||
Granted | — | ||||||||||||
Vested | (6 | ) | |||||||||||
Forfeited | — | ||||||||||||
Outstanding at December 31, 2017 | 10 | $ | 34,945 | ||||||||||
Vested, but not issued at December 31, 2017 | 5 | $ | 18,344 |
2017 | 2016 | 2015 | ||||||||||
Estimated option life (years) | 5.26 | 5.27 | 5.17 | |||||||||
Risk free interest rate (range) | 1.53%-2.38% | 0.86%-2.21% | 1.04%-2.07% | |||||||||
Expected volatility (range) | 15.09%-17.95% | 15.91%-23.49% | 17.00%-26.79% | |||||||||
Expected dividend rate | — | % | — | % | — | % | ||||||
Weighted average grant-date fair value per share of options granted | $ | 494.17 | $ | 320.21 | $ | 296.50 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Aggregate exercise proceeds (1) | $ | 140,525 | $ | 38,106 | $ | 85,948 | ||||||
Aggregate intrinsic value on exercise dates | $ | 206,890 | $ | 96,600 | $ | 99,288 |
(1) | Aggregate exercise proceeds include the Option exercise price received in cash or the fair market value of NVR stock surrendered by the optionee in lieu of cash. |
Year Ending December 31, | |||
2018 | $ | 29,366 | |
2019 | 21,569 | ||
2020 | 17,799 | ||
2021 | 13,436 | ||
2022 | 10,780 | ||
Thereafter | 17,202 | ||
110,152 | |||
Sublease income | (30 | ) | |
$ | 110,122 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Warranty reserve, beginning of year | $ | 93,895 | $ | 87,407 | $ | 94,060 | ||||||
Provision | 44,652 | 50,787 | 47,003 | |||||||||
Payments | (44,034 | ) | (44,299 | ) | (53,656 | ) | ||||||
Warranty reserve, end of year | $ | 94,513 | $ | 93,895 | $ | 87,407 |
i) | the assumed gain/loss of the expected resultant loan sale (Level 2); |
ii) | the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and |
iii) | the value of the servicing rights associated with the loan (Level 2). |
As of December 31, | ||||||||
2017 | 2016 | |||||||
Rate lock commitments: | ||||||||
Gross assets | $ | 5,400 | $ | 5,403 | ||||
Gross liabilities | 1,832 | 3,327 | ||||||
Net rate lock commitments | $ | 3,568 | $ | 2,076 | ||||
Forward sales contracts: | ||||||||
Gross assets | $ | 992 | $ | 9,148 | ||||
Gross liabilities | 667 | 1,084 | ||||||
Net forward sales contracts | $ | 325 | $ | 8,064 |
Notional or Principal Amount | Assumed Gain/(Loss) From Loan Sale | Interest Rate Movement Effect | Servicing Rights Value | Security Price Change | Total Fair Value Measurement Gain/(Loss) | |||||||||||||||||||
Rate lock commitments | $ | 490,184 | $ | (666 | ) | $ | (407 | ) | $ | 4,641 | $ | — | $ | 3,568 | ||||||||||
Forward sales contracts | $ | 705,405 | — | — | — | 325 | 325 | |||||||||||||||||
Mortgages held for sale | $ | 350,558 | (204 | ) | (1,726 | ) | 3,861 | — | 1,931 | |||||||||||||||
Total fair value measurement | $ | (870 | ) | $ | (2,133 | ) | $ | 8,502 | $ | 325 | $ | 5,824 |
Year Ended December 31, 2017 | ||||||||||||||||
4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||||
Revenues – homebuilding operations | $ | 1,781,494 | $ | 1,633,726 | $ | 1,512,714 | $ | 1,247,587 | ||||||||
Gross profit – homebuilding operations | $ | 343,187 | $ | 325,755 | $ | 294,631 | $ | 221,570 | ||||||||
Mortgage banking fees | $ | 34,842 | $ | 34,194 | $ | 31,778 | $ | 29,505 | ||||||||
Net income | $ | 124,619 | $ | 162,102 | $ | 147,877 | $ | 102,923 | ||||||||
Diluted earnings per share | $ | 28.88 | $ | 38.02 | $ | 35.19 | $ | 25.12 | ||||||||
New orders (units) | 4,306 | 4,200 | 4,678 | 4,424 | ||||||||||||
Settlements (units) | 4,630 | 4,158 | 3,917 | 3,256 | ||||||||||||
Backlog, end of period (units) | 8,531 | 8,855 | 8,813 | 8,052 | ||||||||||||
Loans closed | $ | 1,229,695 | $ | 1,115,494 | $ | 1,041,613 | $ | 843,341 |
Year Ended December 31, 2016 | ||||||||||||||||
4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||||
Revenues – homebuilding operations | $ | 1,718,527 | $ | 1,507,451 | $ | 1,361,741 | $ | 1,121,504 | ||||||||
Gross profit – homebuilding operations | $ | 305,087 | $ | 265,159 | $ | 235,372 | $ | 195,744 | ||||||||
Mortgage banking fees | $ | 34,239 | $ | 30,118 | $ | 26,442 | $ | 22,522 | ||||||||
Net income | $ | 150,891 | $ | 117,392 | $ | 91,676 | $ | 65,303 | ||||||||
Diluted earnings per share | $ | 37.80 | $ | 28.46 | $ | 22.01 | $ | 15.79 | ||||||||
New orders (units) | 3,645 | 3,477 | 4,324 | 4,137 | ||||||||||||
Settlements (units) | 4,419 | 3,922 | 3,581 | 3,006 | ||||||||||||
Backlog, end of period (units) | 6,884 | 7,658 | 8,103 | 7,360 | ||||||||||||
Loans closed | $ | 1,201,164 | $ | 1,055,163 | $ | 942,407 | $ | 753,840 |
Grantee: | Date: | |||
(Signature) | ||||
Company: | Date: | |||
(Signature) | ||||
Title: |
Option | This Agreement evidences an award of an Option exercisable for that number of shares of Stock set forth on the cover sheet and subject to the vesting and other conditions set forth herein, in the Plan and on the cover sheet. This option is not intended to be an incentive option under Section 422 of the Internal Revenue Code and will be interpreted accordingly. |
Transfer of Unvested Options | During your lifetime, only you (or, in the event of your legal incapacity or incompetency, your guardian or legal representative) may exercise the Option. The Option may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered, whether by operation of law or otherwise, nor may the Option be made subject to execution, attachment or similar process. If you attempt to do any of these things, this Option will immediately become forfeited. |
Issuance and Vesting | Your rights under this Option grant and this Agreement shall vest in accordance with the vesting schedule set forth on the cover sheet so long as you continue in your Service on the vesting dates set forth on the cover sheet. In the event of a termination of your employment resulting from your involuntary termination due to a reduction in force, death or disability or from your retirement at normal retirement age (age 65) on or after January 1, 2019, the Option shall become exercisable at the date of termination for a pro rata portion based on the number of full months of the current year that has expired prior to the termination of the previously nonexercisable portion of the Option which would have been eligible to be exercised at the end of the year in which such termination occurs. You shall not be entitled to pro rata vesting if your employment is terminated for any other reason. An involuntary termination due to a reduction in force shall be defined as a termination where the Company determines in its sole discretion that the termination is for economic reasons unrelated to job performance. Your Option is exercisable only as to its vested portion. For the avoidance of doubt and by way of example, if the Option becomes exercisable as to a portion of the Stock subject to the Option on December 31, 2019, no exercise of the Option for such portion will be effective until, at the earliest, the first business day of 2020, at which time you would not necessarily have to be an employee of the Company or an Affiliate to exercise the Option, subject to the earlier termination of the Option pursuant to this Agreement. No additional shares of Stock underlying your Option will vest after your Service has terminated for any reason. |
Corporate Transaction | Notwithstanding the vesting schedule set forth above, upon the consummation of a Corporate Transaction, the Option will become 100% vested (i) if the Option is not assumed or if new common stock options relating to the stock of a successor entity are not granted with appropriate adjustments as to the number of shares subject to the Option and the exercise price, or (ii) if assumed and substituted for, upon your termination without Cause within the 12 month period following the consummation of the Change in Control. |
Evidence of Issuance | The issuance of the shares upon exercise of this Option shall be evidenced in such a manner as the Company, in its discretion, will deem appropriate, including, without limitation, book-entry, registration or issuance of one or more share certificates. |
Forfeiture of Unvested Options | Unless the termination of your Service triggers accelerated vesting of your Option, or other treatment pursuant to the terms of this Agreement, the Plan, or any other written agreement between the Company or any Affiliate, as applicable, and you, you will automatically forfeit to the Company the unvested portion of the Option in the event you are no longer providing Service for any reason. Your Option will expire in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the cover sheet. Your Option will expire earlier if your Service terminates, as described below. |
Expiration of Vested Options After Service Terminates | If your Service terminates for any reason, other than death, Disability or Cause, then the vested portion of your Option will expire at the close of business at Company headquarters on the 90th day after your termination date. If your Service terminates because of your death or Disability, or if you die during the 90-day period after your termination for any reason (other than Cause), then the vested portion of your Option will expire at the close of business at Company headquarters on the date twelve (12) months after the date of your death or termination for Disability. During that twelve (12) month period, your estate or heirs may exercise the vested portion of your Option. If your Service is terminated for Cause, then you shall immediately forfeit all rights to your entire Option and the Option shall immediately expire. |
Forfeiture of Rights | If you should take actions in violation or breach of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees or customers of the Company or any Affiliate or any confidentiality obligation with respect to the Company or any Affiliate or otherwise in competition with the Company or any Affiliate, the Company has the right to cause an immediate forfeiture of your rights to the Option awarded under this Agreement and the Option shall immediately expire. Specifically, in consideration of this Award, you acknowledge and agree to the following: |
(i) Confidential Information. In connection with your employment with the Company, you have had or may have access to confidential, proprietary, and non-public information concerning the business or affairs of the Company, including but not limited to trade secrets (as defined in Virginia Code § 59.1-336) and other information concerning the Company’s customers, developers, lot positions, subcontractors, employees, pricing, procedures, marketing plans, business plans, operations, business strategies, and methods (collectively, “Confidential Information”). Accordingly, both during and after termination of your Service (regardless of whether you, or the Company or an Affiliate terminates your Service), you shall not misappropriate, use or disclose to any third party any Confidential Information for any reason other than as intended within the scope of your Service. In the event that you are required by law to disclose any Confidential Information, you agree to give the Company prompt advance written notice thereof and to provide the Company, if requested, with reasonable assistance in obtaining an order to protect the Confidential Information from public disclosure. Upon termination of your Service for any reason, or at any other time upon request of the Company, you shall immediately deliver to the Company all documents, forms, blueprints, designs, policies, memoranda, or other data (and copies hereof), in tangible, electronic, or intangible form, relating to the business of the Company or any Affiliate. Notwithstanding the foregoing, Confidential Information shall not include information that (1) you had in your possession as of the commencement of your Service to the Company or an Affiliate, provided that such information is not subject to a confidentiality agreement with, or other obligation of secrecy to, the Company or an Affiliate, or (2) becomes publicly available otherwise than through disclosure by you in violation of this or any other applicable Agreement. | |
(ii) Non-Competition. During your Service and for a period of twelve (12) months after your Service ends (regardless of whether you, or the Company or an Affiliate terminates your Service) (“the Restricted Period”), you shall not anywhere in the Restricted Area (as defined below): (a) own more than 5% of outstanding shares or control any residential homebuilding, mortgage financing, or settlement services business that competes with the Company or an Affiliate in a type of business activity (i.e., residential homebuilding, mortgage financing, or settlement services) over which you had any management responsibility at any time during the twenty-four (24) months prior to termination of your Service; or (b) render services to (whether as an employee, consultant, independent contractor, partner, officer, director, or board member) any person or entity that competes with the Company or an Affiliate in the residential homebuilding business, mortgage financing business, or settlement services business, where such services are competitive with any of the services you provided to the Company or to an Affiliate during the twenty-four (24) months prior to termination of your Service. “Restricted Area” means only those counties and other units of local government in which the Company engaged in residential homebuilding business activities, mortgage financing business activities, or settlement services business activities, as applicable, over which you have had any managerial responsibility at any time during the 24-month period prior to the termination of your Service. |
(iii) Land Development. If you were employed as a Land Manager, VP of Land, otherwise had any managerial responsibility over the Company’s operations contracting for finished lots, or received, as part of your work duties, Confidential Information relating to land development, at any time during the twenty-four (24) months prior to termination of your Service, you agree that you will not engage in any competitive residential land development activities during the Restricted Period within the Restricted Area. | |
(iv) Non-Recruitment. During the Restricted Period, you will not, directly or indirectly, hire or attempt to hire for a position or role that competes with the Company or an Affiliate, any person, who, at any time during the twelve (12)-month period prior to the termination of your Service, was an employee or contractor of the Company. For the avoidance of doubt, a position or role competes with the Company or an Affiliate if it (x) requires the same or similar knowledge or skills as the recruited person’s current position or role with the Company or Affiliate, and (y) involves the same type of business activity (i.e., residential homebuilding, mortgage financing, or settlement services). | |
(v) Non-Solicitation of Developers. During the Restricted Period, you will not, directly or indirectly, for the purpose of competing with the Company or an Affiliate, solicit the services of, or acquire or attempt to acquire real property, goods, or services from, any developer or subcontractor with which the Company or any Affiliate contracted at any time during the twelve (12)-month period prior to the termination of your Service, if, during such twelve (12)-month period, you had knowledge of such contract or you had contact with such developer or subcontractor. | |
(vi) Non-Solicitation of Customers. During the Restricted Period, you will not, directly or indirectly, on your behalf or on behalf of another person or entity, solicit any customer or client, or prospective customer or client, of the Company in the twelve (12)-month period prior to the termination of your Service. For the avoidance of doubt, the customers and prospective customers covered by this Clause (vi) include only those persons and entities either (x) with whom you had communications in your capacity as an employee or contractor of the Company or of an Affiliate at any time in the twelve (12)-month period prior to the termination of your Service, or (y) about whom you possessed Confidential Information at any time during the twelve (12)-month period prior to your termination of Service. | |
You acknowledge that the restrictions set forth herein are reasonable and necessary to protect the business and interests of the Company and its Affiliates, and that it would be impossible to measure in money the damages that could or would accrue to the Company and its Affiliates in the event that you fail to honor your obligations under this Agreement. Therefore, in addition to any other remedies they may have, the Company and its Affiliates may apply to any court of competent jurisdiction for specific performance, temporary, preliminary, and/or permanent injunctive relief, or other relief in order to enforce the obligations under this Agreement or prevent a violation of these obligations. You expressly acknowledge and agree that the Company and its Affiliates may pursue all relief to which they are entitled, including without limitation damages, specific performance and injunctive relief. You further acknowledge that each of the restrictive covenants above is independent from the others, and, accordingly, if any is held to be illegal or unenforceable in a judicial proceeding, such provision shall be severed and shall be inoperative, and the others shall remain operative and binding. Moreover, in the event of a breach or violation by you of the obligations in this Agreement, the Restricted Period shall be extended until such breach or violation has been cured. | |
In addition, if you have exercised any options during the one year period prior to your actions, you will owe the Company a cash payment (or forfeiture of shares of Stock) in an amount determined as follows: (1) for any shares of Stock that you have sold prior to receiving notice from the Company, the amount will be the proceeds received from the sale(s), less the option price, and (2) for any shares of Stock that you still own, the amount will be the number of shares of Stock owned times the Fair Market Value of the shares of Stock on the date you receive notice from the Company, less the option price (provided, that the Company may require you to satisfy your payment obligations hereunder either by forfeiting and returning to the Company any other shares of Stock or making a cash payment or a combination of these methods as determined by the Company in its sole discretion). |
Leaves of Absence | For purposes of this Agreement, your Service does not terminate when you go on a bona fide leave of absence that was approved by your employer in writing if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work. The Company may determine, in its discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan in accordance with the provisions of the Plan. |
Notice of Exercise | The Option may be exercised, in whole or in part, to purchase a whole number of vested shares of Stock by following the procedures set forth in the Plan and in this Agreement. When you wish to exercise this Option, you must exercise in a manner required or permitted by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so. |
Form of Payment | When you exercise your Option, you must include payment of the Option Price indicated on the cover sheet for the shares you are purchasing. Payment may be made in one (or a combination) of the following forms: Immediately available funds. Shares of Stock owned by you and which are surrendered to the Company. The Fair Market Value of the shares as of the effective date of the option exercise will be applied to the option price. By delivery (on a form prescribed by the Company) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell Stock and to deliver all or part of the sale proceeds to the Company in payment of the aggregate option price and any withholding taxes. |
Withholding Taxes | You agree as a condition of this grant that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise within a reasonable period of time, or you shall forfeit the shares of Stock. In the event that the Company or an Affiliate, as applicable, determines that any federal, state, local or foreign tax or withholding payment is required relating to the exercise of this Option or sale of Stock arising from this Option, the Company or an Affiliate, as applicable, shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Company or an Affiliate, as applicable, consistent with Section 13.3 of the Plan (including in connection with a same day sale). Payment must be made in immediately available funds. |
Retention Rights | This Agreement and the grant evidenced hereby do not give you the right to be retained by the Company or an Affiliate in any capacity. Unless otherwise specified in an employment or other written agreement between the Company or an Affiliate, as applicable, and you, the Company or an Affiliate, as applicable, reserves the right to terminate your Service at any time and for any reason. |
Stockholder Rights | You, or your estate or heirs, have no rights as a shareholder of the Company until Stock has been issued upon exercise of your Option and either a certificate evidencing your Stock has been issued or an appropriate entry has been made on the Company’s books. No adjustments are made for dividends, distributions or other rights if the applicable record date occurs before your certificate is issued (or an appropriate book entry is made), except as described in the Plan. Your grant shall be subject to the terms of any applicable agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity, as provided in Section 12 of the Plan. |
Clawback | If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, and you are either (i) subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, or (ii) you knowingly engaged in the misconduct, were grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct or were grossly negligent in failing to prevent the misconduct, you shall reimburse the Company the amount of any payment in settlement of this Award earned or accrued during the 12-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance. |
Attorney’s Fees and Costs | I agree that if I violate this Agreement, I will be responsible for all attorney’s fees, costs, and expenses incurred by the Company by reason of any action relating to this Agreement. |
Applicable Law | This Agreement will be interpreted and enforced under the laws of the Commonwealth of Virginia, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. |
Venue | The Company and I irrevocably and unconditionally agree that neither party will commence any action, litigation, or proceeding of any kind whatsoever against the other in any way arising from or relating to this Agreement or our relationship, including but not limited to contract, equity, tort, fraud, and statutory claims, in any forum other than state or federal court in the Commonwealth of Virginia. The Company and I irrevocably and unconditionally submit to the exclusive jurisdiction of the Commonwealth of Virginia's state and federal courts for all actions, litigations, or proceedings whether brought by me or the Company. |
The Plan | The text of the Plan is incorporated in this Agreement by reference. Certain capitalized terms used in this Agreement are defined in the Plan, and have the meaning set forth in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this grant. Any prior agreements, commitments or negotiations concerning this grant are superseded; except that any written employment or consulting, and/or severance agreement between you and the Company or an Affiliate, as applicable, shall supersede this Agreement with respect to its subject matter. |
Data Privacy | In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this grant, you give explicit consent to the Company to process any such personal data. |
Code Section 409A | It is intended that this Award comply with Section 409A of the Code (“Section 409A”) or an exemption to Section 409A. To the extent that the Company determines that you would be subject to the additional 20% tax imposed on certain non-qualified deferred compensation plans pursuant to Section 409A as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax. The nature of any such amendment shall be determined by the Company. |
Grantee: | Date: | |||
(Signature) | ||||
Company: | Date: | |||
(Signature) | ||||
Title: |
Option | This Agreement evidences an award of an Option exercisable for that number of shares of Stock set forth on the cover sheet and subject to the vesting and other conditions set forth herein, in the Plan and on the cover sheet. This option is not intended to be an incentive option under Section 422 of the Internal Revenue Code and will be interpreted accordingly. |
Transfer of Unvested Options | During your lifetime, only you (or, in the event of your legal incapacity or incompetency, your guardian or legal representative) may exercise the Option. The Option may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered, whether by operation of law or otherwise, nor may the Option be made subject to execution, attachment or similar process. If you attempt to do any of these things, this Option will immediately become forfeited. |
Issuance and Vesting | Your rights under this Option grant and this Agreement shall vest, if at all, in accordance with the vesting schedule set forth on Exhibit A provided you continue in Service through the vesting dates set forth on Exhibit A and provided the Compensation Committee of the Board (the “Compensation Committee”) determines that the applicable performance criteria have been satisfied. In the event of a termination of your employment resulting from your involuntary termination due to a reduction in force, death or disability or from your retirement at normal retirement age (age 65) on or after January 1, 2019: (1) The Option shall remain outstanding until such time as the Compensation Committee shall determine whether the applicable performance criteria have been satisfied;and (2) If the Compensation Committee determines that the performance criteria have been satisfied, the Option shall become exercisable for a pro rata portion based on the achievement of the performance criteria and the number of full months of the then-current year that have expired prior to the termination of the previouslynonexercisable portion of the Option which would have been eligible to be exercised at the end of the year in which such termination occurs. Such prorated portion shall remain exercisable until the later of ninety days following the date of termination of your employment and such Compensation Committee determination. |
You shall not be entitled to pro rata vesting if your employment is terminated for any other reason. In the event of a termination of your employment for any reason other than Cause on or after December 31, 2019 but prior to completion of the Compensation Committee’s determination as to whether the performance criteria have been satisfied, the Option shall remain outstanding until such time as the Compensation Committee shall determine whether the applicable performance criteria have been satisfied. If the Compensation Committee determines that the performance criteria have been satisfied at at least the threshold level, the Option shall become exercisable based on the achievement of the performance criteria and shall remain exercisable for ninety days following such Compensation Committee determination. | |
An involuntary termination due to a reduction in force shall be defined as a termination where the Company determines in its sole discretion that the termination is for economic reasons unrelated to job performance. Your Option is exercisable only as to its vested portion. For the avoidance of doubt and by way of example, if the Option becomes exercisable as to a portion of the Stock subject to the Option after the Compensation Committee determines that the applicable performance criteria have been satisfied on February 15, 2020, no exercise of the Option for such portion will be effective until, at the earliest, February 16, 2020, at which time you would not necessarily have to be an employee of the Company or an Affiliate to exercise the Option, subject to the earlier termination of the Option pursuant to this Agreement. |
Corporate Transaction | Notwithstanding the performance metrics and vesting schedule set forth on Exhibit A, upon the consummation of a Corporate Transaction, the Option will become 100% vested (i) if the Option is not assumed or if new common stock options relating to the stock of a successor entity are not granted with appropriate adjustments as to the number of shares subject to the Option and the exercise price, or (ii) if assumed and substituted for, upon your termination without Cause within the 12 month period following the consummation of the Change in Control. If the Option is assumed or if new common stock options relating to the stock of a successor entity are granted, the performance metrics set forth on Exhibit A shall be deemed to be satisfied at the Target level and the Option shall continue to be subject to the time-based vesting criteria set forth on Exhibit A |
Evidence of Issuance | The issuance of the shares upon exercise of this Option shall be evidenced in such a manner as the Company, in its discretion, will deem appropriate, including, without limitation, book-entry, registration or issuance of one or more share certificates. |
Forfeiture of Unvested Options | Unless the termination of your Service triggers accelerated vesting of your Option, or other treatment pursuant to the terms of this Agreement, the Plan, or any other written agreement between the Company or any Affiliate, as applicable, and you, you will automatically forfeit to the Company the unvested portion of the Option in the event you are no longer providing Service for any reason. Your Option will expire in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the cover sheet. Your Option will expire earlier if your Service terminates, as described below. |
Expiration of Vested Options After Service Terminates | If your Service terminates for any reason, other than death, Disability or Cause, then the vested portion of your Option will expire at the close of business at Company headquarters on the 90th day after your termination date. If your Service terminates because of your death or Disability, or if you die during the 90-day period after your termination for any reason (other than Cause), then the vested portion of your Option will expire at the close of business at Company headquarters on the date twelve (12) months after the date of your death or termination for Disability. During that twelve (12) month period, your estate or heirs may exercise the vested portion of your Option. If your Service is terminated for Cause, then you shall immediately forfeit all rights to your entire Option and the Option shall immediately expire. |
Forfeiture of Rights | If you should take actions in violation or breach of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees or customers of the Company or any Affiliate or any confidentiality obligation with respect to the Company or any Affiliate or otherwise in competition with the Company or any Affiliate, the Company has the right to cause an immediate forfeiture of your rights to the Option awarded under this Agreement and the Option shall immediately expire. Specifically, in consideration of this Award, you acknowledge and agree to the following: |
(i) Confidential Information. In connection with your employment with the Company, you have had or may have access to confidential, proprietary, and non-public information concerning the business or affairs of the Company, including but not limited to trade secrets (as defined in Virginia Code § 59.1-336) and other information concerning the Company’s customers, developers, lot positions, subcontractors, employees, pricing, procedures, marketing plans, business plans, operations, business strategies, and methods (collectively, “Confidential Information”). Accordingly, both during and after termination of your Service (regardless of whether you, or the Company or an Affiliate terminates your Service), you shall not misappropriate, use or disclose to any third party any Confidential Information for any reason other than as intended within the scope of your Service. In the event that you are required by law to disclose any Confidential Information, you agree to give the Company prompt advance written notice thereof and to provide the Company, if requested, with reasonable assistance in obtaining an order to protect the Confidential Information from public disclosure. Upon termination of your Service for any reason, or at any other time upon request of the Company, you shall immediately deliver to the Company all documents, forms, blueprints, designs, policies, memoranda, or other data (and copies hereof), in tangible, electronic, or intangible form, relating to the business of the Company or any Affiliate. Notwithstanding the foregoing, Confidential Information shall not include information that (1) you had in your possession as of the commencement of your Service to the Company or an Affiliate, provided that such information is not subject to a confidentiality agreement with, or other obligation of secrecy to, the Company or an Affiliate, or (2) becomes publicly available otherwise than through disclosure by you in violation of this or any other applicable Agreement. | |
(ii) Non-Competition. During your Service and for a period of twelve (12) months after your Service ends (regardless of whether you, or the Company or an Affiliate terminates your Service) (“the Restricted Period”), you shall not anywhere in the Restricted Area (as defined below): (a) own more than 5% of outstanding shares or control any residential homebuilding, mortgage financing, or settlement services business that competes with the Company or an Affiliate in a type of business activity (i.e., residential homebuilding, mortgage financing, or settlement services) over which you had any management responsibility at any time during the twenty-four (24) months prior to termination of your Service; or (b) render services to (whether as an employee, consultant, independent contractor, partner, officer, director, or board member) any person or entity that competes with the Company or an Affiliate in the residential homebuilding business, mortgage financing business, or settlement services business, where such services are competitive with any of the services you provided to the Company or to an Affiliate during the twenty-four (24) months prior to termination of your Service. “Restricted Area” means only those counties and other units of local government in which the Company engaged in residential homebuilding business activities, mortgage financing business activities, or settlement services business activities, as applicable, over which you have had any managerial responsibility at any time during the 24-month period prior to the termination of your Service. | |
(iii) Land Development. If you were employed as a Land Manager, VP of Land, otherwise had any managerial responsibility over the Company’s operations contracting for finished lots, or received, as part of your work duties, Confidential Information relating to land development, at any time during the twenty-four (24) months prior to termination of your Service, you agree that you will not engage in any competitive residential land development activities during the Restricted Period within the Restricted Area. | |
(iv) Non-Recruitment. During the Restricted Period, you will not, directly or indirectly, hire or attempt to hire for a position or role that competes with the Company or an Affiliate, any person, who, at any time during the twelve (12)-month period prior to the termination of your Service, was an employee or contractor of the Company. For the avoidance of doubt, a position or role competes with the Company or an Affiliate if it (x) requires the same or similar knowledge or skills as the recruited person’s current position or role with the Company or Affiliate, and (y) involves the same type of business activity (i.e., residential homebuilding, mortgage financing, or settlement services). |
(v) Non-Solicitation of Developers. During the Restricted Period, you will not, directly or indirectly, for the purpose of competing with the Company or an Affiliate, solicit the services of, or acquire or attempt to acquire real property, goods, or services from, any developer or subcontractor with which the Company or any Affiliate contracted at any time during the twelve (12)-month period prior to the termination of your Service, if, during such twelve (12)-month period, you had knowledge of such contract or you had contact with such developer or subcontractor. | |
(vi) Non-Solicitation of Customers. During the Restricted Period, you will not, directly or indirectly, on your behalf or on behalf of another person or entity, solicit any customer or client, or prospective customer or client, of the Company in the twelve (12)-month period prior to the termination of your Service. For the avoidance of doubt, the customers and prospective customers covered by this Clause (vi) include only those persons and entities either (x) with whom you had communications in your capacity as an employee or contractor of the Company or of an Affiliate at any time in the twelve (12)-month period prior to the termination of your Service, or (y) about whom you possessed Confidential Information at any time during the twelve (12)-month period prior to your termination of Service. | |
You acknowledge that the restrictions set forth herein are reasonable and necessary to protect the business and interests of the Company and its Affiliates, and that it would be impossible to measure in money the damages that could or would accrue to the Company and its Affiliates in the event that you fail to honor your obligations under this Agreement. Therefore, in addition to any other remedies they may have, the Company and its Affiliates may apply to any court of competent jurisdiction for specific performance, temporary, preliminary, and/or permanent injunctive relief, or other relief in order to enforce the obligations under this Agreement or prevent a violation of these obligations. You expressly acknowledge and agree that the Company and its Affiliates may pursue all relief to which they are entitled, including without limitation damages, specific performance and injunctive relief. You further acknowledge that each of the restrictive covenants above is independent from the others, and, accordingly, if any is held to be illegal or unenforceable in a judicial proceeding, such provision shall be severed and shall be inoperative, and the others shall remain operative and binding. Moreover, in the event of a breach or violation by you of the obligations in this Agreement, the Restricted Period shall be extended until such breach or violation has been cured. | |
In addition, if you have exercised any options during the one year period prior to your actions, you will owe the Company a cash payment (or forfeiture of shares of Stock) in an amount determined as follows: (1) for any shares of Stock that you have sold prior to receiving notice from the Company, the amount will be the proceeds received from the sale(s), less the option price, and (2) for any shares of Stock that you still own, the amount will be the number of shares of Stock owned times the Fair Market Value of the shares of Stock on the date you receive notice from the Company, less the option price (provided, that the Company may require you to satisfy your payment obligations hereunder either by forfeiting and returning to the Company any other shares of Stock or making a cash payment or a combination of these methods as determined by the Company in its sole discretion). | |
Leaves of Absence | For purposes of this Agreement, your Service does not terminate when you go on a bona fide leave of absence that was approved by your employer in writing if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work. The Company may determine, in its discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan in accordance with the provisions of the Plan. |
Notice of Exercise | The Option may be exercised, in whole or in part, to purchase a whole number of vested shares of Stock by following the procedures set forth in the Plan and in this Agreement. When you wish to exercise this Option, you must exercise in a manner required or permitted by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so. |
Form of Payment | When you exercise your Option, you must include payment of the Option Price indicated on the cover sheet for the shares you are purchasing. Payment may be made in one (or a combination) of the following forms: Immediately available funds. Shares of Stock owned by you and which are surrendered to the Company. The Fair Market Value of the shares as of the effective date of the option exercise will be applied to the option price. By delivery (on a form prescribed by the Company) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell Stock and to deliver all or part of the sale proceeds to the Company in payment of the aggregate option price and any withholding taxes. |
Withholding Taxes | You agree as a condition of this grant that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise within a reasonable period of time, or you shall forfeit the shares of Stock. In the event that the Company or an Affiliate, as applicable, determines that any federal, state, local or foreign tax or withholding payment is required relating to the exercise of this Option or sale of Stock arising from this Option, the Company or an Affiliate, as applicable, shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Company or an Affiliate, as applicable, consistent with Section 13.3 of the Plan (including in connection with a same day sale). Payment must be made in immediately available funds. |
Retention Rights | This Agreement and the grant evidenced hereby do not give you the right to be retained by the Company or an Affiliate in any capacity. Unless otherwise specified in an employment or other written agreement between the Company or an Affiliate, as applicable, and you, the Company or an Affiliate, as applicable, reserves the right to terminate your Service at any time and for any reason. |
Stockholder Rights | You, or your estate or heirs, have no rights as a shareholder of the Company until Stock has been issued upon exercise of your Option and either a certificate evidencing your Stock has been issued or an appropriate entry has been made on the Company’s books. No adjustments are made for dividends, distributions or other rights if the applicable record date occurs before your certificate is issued (or an appropriate book entry is made), except as described in the Plan. Your grant shall be subject to the terms of any applicable agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity, as provided in Section 12 of the Plan. |
Clawback | If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, and you are either (i) subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, or (ii) you knowingly engaged in the misconduct, were grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct or were grossly negligent in failing to prevent the misconduct, you shall reimburse the Company the amount of any payment in settlement of this Award earned or accrued during the 12-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance. |
Attorney’s Fees and Costs | I agree that if I violate this Agreement, I will be responsible for all attorney’s fees, costs, and expenses incurred by the Company by reason of any action relating to this Agreement. |
Applicable Law | This Agreement will be interpreted and enforced under the laws of the Commonwealth of Virginia, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. |
Venue | The Company and I irrevocably and unconditionally agree that neither party will commence any action, litigation, or proceeding of any kind whatsoever against the other in any way arising from or relating to this Agreement or our relationship, including but not limited to contract, equity, tort, fraud, and statutory claims, in any forum other than state or federal court in the Commonwealth of Virginia. The Company and I irrevocably and unconditionally submit to the exclusive jurisdiction of the Commonwealth of Virginia's state and federal courts for all actions, litigations, or proceedings whether brought by me or the Company. |
The Plan | The text of the Plan is incorporated in this Agreement by reference. Certain capitalized terms used in this Agreement are defined in the Plan, and have the meaning set forth in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this grant. Any prior agreements, commitments or negotiations concerning this grant are superseded; except that any written employment or consulting, and/or severance agreement between you and the Company or an Affiliate, as applicable, shall supersede this Agreement with respect to its subject matter. |
Data Privacy | In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this grant, you give explicit consent to the Company to process any such personal data. |
Code Section 409A | It is intended that this Award comply with Section 409A of the Code (“Section 409A”) or an exemption to Section 409A. To the extent that the Company determines that you would be subject to the additional 20% tax imposed on certain non-qualified deferred compensation plans pursuant to Section 409A as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax. The nature of any such amendment shall be determined by the Company. |
Name of Subsidiary | State of Incorporation or Organization | |||
NVR Mortgage Finance, Inc. | Virginia | |||
NVR Settlement Services, Inc. | Pennsylvania | |||
RVN, Inc. | Delaware | |||
NVR Services, Inc. | Delaware | |||
NVR Funding II, Inc. | Delaware |
1. | I have reviewed this Annual Report on Form 10-K of NVR, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the 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 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. |
Date: February 14, 2018 | By: | /s/ Paul C. Saville | ||
Paul C. Saville | ||||
President and Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of NVR, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the 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 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. |
Date: February 14, 2018 | By: | /s/ Daniel D. Malzahn | ||
Daniel D. Malzahn | ||||
Senior Vice President, Chief Financial Officer and Treasurer |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NVR, Inc. |
Date: February 14, 2018 | By: | /s/ Paul C. Saville | |
Paul C. Saville | |||
President and Chief Executive Officer | |||
By: | /s/ Daniel D. Malzahn | ||
Daniel D. Malzahn | |||
Senior Vice President, Chief Financial Officer and Treasurer |
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MVE
Document and Entity Information - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Feb. 12, 2018 |
Jun. 30, 2017 |
|
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | NVR | ||
Entity Registrant Name | NVR INC | ||
Entity Central Index Key | 0000906163 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 3,683,093 | ||
Entity Public Float | $ 8,443,210 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 20,555,330 | 20,555,330 |
Deferred compensation trust, shares | 108,640 | 108,640 |
Treasury stock, shares | 16,864,324 | 16,862,327 |
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Interest expense | $ (24,185) | $ (21,707) | $ (23,559) |
Income before taxes | 846,911 | 661,697 | 603,212 |
Income tax expense | (309,390) | (236,435) | (220,285) |
Net income | $ 537,521 | $ 425,262 | $ 382,927 |
Basic earnings per share (USD per share) | $ 144.00 | $ 110.53 | $ 95.21 |
Diluted earnings per share (USD per share) | $ 126.77 | $ 103.61 | $ 89.99 |
Basic weighted average shares outstanding (in Shares) | 3,733 | 3,847 | 4,022 |
Diluted weighted average shares outstanding (in Shares) | 4,240 | 4,104 | 4,255 |
Homebuilding: | |||
Revenues | $ 6,175,521 | $ 5,709,223 | $ 5,065,200 |
Other income | 6,536 | 2,820 | 2,956 |
Cost of sales | (4,990,378) | (4,707,861) | (4,118,782) |
Selling, general and administrative | (392,272) | (382,459) | (371,127) |
Operating income | 799,407 | 621,723 | 578,247 |
Interest expense | (23,037) | (20,621) | (22,918) |
Income before taxes | 776,370 | 601,102 | 555,329 |
Mortgage Banking: | |||
Mortgage banking fees | 130,319 | 113,321 | 93,808 |
Interest income | 7,850 | 7,569 | 6,485 |
Other income | 2,048 | 1,652 | 1,113 |
General and administrative | (68,528) | (60,861) | (52,882) |
Interest expense | (1,148) | (1,086) | (641) |
Income before taxes | $ 70,541 | $ 60,595 | $ 47,883 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of NVR, Inc. and its subsidiaries (“NVR” or the “Company”) and certain other entities in which the Company is deemed to be the primary beneficiary (see Notes 3 and 4 herein for additional information). All significant intercompany transactions have been eliminated in consolidation. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Management continually evaluates the estimates used to prepare the consolidated financial statements and updates those estimates as necessary. In general, the Company’s estimates are based on historical experience, on information from third party professionals, and other various assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ materially from those estimates made by management. Cash and Cash Equivalents Cash and cash equivalents include short-term investments with original maturities of three months or less. Homebuilding restricted cash was attributable to customer deposits for certain home sales. Mortgage banking restricted cash included amounts collected from customers for loans in process and closed mortgage loans held for sale. At December 31, 2017 and 2016, $1,069 and $1,214, respectively, of cash related to a consolidated variable interest entity is included in homebuilding “Other assets ” on the accompanying consolidated balance sheet. Homebuilding Inventory The carrying value of inventory is stated at the lower of cost or market value. Cost of lots and completed and uncompleted housing units represent the accumulated actual cost of the units. Field construction supervisors’ salaries and related direct overhead expenses are included in inventory costs. Interest costs are not capitalized into inventory, with the exception of land under development and joint venture investments, as applicable (see below). Upon settlement, the cost of the unit is expensed on a specific identification basis. Cost of building materials is determined on a first-in, first-out basis. Sold inventory is evaluated for impairment based on the contractual sales price compared to the total estimated cost to construct. Unsold inventory is evaluated for impairment by analyzing recent comparable sales prices within the applicable community compared to the costs incurred to date plus the expected costs to complete. Any calculated impairments are recorded immediately. Contract Land Deposits The Company purchases finished lots under fixed price lot purchase agreements (“Lot Purchase Agreements”) that require deposits that may be forfeited if NVR fails to perform under the contract. The deposits are in the form of cash or letters of credit in varying amounts and represent a percentage of the aggregate purchase price of the finished lots. NVR maintains an allowance for losses on contract land deposits that reflects the Company’s judgment of the present loss exposure in the existing contract land deposit portfolio at the end of the reporting period. To analyze contract land deposit impairments, NVR utilizes guidance from Accounting Standards Codification (“ASC”) 450, Contingencies, and conducts a loss contingency analysis each quarter. In addition to considering market and economic conditions, NVR assesses contract land deposit impairments on a community-by-community basis pursuant to the purchase contract terms, analyzing, as applicable, current sales absorption levels, recent sales’ direct profit, the dollar differential between the contractual purchase price and the current market price for lots, a developer’s financial stability, a developer’s financial ability or willingness to reduce lot prices to current market prices, and the contract’s default status by either the Company or the developer along with an analysis of the expected outcome of any such default. NVR’s analysis is focused on whether the Company can sell houses at an acceptable margin and sales pace in a particular community in the current market with which the Company is faced. Because the Company does not own the finished lots on which the Company has placed a contract land deposit, if the above analysis leads to a determination that the Company cannot sell homes at an acceptable margin and sales pace at the current contractual lot price, the Company then determines whether it will elect to default under the contract, forfeit the deposit and terminate the contract, or whether the Company will attempt to restructure the lot purchase contract, which may require it to forfeit the deposit to obtain contract concessions from a developer. The Company also assesses whether impairment is present due to collectability issues resulting from a developer’s non-performance because of financial or other conditions. For the year ended December 31, 2017, the Company incurred net pre-tax charges of $1,238 related to the impairment of contract land deposits. For the years ended December 31, 2016 and 2015, the Company recognized net pre-tax recoveries of $4,269 and $11,058, respectively, of contract land deposits previously determined to be unrecoverable. The contract land deposit assets on the accompanying consolidated balance sheets are shown net of the allowance for losses of $29,999 and $31,306 at December 31, 2017 and 2016, respectively. Land Under Development On a limited basis, NVR directly acquires raw parcels of land already zoned for its intended use to develop into finished lots. Land under development includes the land acquisition costs, direct improvement costs, capitalized interest, where applicable, and real estate taxes. Land under development, including the land under development held by the Company’s unconsolidated joint ventures and the related joint venture investments, is reviewed for potential write-downs when impairment indicators are present. In addition to considering market and economic conditions, the Company assesses land under development impairments on a community-by-community basis, analyzing, as applicable, current sales absorption levels, recent sales’ direct profit, and the dollar differential between the projected fully-developed cost of the lots and the current market price for lots. If indicators of impairment are present for a community, NVR performs an analysis to determine if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts, and if so, impairment charges are required to be recorded if the fair value of such assets is less than their carrying amounts. For those assets deemed to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company’s determination of fair value is primarily based on discounting the estimated future cash flows at a rate commensurate with the inherent risks associated with the assets and related estimated cash flow streams. NVR does not believe that any of the land under development is impaired as of December 31, 2017. Property, Plant, and Equipment Property, plant, and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is based on the estimated useful lives of the assets using the straight-line method. Model home furniture and fixtures are generally depreciated over a two-year period, office facilities and other equipment are depreciated over a period of three to ten years and production facilities are depreciated over periods of five to forty years. Intangible Assets On December 31, 2012, the Company acquired substantially all of the assets of Heartland Homes, Inc., which resulted in the Company recording finite-lived intangible assets and goodwill. The Company completed its annual assessment for impairment of goodwill and management determined that there was no impairment. As of December 31, 2017 and 2016, finite-lived intangible assets, net of accumulated amortization, totaled $776 and $2,158, respectively. The remaining finite-lived intangible assets will be amortized on a straight-line basis over 5 years. As of both December 31, 2017 and 2016, the goodwill value was $441. Finite-lived intangible assets and goodwill are included in homebuilding "Other assets" in the accompanying consolidated balance sheets. Warranty/Product Liability Reserves The Company establishes warranty and product liability reserves to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to NVR’s homebuilding business. Liability estimates are determined based on management’s judgment considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s General Counsel and outside counsel retained to handle specific product liability cases. Mortgage Loans Held for Sale, Derivatives and Hedging Activities NVR originates several different loan products to its customers to finance the purchase of a home through its wholly-owned mortgage subsidiary, NVR Mortgage Finance, Inc. (“NVRM”). NVRM sells all of the loans it originates into the secondary market on a servicing released basis, typically within 30 days from origination. All of the loans that NVRM originates are underwritten to the standards and specifications of the ultimate investor. Those underwriting standards are typically equal to or more stringent than the underwriting standards required by Fannie Mae (“FNMA”), Freddie Mac ("FHLMC"), the Department of Veterans Affairs (“VA”) and the Federal Housing Administration (“FHA”). Insofar as NVRM underwrites its originated loans to those standards, NVRM bears no increased concentration of credit risk from the issuance of loans, except in certain limited instances where early payment default occurs. NVRM employs a quality control department to ensure that its underwriting controls are effectively operating, and further assesses the underwriting function as part of its assessment of internal controls over financial reporting. NVRM maintains a reserve for losses on mortgage loans originated that reflects NVR’s judgment of the present loss exposure in the loans that NVRM has originated and sold. The reserve is calculated based on an analysis of historical experience and exposure (see Note 15 herein for further information). Mortgage loans held for sale are carried at the lower of cost or fair value, net of deferred origination costs, until sold. In the normal course of business, NVRM enters into contractual commitments to extend credit to buyers of single-family homes with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate within time frames established by NVRM. All mortgagors are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to a broker/dealer. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to broker/dealers. The forward sale contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments. NVRM does not engage in speculative or trading derivative activities. Both the rate lock commitments to borrowers and the forward sale contracts to broker/dealers are undesignated derivatives, and, accordingly, are marked to fair value through earnings. At December 31, 2017, there were contractual commitments to extend credit to borrowers aggregating $490,184, and open forward delivery sale contracts aggregating $705,405, which hedge both the rate lock loan commitments and closed loans held for sale (see Note 14 herein for a description of the Company’s fair value accounting). Earnings per Share The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for the years ended December 31, 2017, 2016 and 2015:
The assumed proceeds used in the treasury method for calculating NVR’s diluted earnings per share includes the amount the employee must pay upon exercise and the amount of compensation cost attributed to future services not yet recognized. The following stock options issued under equity incentive plans were outstanding during the years ended December 31, 2017, 2016 and 2015, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.
Revenues – Homebuilding Operations NVR builds single-family detached homes, townhomes and condominium buildings, which generally are constructed on a pre-sold basis for the ultimate customer. Revenues are recognized at the time the unit is settled and title passes to the customer, adequate cash payment has been received and there is no continuing involvement. In situations where the buyer’s financing is originated by NVRM and the buyer has not made an adequate initial or continuing investment as prescribed by GAAP, the profit on such settlement is deferred until the sale of the related loan to a third-party investor has been completed. Mortgage Banking Fees Mortgage banking fees include income earned by NVRM for originating mortgage loans, servicing mortgage loans held on an interim basis, title fees, gains and losses on the sale of mortgage loans and mortgage servicing and other activities incidental to mortgage banking. Mortgage banking fees are generally recognized after the loan has been sold to an unaffiliated, third party investor. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 11 herein for discussion of the impact on the Company's deferred tax asset resulting from the enactment of the Tax Cuts and Jobs Act in December 2017. ASC 740-10, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statements of income. The Company recognizes interest related to unrecognized tax benefits as a component of income tax expense. Based on its historical experience in dealing with various taxing authorities, the Company has found that it is the administrative practice of the taxing authorities to not seek penalties from the Company for the tax positions it has taken on its returns, related to its unrecognized tax benefits. Therefore, the Company does not accrue penalties for the positions in which it has an unrecognized tax benefit. However, if such penalties were to be accrued, they would be recorded as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, by expiration of the applicable statute of limitation, or by determination in accordance with certain states’ administrative practices that the uncertain tax position has been effectively settled (see Note 11 herein for further information). Financial Instruments Except as otherwise noted herein, NVR believes that insignificant differences exist between the carrying value and the fair value of its financial instruments (see Note 14 herein for further information). Equity-Based Compensation The Company accounts for its equity-based compensation in accordance with ASC 718, Compensation – Stock Compensation. ASC 718 requires an entity to recognize an expense within its income statement for all share-based payment arrangements, which includes employee stock option and restricted share unit plans. The expense is based on the grant-date fair value of the stock options and restricted share units granted, and is recognized ratably over the requisite service period. Recognition of compensation expense for the stock options which are subject to a performance condition are treated as a separate award from the “service-only” stock options, and expense is recognized when it becomes probable that the stated performance target will be achieved. The Company calculates the fair value of its non-publicly traded, employee stock options using the Black-Scholes option-pricing model. The grant date fair value of the restricted share units is the closing price of the Company’s common stock on the day immediately preceding the date of grant. The Company’s equity-based compensation programs are accounted for as equity-classified awards (see Note 12 herein for further discussion of equity-based compensation plans). Comprehensive Income For the years ended December 31, 2017, 2016 and 2015, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying consolidated financial statements. Reclassifications Certain prior period amounts have been reclassified to conform to the current year's presentation. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements The Company adopted Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, effective January 1, 2017. In connection with the adoption of ASU 2016-09, the Company:
No other adjustments were made as a result of the adoption of ASU 2016-09. The Company also adopted ASU 2015-11, Inventory – Simplifying the Measurement of Inventory effective January 1, 2017. The standard requires inventory to be measured at the lower of cost or net realizable value. Under prior GAAP, impaired inventory was written down to net realizable value less a normal profit margin. Under the new standard, impaired inventory is written down to the net realizable value. ASU 2015-11 was adopted prospectively and did not have a material effect on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires 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 standard is effective for the Company as of January 1, 2018 and replaces most existing revenue recognition guidance in GAAP. The Company will adopt the standard using the cumulative effect transition method. The Company has determined that the adoption of this standard will not have a material effect on its consolidated financial statements and related disclosures. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on-balance sheet with a liability equal to the present value of lease payments over the lease term and a right-of-use asset for the right to use the underlying asset over the lease term. Lessees will recognize expenses on their income statements in a manner similar to current GAAP. The standard also requires additional disclosures of key information about leasing arrangements. The standard is effective for the Company as of January 1, 2019. The Company believes that the adoption of this standard will have a material effect on both assets and liabilities presented on the balance sheet, and is further evaluating the impact of its adoption. In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes the way impairment of financial assets is recognized. The standard will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. The standard’s provisions will be applied as a cumulative-effect adjustment to beginning retained earnings as of the effective date. The standard is effective for the Company as of January 1, 2020. Early adoption is permitted for annual and interim periods beginning January 1, 2019. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. In August 2016, FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The objective of the standard is to address the diversity in practice of how certain cash receipts and payments are presented on the statement of cash flows. The standard requires that the guidance be applied retrospectively in the first interim and annual periods in which an entity adopts the guidance. The standard is effective for the Company as of January 1, 2018. The Company expects the standard to affect the presentation of distributions from joint ventures on its consolidated statements of cash flows. In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. The amendments in the standard require that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. As a result, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The standard is effective for the Company as of January 1, 2018. The Company does not believe that the adoption of this standard will have a material effect on its consolidated statements of cash flows and related disclosures. In January 2017, FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The standard’s objective is to simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. Under the amendments in the standard, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would then be recognized, not to exceed the amount of goodwill allocated to that reporting unit. The standard is effective for the Company on January 1, 2020, and early adoption is permitted. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures. In May 2017, FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments in the standard clarify when changes in a share-based payment award must be accounted for as a modification, and will allow entities to make certain changes to share-based payment awards without accounting for them as modifications. Under the new guidance, entities will only apply modification accounting if there are substantive changes made to share-based payment awards. If a change made to a share-based payment award does not affect the fair value, vesting conditions and classification as either an equity or liability instrument, modification accounting will not need to be applied. The standard is effective for the Company on January 1, 2018. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures. |
Segment Information, Nature of Operations, and Certain Concentrations |
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Segment Information, Nature of Operations, and Certain Concentrations | Segment Information, Nature of Operations, and Certain Concentrations NVR’s homebuilding operations primarily construct and sell single-family detached homes, townhomes and condominium buildings under three trade names: Ryan Homes, NVHomes and Heartland Homes. The Ryan Homes product is marketed primarily to first-time and first-time move-up buyers. Ryan Homes operates in twenty-nine metropolitan areas located in Maryland, Virginia, Washington, D.C., West Virginia, Pennsylvania, New York, North Carolina, South Carolina, Florida, Ohio, New Jersey, Delaware, Indiana, Illinois and Tennessee. The NVHomes and Heartland Homes products are marketed primarily to move-up and luxury buyers. NVHomes operates in Delaware and the Washington, D.C., Baltimore, MD, Philadelphia, PA and Raleigh, NC metropolitan areas. Heartland Homes operates in the Pittsburgh, PA metropolitan area. NVR derived approximately 30% and 11% of its 2017 homebuilding revenues from the Washington, D.C. and Baltimore, MD metropolitan areas, respectively. NVR’s mortgage banking segment is a regional mortgage banking operation. Substantially all of the mortgage banking segment’s loan closing activity is for NVR’s homebuilding customers. NVR’s mortgage banking business generates revenues primarily from origination fees, gains on sales of loans, and title fees. A substantial portion of the Company’s mortgage operations is conducted in the Washington, D.C. and Baltimore, MD metropolitan areas. The following disclosure includes four homebuilding reportable segments that aggregate geographically the Company’s homebuilding operating segments, and the mortgage banking operations presented as a single reportable segment. The homebuilding reportable segments are comprised of operating divisions in the following geographic areas:
Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, selling, general and administrative expenses, and a corporate capital allocation charge. The corporate capital allocation charge is eliminated in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker (“CODM”) to determine whether the operating segment’s results are providing the desired rate of return after covering the Company’s cost of capital. In addition, certain assets including goodwill and intangible assets, and consolidation adjustments as discussed further below, are not allocated to the operating segments as those assets are neither included in the operating segment’s corporate capital allocation charge, nor in the CODM’s evaluation of the operating segment’s performance. The Company records charges on contract land deposits when it is determined that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are charged to the operating segment upon the determination to terminate a Lot Purchase Agreement with the developer, or to restructure a Lot Purchase Agreement resulting in the forfeiture of the deposit. Mortgage banking profit before tax consists of revenues generated from mortgage financing, title insurance and closing services, less the costs of such services and general and administrative costs. Mortgage banking operations are not charged a corporate capital allocation charge. In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between segment profit and consolidated profit before tax include unallocated corporate overhead (including all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. NVR’s overhead functions, such as accounting, treasury and human resources are centrally performed and the costs are not allocated to the Company’s operating segments. Consolidation adjustments consist of such items necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to the Company’s operating segments. External corporate interest expense primarily consists of interest charges on the Company’s 3.95% Senior Notes due 2022 (the “Senior Notes”) and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above. Following are tables presenting segment revenues, profit before taxes, assets, interest income, interest expense, depreciation and amortization and expenditures for property and equipment, with reconciliations to the amounts reported for the consolidated enterprise, where applicable:
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Variable Interest Entities |
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Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities Lot Purchase Agreements NVR generally does not engage in the land development business. Instead, the Company typically acquires finished building lots at market prices from various development entities under Lot Purchase Agreements. The Lot Purchase Agreements require deposits that may be forfeited if NVR fails to perform under the Lot Purchase Agreements. The deposits required under the Lot Purchase Agreements are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots. NVR believes this lot acquisition strategy reduces the financial requirements and risks associated with direct land ownership and land development. NVR may, at its option, choose for any reason and at any time not to perform under these Lot Purchase Agreements by delivering notice of its intent not to acquire the finished lots under contract. NVR’s sole legal obligation and economic loss for failure to perform under these Lot Purchase Agreements is limited to the amount of the deposit pursuant to the liquidated damage provisions contained within the Lot Purchase Agreements. In other words, if NVR does not perform under a Lot Purchase Agreement, NVR loses only its deposit. None of the creditors of any of the development entities with which NVR enters Lot Purchase Agreements have recourse to the general credit of NVR. NVR generally does not have any specific performance obligations to purchase a certain number or any of the lots, nor does NVR guarantee completion of the development by the developer or guarantee any of the developers’ financial or other liabilities. NVR is not involved in the design or creation of the development entities from which the Company purchases lots under Lot Purchase Agreements. The developer’s equity holders have the power to direct 100% of the operating activities of the development entity. NVR has no voting rights in any of the development entities. The sole purpose of the development entity’s activities is to generate positive cash flow returns for the equity holders. Further, NVR does not share in any of the profit or loss generated by the project’s development. The profits and losses are passed directly to the developer’s equity holders. The deposit placed by NVR pursuant to the Lot Purchase Agreement is deemed to be a variable interest in the respective development entities. Those development entities are deemed to be variable interest entities (“VIE”). Therefore, the development entities with which NVR enters into Lot Purchase Agreements, including the joint venture limited liability corporations, discussed below, are evaluated for possible consolidation by NVR. An enterprise must consolidate a VIE when that enterprise has a controlling financial interest in the VIE. An enterprise is deemed to have a controlling financial interest if it has i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. NVR believes the activities that most significantly impact a development entity’s economic performance are the operating activities of the entity. Unless and until a development entity completes finished building lots through the development process to be able to sell, the process of which the development entity’s equity investors bear the full risk, the entity does not earn any revenues. The operating development activities are managed solely by the development entity’s equity investors. The development entities with which NVR contracts to buy finished lots typically select the respective projects, obtain the necessary zoning approvals, obtain the financing required with no support or guarantees from NVR, select who will purchase the finished lots and at what price, and manage the completion of the infrastructure improvements, all for the purpose of generating a cash flow return to the development entity’s equity holders and all independent of NVR. The Company possesses no more than limited protective legal rights through the Lot Purchase Agreement in the specific finished lots that it is purchasing, and NVR possesses no participative rights in the development entities. Accordingly, NVR does not have the power to direct the activities of a developer that most significantly impact the developer’s economic performance. For this reason, NVR has concluded that it is not the primary beneficiary of the development entities with which the Company enters into Lot Purchase Agreements, and therefore NVR does not consolidate any of these VIEs. As of December 31, 2017, NVR controlled approximately 84,300 lots under Lot Purchase Agreements with third parties through deposits in cash and letters of credit totaling approximately $393,900 and $1,900, respectively. As noted above, NVR’s sole legal obligation and economic loss for failure to perform under these Lot Purchase Agreements is limited to the amount of the deposit pursuant to the liquidated damage provisions contained in the Lot Purchase Agreements and, in very limited circumstances, specific performance obligations. In addition, NVR has certain properties under contract with land owners that are expected to yield approximately 10,700 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. These properties are controlled with deposits in cash and letters of credit totaling approximately $6,600 and $100, respectively, as of December 31, 2017, of which approximately $5,800 is refundable if NVR does not perform under the contract. NVR generally expects to assign the raw land contracts to a land developer and simultaneously enter into a Lot Purchase Agreement with the assignee if the project is determined to be feasible. NVR’s total risk of loss related to contract land deposits as of December 31, 2017 and 2016 was as follows:
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Joint Ventures |
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Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint Ventures | Joint Ventures On a limited basis, NVR obtains finished lots using joint venture limited liability corporations (“JVs”). The JVs are typically structured such that NVR is a non-controlling member and is at risk only for the amount the Company has invested, or committed to invest, in addition to any deposits placed under Lot Purchase Agreements with the joint venture. NVR is not a borrower, guarantor or obligor on any debt of the JVs, as applicable. The Company enters into a standard Lot Purchase Agreement to purchase lots from these JVs, and as a result has a variable interest in these JVs. At December 31, 2017, the Company had an aggregate investment totaling approximately $45,500 in six JVs that are expected to produce approximately 7,300 finished lots, of which approximately 3,900 lots were controlled by the Company and the remaining approximately 3,400 lots were either under contract with unrelated parties or not currently under contract. In addition, NVR had additional funding commitments in the aggregate totaling $5,300 to three of the JVs at December 31, 2017. The Company has determined that it is not the primary beneficiary of five of the JVs because NVR and the other JV partner either share power or the other JV partner has the controlling financial interest. The aggregate investment in unconsolidated JVs was approximately $45,200 and $49,000 at December 31, 2017 and 2016, respectively, and is reported in the “Other assets” line item on the accompanying consolidated balance sheets. For the remaining JV, NVR has concluded that it is the primary beneficiary because the Company has the controlling financial interest in the JV. The condensed balance sheets of the consolidated JV at December 31, 2017 and 2016 were as follows:
At December 31, 2016, the Company had an aggregate investment totaling approximately $49,400 in six JVs that were expected to produce approximately 7,400 finished lots, of which approximately 4,200 lots were controlled by the Company and the remaining approximately 3,200 lots were either under contract with unrelated parties or not currently under contract. In addition, at December 31, 2016, NVR had additional funding commitments in the aggregate totaling $6,200 to three of the JVs. The Company recognizes income from the JVs as a reduction to the lot cost of the lots purchased from the respective JVs when homes are settled and is based on expected total profitability and the total number of lots expected to be produced by the respective JVs. Distributions received from the unconsolidated JVs are allocated between return of capital and distributions of earnings based on the ratio of capital contributed by NVR to the total expected returns for the respective JVs, and are classified within the accompanying consolidated statements of cash flows as cash flows from investing activities and operating activities, respectively. |
Land Under Development |
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Real Estate [Abstract] | |
Land Under Development | Land Under Development On a limited basis, NVR directly acquires raw land parcels already zoned for its intended use to develop into finished lots. Land under development includes the land acquisition costs, direct improvement costs, capitalized interest where applicable, and real estate taxes. In October 2017, the Company purchased a raw land parcel for approximately $14,800. The parcel is expected to produce approximately 150 lots. As of December 31, 2017, NVR directly owned four separate raw parcels of land with a carrying value of $34,212 that it intends to develop into approximately 500 finished lots primarily for use in its homebuilding operations. The Company also has additional funding commitments of approximately $7,900 under a joint development agreement related to one parcel, a portion of which the Company expects will be offset by development credits of approximately $4,700. None of the raw parcels had any indicators of impairment as of December 31, 2017. As of December 31, 2016, NVR directly owned four separate raw parcels of land with a carrying value of $46,999, which were expected to produce approximately 600 finished lots. |
Capitalized Interest |
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Capitalized Interest Costs, Including Allowance for Funds Used During Construction [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Interest | Capitalized Interest The Company capitalizes interest costs to land under development during the active development of finished lots. In addition, the Company capitalizes interest costs to its joint venture investments while the investments are considered qualified assets pursuant to ASC 835-20, Interest. Capitalized interest is transferred to sold or unsold inventory as the development of finished lots is completed, then charged to cost of sales upon the Company’s settlement of homes and the respective lots. Interest incurred in excess of the interest capitalizable based on the level of qualified assets is expensed in the period incurred. NVR’s interest costs incurred, capitalized, expensed and charged to cost of sales during the years ended December 31, 2017, 2016 and 2015 was as follows:
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Related Party Transactions |
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Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions During the year ended December 31, 2017, NVR entered into Lot Purchase Agreements to purchase finished building lots for a total purchase price of approximately $66,600 with Elm Street Development, Inc. (“Elm Street”), which is controlled by one of the Company’s directors, William Moran. The independent members of the Company’s Board of Directors approved these transactions. During 2017, 2016 and 2015, NVR purchased developed lots at market prices from Elm Street for approximately $37,100, $44,500 and $41,200, respectively. The Company also continues to control a parcel of raw land expected to yield approximately 2,400 finished lots through a JV entered into with Elm Street during 2009. NVR and Elm Street each made an additional investment of $2,900 in the JV in 2017. NVR did not make any investments in the JV in 2016. Further, during 2016 and 2015, the Company paid Elm Street $143 per year to manage the development of a property that the Company purchased from Elm Street in 2010. No management fees were paid to Elm Street in 2017 related to this property. |
Property, Plant and Equipment ("PP&E") |
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Property, Plant and Equipment ("PP&E") | Property, Plant and Equipment (“PP&E”)
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Debt |
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Debt Disclosure [Abstract] | |
Debt | Debt Senior Notes On September 10, 2012, NVR completed an offering for $600,000 of Senior Notes under a shelf registration statement filed on September 5, 2012 with the Securities and Exchange Commission (the “SEC”). The Senior Notes were issued at a discount to yield 3.97% and have been reflected net of the unamortized discount in the accompanying consolidated balance sheet. The offering of the Senior Notes resulted in aggregate net proceeds of approximately $593,900, after deducting underwriting discounts and other offering expenses. The Senior Notes mature on September 15, 2022 and bear interest at 3.95%, payable semi-annually in arrears on March 15 and September 15. The Senior Notes have been reflected net of unamortized debt issuance costs of $2,395 and $2,904 as of December 31, 2017 and 2016, respectively. The Senior Notes are senior unsecured obligations and rank equally in right of payment with any of NVR’s existing and future unsecured senior indebtedness, will rank senior in right of payment to any of NVR’s future indebtedness that is by its terms expressly subordinated to the Senior Notes and will be effectively subordinated to any of NVR’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The indenture governing the Senior Notes has, among other items, and subject to certain exceptions, covenants that restrict the Company’s ability to create, incur, assume or guarantee secured debt, enter into sale and leaseback transactions and conditions related to mergers and/or the sale of assets. Credit Agreement On July 15, 2016, NVR entered into an unsecured Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Merrill Lynch, Pierce, Fenner & Smith Incorporated as Sole Lead Arranger and Sole Book Runner, and the other lenders party thereto, which provides for aggregate revolving loan commitments of $200,000 (the “Facility”). Proceeds of the borrowings under the Facility will be used for working capital and general corporate purposes. Under the Credit Agreement, the Company may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which approximately $7,300 was outstanding at December 31, 2017, and a $25,000 sublimit for a swing line commitment. Borrowings under the Credit Agreement generally bear interest for Base Rate Loans at a Base Rate equal to the highest of (i) a Federal Funds Rate plus one-half of one percent, (ii) Bank of America’s publicly announced “prime rate,” and (iii) the Eurodollar Rate plus one percent, plus the Applicable Rate which is based on the Company’s debt rating, or for Eurodollar Rate Loans, at the Eurodollar Rate equal to LIBOR plus the Applicable Rate. The Credit Agreement contains various representations and affirmative and negative covenants that are generally customary for credit facilities of this type. Such covenants include, among others, the following financial maintenance covenants: (i) minimum consolidated tangible net worth, (ii) minimum interest coverage ratio or minimum liquidity and (iii) a maximum leverage ratio. The negative covenants include, among others, certain limitations on liens, investments and fundamental changes. The Credit Agreement termination date is July 15, 2021. The Company was in compliance with all covenants under the Credit Agreement at December 31, 2017. There was no debt outstanding under the Facility at December 31, 2017. Repurchase Agreement On July 26, 2017, NVRM entered into the Ninth Amendment (the “Amendment”) to its Amended and Restated Master Repurchase Agreement dated August 2, 2011 with U.S. Bank National Association (as amended by the Amendment and eight earlier amendments, the “Repurchase Agreement”). The purpose of the Repurchase Agreement is to finance the origination of mortgage loans by NVRM. The Repurchase Agreement provides for loan purchases up to $150,000, subject to certain sub limits, and provides for an incremental commitment pursuant to which NVRM may from time to time request increases in the total commitment available under the Repurchase Agreement by up to $50,000 in the aggregate. Advances under the Repurchase Agreement carry a Pricing Rate based on the LIBOR Rate plus the LIBOR Margin, as determined under the Repurchase Agreement, provided that the Pricing Rate shall not be less than 2.125%. The Pricing Rate at December 31, 2017 was 3.75%. There are several restrictions on purchased loans, including that they cannot be sold to others, they cannot be pledged to anyone other than the agent, and they cannot support any other borrowing or repurchase agreement. Amounts outstanding under the Repurchase Agreement are collateralized by the Company’s mortgage loans held for sale. At December 31, 2017, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement. As of both December 31, 2017 and 2016, there was no debt outstanding under the Repurchase Agreement. The Repurchase Agreement expires on July 25, 2018. The Repurchase Agreement contains various affirmative and negative covenants. The negative covenants include, among others, certain limitations on transactions involving acquisitions, mergers, the incurrence of debt, sale of assets and creation of liens upon any of its Mortgage Notes. Additional covenants include (i) a tangible net worth requirement, (ii) a minimum liquidity requirement, (iii) a minimum net income requirement, and (iv) a maximum leverage ratio requirement. The Company was in compliance with all covenants under the Repurchase Agreement at December 31, 2017. |
Common Stock |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock There were approximately 3,691 and 3,693 common shares outstanding at December 31, 2017 and 2016, respectively. The Company made the following share repurchases during the years indicated:
The Company issues shares from the treasury account for all equity plan activity. The Company issued 165, 83 and 131 such shares during 2017, 2016 and 2015, respectively. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes During 2017, the Company's provision for income taxes and effective tax rate were impacted by the following items:
The provision for income taxes consists of the following:
In addition to amounts applicable to income before taxes, the following income tax benefits were recorded in shareholders’ equity:
(1) During 2017, these income tax benefits were recognized in the consolidated statement of income as required under ASU 2016-09. Deferred income taxes on NVR’s consolidated balance sheets were comprised of the following:
Deferred tax assets arise principally as a result of various accruals required for financial reporting purposes and equity-based compensation expense, which are not currently deductible for tax return purposes. The decrease to the Company's deferred tax assets in 2017 was primarily attributable to the remeasurement as a result of the enactment of the Tax Cut and Jobs Act in December 2017. Management believes that the Company will have sufficient future taxable income to make it more likely than not that the net deferred tax assets will be realized. Federal taxable income is estimated to be approximately $614,562 for the year ended December 31, 2017, and was $578,882 for the year ended December 31, 2016. A reconciliation of income tax expense in the accompanying consolidated statements of income to the amount computed by applying the statutory federal income tax rate of 35% to income before taxes is as follows:
The Company’s effective tax rate in 2017, 2016 and 2015 was 36.53%, 35.73% and 36.52%, respectively. As previously discussed, the 2017 effective tax rate was impacted by the enactment of the Tax Cut and Jobs Act and the Company's adoption of ASU 2016-09. The Company files a consolidated U.S. federal income tax return, as well as state and local tax returns in all jurisdictions where the Company maintains operations. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years prior to 2014. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
If recognized, the total amount of unrecognized tax benefits that would affect the effective tax rate (net of the federal tax benefit) is $35,816 as of December 31, 2017. The Company recognizes interest related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2017 and 2016, the Company recognized a net reversal of accrued interest on unrecognized tax benefits in the amount of $1,065 and $1,582, respectively. For the year ended December 31, 2015, the Company recognized a net addition of accrued interest on unrecognized tax benefits in the amount of $125. As of December 31, 2017 and 2016, the Company had a total of $18,575 and $19,639, respectively, of accrued interest on unrecognized tax benefits which are included in “Accrued expenses and other liabilities” on the accompanying consolidated balance sheets. Based on its historical experience in dealing with various taxing authorities, the Company has found that it is the administrative practice of these authorities to not seek penalties from the Company for the tax positions it has taken on its returns, related to its unrecognized tax benefits. Therefore, the Company does not accrue penalties for the positions in which it has an unrecognized tax benefit. However, if such penalties were to be accrued, they would be recorded as a component of income tax expense. The Company believes that within the next 12 months, it is reasonably possible that the unrecognized tax benefits as of December 31, 2017 will be reduced by approximately $11,971 due to statute expiration and effectively settled positions in various state jurisdictions. The Company is currently under audit by the states of New Jersey and North Carolina. |
Equity-Based Compensation, Profit Sharing and Deferred Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation, Profit Sharing and Deferred Compensation Plans | Equity-Based Compensation, Profit Sharing and Deferred Compensation Plans Equity-Based Compensation Plans NVR’s equity-based compensation plans provide for the granting of non-qualified stock options to purchase shares of NVR common stock (“Options”) and restricted share units (“RSUs”) to key management employees, including executive officers and Board members, of the Company. The exercise price of Options granted is equal to the closing price of the Company’s common stock on the New York Stock Exchange (the “NYSE”) on the day prior to the date of grant, and RSUs are issued at a $0 exercise price. Options are granted for a ten-year term and typically vest in separate tranches over periods of 3 to 6 years. The vesting for certain Options is contingent solely on continued employment or service as a Director, while vesting for other Options is contingent upon both continued employment or service as a Director and the achievement of a performance metric as discussed further in the summary description of the 2014 Equity Incentive Plan below. RSUs generally vest in separate tranches over periods of 2 to 4 years, based solely on continued employment or continued service as a Director. The following table provides a summary of each of the Company’s equity-based compensation plans for any plan with grants outstanding at December 31, 2017:
During 2017, the Company issued 19 Options under the 2014 Plan. Substantially all of the Options granted in 2017 will vest annually over four years in 25% increments beginning on December 31, 2019. Vesting for 15 of the Options granted is contingent both upon continued employment or continued service as a director and the Company’s return on capital performance. Vesting for the other 4 Options granted under the 2014 Plan is contingent solely upon continued employment or continued service as a director. The Company also issued 11 Options under the 2010 Plan during 2017. Substantially all of the 2010 Plan Options granted during 2017 will vest annually over four years in 25% increments beginning on December 31, 2019. The vesting for the Options granted under the 2010 Plan is based solely on continued employment. The following table provides additional information relative to NVR’s equity-based compensation plans for the year ended December 31, 2017:
To estimate the grant-date fair value of its Options, the Company uses the Black-Scholes option-pricing model (the “Pricing Model”). The Pricing Model estimates the per share fair value of an option on its date of grant based on the following factors: the option’s exercise price; the price of the underlying stock on the date of grant; the estimated dividend yield; a risk-free interest rate; the estimated option term; and the expected volatility. For the risk-free interest rate, the Company uses U.S. Treasury STRIPS which mature at approximately the same time as the option’s expected holding term. For expected volatility, NVR has concluded that its historical volatility over the option’s expected holding term provides the most reasonable basis for this estimate. The fair value of the Options granted during 2017, 2016 and 2015 was estimated on the grant date using the Pricing Model, based on the following assumptions:
In accordance with ASC 718, Compensation – Stock Compensation, the fair value of the RSUs is measured as if they were vested and issued on the grant date. Additionally, under ASC 718, service-only restrictions on vesting of RSUs are not reflected in the fair value calculation at the grant date. As a result, the fair value of the RSUs was the closing price of the Company’s common stock on the day immediately preceding the date of grant. There were no RSUs granted during 2017. Compensation cost for Options and RSUs is recognized on a straight-line basis over the requisite service period for the entire award (from the date of grant through the period of the last separately vesting portion of the grant). For the recognition of equity-based compensation, the RSUs are treated as a separate award from the Options. Additionally, the Options which are subject to a performance condition are treated as a separate award from the “service-only” Options, and compensation expense is recognized when it becomes probable that the stated performance target will be achieved. The Company currently believes that it is probable that the current open performance condition will be satisfied at the target level and is recognizing compensation expense related to such Options accordingly. Compensation cost is recognized within the income statement in the same expense line as the cash compensation paid to the respective employees. In connection with the adoption of ASU 2016-09 on January 1, 2017, the Company made the election to recognize forfeitures of equity-based awards as a reduction to compensation costs in the period in which they occur. For the years ended December 31, 2016 and 2015, the Company estimated forfeitures based on its historical forfeiture rate. In 2017, 2016 and 2015, the Company recognized $44,562, $43,598, and $54,091 in equity-based compensation costs, respectively, and approximately $17,100, $17,000, and $19,700 in tax benefit related to equity-based compensation costs, respectively. As of December 31, 2017, the total unrecognized compensation cost for all outstanding Options and RSUs equaled approximately $100,000. The unrecognized compensation cost will be recognized over each grant’s applicable vesting period with the latest vesting date being December 31, 2023. The weighted-average period over which the unrecognized compensation will be recorded is equal to approximately 1.9 years. The Company settles Option exercises and vesting of RSUs by issuing shares of treasury stock. Shares are relieved from the treasury account based on the weighted average cost of treasury shares acquired. During the years ended December 31, 2017, 2016 and 2015, the Company issued 165, 83 and 131 shares, respectively, from the treasury account for Option exercises and vesting of RSUs. Information with respect to the vested RSUs and exercised Options is as follows:
Profit Sharing Plans NVR has a trustee-administered, profit sharing retirement plan (the “Profit Sharing Plan”) and an Employee Stock Ownership Plan (“ESOP”) covering substantially all employees. The Profit Sharing Plan and the ESOP provide for annual discretionary contributions in amounts as determined by the NVR Board of Directors. The combined plan contribution for the years ended December 31, 2017, 2016 and 2015 was approximately $18,400, $16,700 and $17,900, respectively. The ESOP purchased approximately 6 and 9 shares of NVR common stock in the open market for the 2017 and 2016 plan year contributions, respectively, using cash contributions provided by the Company. As of December 31, 2017, all shares held by the ESOP had been allocated to participants’ accounts. The 2017 plan year contribution was funded and fully allocated to participants in February 2018. Deferred Compensation Plans The Company has two deferred compensation plans (“Deferred Comp Plans”). The specific purpose of the Deferred Comp Plans is to i) establish a vehicle whereby named executive officers may defer the receipt of salary and bonus that otherwise would be nondeductible for Company tax purposes into a period where the Company would realize a tax deduction for the amounts paid, and ii) to enable certain employees who are subject to the Company’s stock holding requirements to acquire shares of the Company’s common stock on a pre-tax basis in order to more quickly meet, and maintain compliance with those stock holding requirements. Amounts deferred into the Deferred Comp Plans are invested in NVR common stock, held in a rabbi trust account, and are paid out in a fixed number of shares upon expiration of the deferral period. The rabbi trust account held 109 shares of NVR common stock as of both December 31, 2017 and 2016. Shares held by the Deferred Comp Plans are treated as outstanding shares in the Company’s earnings per share calculation for each of the years ended December 31, 2017, 2016 and 2015. |
Commitments and Contingent Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities NVR is committed under multiple non-cancelable operating leases involving office space, model homes, production facilities, automobiles and equipment. Future minimum lease payments under these operating leases as of December 31, 2017 are as follows:
Total rent expense incurred under operating leases was approximately $49,400, $45,800 and $48,100 for the years ended December 31, 2017, 2016 and 2015, respectively. The Company generally does not engage in the land development business. Instead, the Company typically acquires finished building lots at market prices from various development entities under Lot Purchase Agreements. The Lot Purchase Agreements require deposits that may be forfeited if the Company fails to perform under the agreement. The deposits required under the Lot Purchase Agreements are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots. At December 31, 2017, assuming that contractual development milestones are met and the Company exercises its option, the Company expects to place additional forfeitable deposits with land developers under existing Lot Purchase Agreements of approximately $137,900. The Company also has one specific performance contract pursuant to which the Company is committed to purchase 10 finished lots at an aggregate purchase price of approximately $1,505. Additionally, as of December 31, 2017, we had funding commitments totaling approximately $7,900 under a joint development agreement related to our land under development, a portion of which we expect will be offset by development credits of approximately $4,700. During the ordinary course of operating the homebuilding and mortgage banking businesses, the Company is required to enter into bond or letter of credit arrangements with local municipalities, government agencies, or land developers to collateralize its obligations under various contracts. The Company had approximately $44,300 of contingent obligations under such agreements, including approximately $7,300 for letters of credit issued under the Credit Agreement as of December 31, 2017. The Company believes it will fulfill its obligations under the related contracts and does not anticipate any material losses under these bonds or letters of credit. The following table reflects the changes in the Company’s warranty reserve (see Note 1 herein for further discussion of warranty/product liability reserves):
The Company and its subsidiaries are also involved in various other litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company. Legal costs incurred in connection with outstanding litigation are expensed as incurred. |
Fair Value |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value GAAP assigns a fair value hierarchy to the inputs used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs. Financial Instruments The estimated fair values of NVR’s Senior Notes as of December 31, 2017 and 2016 were $630,000 and $612,000, respectively. The estimated fair value is based on recent market prices of similar transactions, which is classified as Level 2 within the fair value hierarchy. The carrying values at December 31, 2017 and 2016 were $597,066 and $596,455, respectively. Except as otherwise noted below, NVR believes that insignificant differences exist between the carrying value and the fair value of its financial instruments, which consists primarily of cash equivalents, due to their short term nature. Derivative Instruments and Mortgage Loans Held for Sale In the normal course of business, NVRM, enters into contractual commitments to extend credit to buyers of single-family homes with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate within time frames established by NVRM. All mortgagors are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to a broker/dealer. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sales contracts to sell whole loans and mortgage-backed securities to broker/dealers. The forward sales contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments. NVRM does not engage in speculative or trading derivative activities. Both the rate lock commitments to borrowers and the forward sale contracts to broker/dealers are undesignated derivatives and, accordingly, are marked to fair value through earnings. At December 31, 2017, there were contractual commitments to extend credit to borrowers aggregating $490,184 and open forward delivery contracts aggregating $705,405, which hedge both the rate lock loan commitments and closed loans held for sale. The fair value of the Company’s rate lock commitments to borrowers and the related input levels includes, as applicable:
The assumed gain/loss considers the excess servicing to be received or buydown fees to be paid upon securitization of the loan. The excess servicing and buydown fees are calculated pursuant to contractual terms with investors. To calculate the effects of interest rate movements, NVRM utilizes applicable published mortgage-backed security prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount. NVRM sells all of its loans on a servicing released basis, and receives a servicing released premium upon sale. Thus, the value of the servicing rights is included in the fair value measurement and is based upon contractual terms with investors and varies depending on the loan type. NVRM assumes a fallout rate when measuring the fair value of rate lock commitments. Fallout is defined as locked loan commitments for which NVRM does not close a mortgage loan and is based on historical experience. The fair value of NVRM’s forward sales contracts to broker/dealers solely considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value. Mortgage loans held for sale are recorded at fair value when closed, and thereafter are carried at the lower of cost or fair value, net of deferred origination costs, until sold. Fair value is measured using Level 2 inputs. As of December 31, 2017, the fair value of loans held for sale of $352,489 included on the accompanying consolidated balance sheet has been increased by $1,931 from the aggregate principal balance of $350,558. As of December 31, 2016, the fair value of loans held for sale of $351,958 were decreased by $5,954 from the aggregate principal balance of $357,912. The fair value measurement of NVRM's undesignated derivative instruments was as follows:
The net rate lock commitments and net forward sales contracts are both reported in mortgage banking "Other assets" on the accompanying consolidated balance sheets. The fair value measurement as of December 31, 2017 was as follows:
The total fair value measurement as of December 31, 2016 was $4,186. For the year ended December 31, 2017, NVRM recorded a fair value adjustment to income of $1,638. For the year ended December 31, 2016, NVRM recorded a fair value adjustment to expense of $3,147. For the year ended December 31, 2015, NVRM recorded a fair value adjustment to income of $3,508. Unrealized gains/losses from the change in the fair value measurements are included in earnings as a component of mortgage banking fees in the accompanying consolidated statements of income. The fair value measurement will be impacted in the future by the change in the value of the servicing rights, interest rate movements, security price fluctuations, and the volume and product mix of NVRM’s closed loans and locked loan commitments. |
Mortgage Repurchase Reserve |
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Dec. 31, 2017 | |
Mortgage Repurchase Reserve [Abstract] | |
Mortgage Repurchase Reserve | Mortgage Repurchase Reserve During the years ended December 31, 2017, 2016 and 2015, the Company recognized pre-tax charges for loan losses related to mortgage loans sold of approximately $2,900, $2,000 and $2,700, respectively. Included in the Mortgage Banking segment’s “Accounts payable and other liabilities” line item on the accompanying consolidated balance sheets is a mortgage repurchase reserve equal to approximately $14,000 and $12,700 at December 31, 2017 and 2016, respectively. |
Quarterly Results (unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results (unaudited) | Quarterly Results (unaudited) The following table sets forth unaudited selected financial data and operating information on a quarterly basis for the years ended December 31, 2017 and 2016.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of NVR, Inc. and its subsidiaries (“NVR” or the “Company”) and certain other entities in which the Company is deemed to be the primary beneficiary (see Notes 3 and 4 herein for additional information). All significant intercompany transactions have been eliminated in consolidation. |
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Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Management continually evaluates the estimates used to prepare the consolidated financial statements and updates those estimates as necessary. In general, the Company’s estimates are based on historical experience, on information from third party professionals, and other various assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ materially from those estimates made by management. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include short-term investments with original maturities of three months or less. Homebuilding restricted cash was attributable to customer deposits for certain home sales. Mortgage banking restricted cash included amounts collected from customers for loans in process and closed mortgage loans held for sale. |
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Homebuilding Inventory | Homebuilding Inventory The carrying value of inventory is stated at the lower of cost or market value. Cost of lots and completed and uncompleted housing units represent the accumulated actual cost of the units. Field construction supervisors’ salaries and related direct overhead expenses are included in inventory costs. Interest costs are not capitalized into inventory, with the exception of land under development and joint venture investments, as applicable (see below). Upon settlement, the cost of the unit is expensed on a specific identification basis. Cost of building materials is determined on a first-in, first-out basis. Sold inventory is evaluated for impairment based on the contractual sales price compared to the total estimated cost to construct. Unsold inventory is evaluated for impairment by analyzing recent comparable sales prices within the applicable community compared to the costs incurred to date plus the expected costs to complete. Any calculated impairments are recorded immediately. |
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Contract Land Deposits | Contract Land Deposits The Company purchases finished lots under fixed price lot purchase agreements (“Lot Purchase Agreements”) that require deposits that may be forfeited if NVR fails to perform under the contract. The deposits are in the form of cash or letters of credit in varying amounts and represent a percentage of the aggregate purchase price of the finished lots. NVR maintains an allowance for losses on contract land deposits that reflects the Company’s judgment of the present loss exposure in the existing contract land deposit portfolio at the end of the reporting period. To analyze contract land deposit impairments, NVR utilizes guidance from Accounting Standards Codification (“ASC”) 450, Contingencies, and conducts a loss contingency analysis each quarter. In addition to considering market and economic conditions, NVR assesses contract land deposit impairments on a community-by-community basis pursuant to the purchase contract terms, analyzing, as applicable, current sales absorption levels, recent sales’ direct profit, the dollar differential between the contractual purchase price and the current market price for lots, a developer’s financial stability, a developer’s financial ability or willingness to reduce lot prices to current market prices, and the contract’s default status by either the Company or the developer along with an analysis of the expected outcome of any such default. NVR’s analysis is focused on whether the Company can sell houses at an acceptable margin and sales pace in a particular community in the current market with which the Company is faced. Because the Company does not own the finished lots on which the Company has placed a contract land deposit, if the above analysis leads to a determination that the Company cannot sell homes at an acceptable margin and sales pace at the current contractual lot price, the Company then determines whether it will elect to default under the contract, forfeit the deposit and terminate the contract, or whether the Company will attempt to restructure the lot purchase contract, which may require it to forfeit the deposit to obtain contract concessions from a developer. The Company also assesses whether impairment is present due to collectability issues resulting from a developer’s non-performance because of financial or other conditions. |
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Land Under Development | Land Under Development On a limited basis, NVR directly acquires raw parcels of land already zoned for its intended use to develop into finished lots. Land under development includes the land acquisition costs, direct improvement costs, capitalized interest, where applicable, and real estate taxes. Land under development, including the land under development held by the Company’s unconsolidated joint ventures and the related joint venture investments, is reviewed for potential write-downs when impairment indicators are present. In addition to considering market and economic conditions, the Company assesses land under development impairments on a community-by-community basis, analyzing, as applicable, current sales absorption levels, recent sales’ direct profit, and the dollar differential between the projected fully-developed cost of the lots and the current market price for lots. If indicators of impairment are present for a community, NVR performs an analysis to determine if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts, and if so, impairment charges are required to be recorded if the fair value of such assets is less than their carrying amounts. For those assets deemed to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company’s determination of fair value is primarily based on discounting the estimated future cash flows at a rate commensurate with the inherent risks associated with the assets and related estimated cash flow streams. NVR does not believe that any of the land under development is impaired as of December 31, 2017. |
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Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant, and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is based on the estimated useful lives of the assets using the straight-line method. Model home furniture and fixtures are generally depreciated over a two-year period, office facilities and other equipment are depreciated over a period of three to ten years and production facilities are depreciated over periods of five to forty years. |
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Intangible Assets | Intangible Assets On December 31, 2012, the Company acquired substantially all of the assets of Heartland Homes, Inc., which resulted in the Company recording finite-lived intangible assets and goodwill. The Company completed its annual assessment for impairment of goodwill and management determined that there was no impairment. As of December 31, 2017 and 2016, finite-lived intangible assets, net of accumulated amortization, totaled $776 and $2,158, respectively. The remaining finite-lived intangible assets will be amortized on a straight-line basis over 5 years. As of both December 31, 2017 and 2016, the goodwill value was $441. Finite-lived intangible assets and goodwill are included in homebuilding "Other assets" in the accompanying consolidated balance sheets. |
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Warranty/Product Liability Reserves | Warranty/Product Liability Reserves The Company establishes warranty and product liability reserves to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to NVR’s homebuilding business. Liability estimates are determined based on management’s judgment considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s General Counsel and outside counsel retained to handle specific product liability cases. |
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Mortgage Loans Held for Sale, Derivatives and Hedging Activities | Mortgage Loans Held for Sale, Derivatives and Hedging Activities NVR originates several different loan products to its customers to finance the purchase of a home through its wholly-owned mortgage subsidiary, NVR Mortgage Finance, Inc. (“NVRM”). NVRM sells all of the loans it originates into the secondary market on a servicing released basis, typically within 30 days from origination. All of the loans that NVRM originates are underwritten to the standards and specifications of the ultimate investor. Those underwriting standards are typically equal to or more stringent than the underwriting standards required by Fannie Mae (“FNMA”), Freddie Mac ("FHLMC"), the Department of Veterans Affairs (“VA”) and the Federal Housing Administration (“FHA”). Insofar as NVRM underwrites its originated loans to those standards, NVRM bears no increased concentration of credit risk from the issuance of loans, except in certain limited instances where early payment default occurs. NVRM employs a quality control department to ensure that its underwriting controls are effectively operating, and further assesses the underwriting function as part of its assessment of internal controls over financial reporting. NVRM maintains a reserve for losses on mortgage loans originated that reflects NVR’s judgment of the present loss exposure in the loans that NVRM has originated and sold. The reserve is calculated based on an analysis of historical experience and exposure (see Note 15 herein for further information). Mortgage loans held for sale are carried at the lower of cost or fair value, net of deferred origination costs, until sold. In the normal course of business, NVRM enters into contractual commitments to extend credit to buyers of single-family homes with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate within time frames established by NVRM. All mortgagors are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to a broker/dealer. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to broker/dealers. The forward sale contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments. NVRM does not engage in speculative or trading derivative activities. Both the rate lock commitments to borrowers and the forward sale contracts to broker/dealers are undesignated derivatives, and, accordingly, are marked to fair value through earnings. At December 31, 2017, there were contractual commitments to extend credit to borrowers aggregating $490,184, and open forward delivery sale contracts aggregating $705,405, which hedge both the rate lock loan commitments and closed loans held for sale (see Note 14 herein for a description of the Company’s fair value accounting). |
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Earnings Per Share | Earnings per Share The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for the years ended December 31, 2017, 2016 and 2015:
The assumed proceeds used in the treasury method for calculating NVR’s diluted earnings per share includes the amount the employee must pay upon exercise and the amount of compensation cost attributed to future services not yet recognized. The following stock options issued under equity incentive plans were outstanding during the years ended December 31, 2017, 2016 and 2015, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.
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Revenues-Homebuilding Operations | Revenues – Homebuilding Operations NVR builds single-family detached homes, townhomes and condominium buildings, which generally are constructed on a pre-sold basis for the ultimate customer. Revenues are recognized at the time the unit is settled and title passes to the customer, adequate cash payment has been received and there is no continuing involvement. In situations where the buyer’s financing is originated by NVRM and the buyer has not made an adequate initial or continuing investment as prescribed by GAAP, the profit on such settlement is deferred until the sale of the related loan to a third-party investor has been completed. |
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Mortgage Banking Fees | Mortgage Banking Fees Mortgage banking fees include income earned by NVRM for originating mortgage loans, servicing mortgage loans held on an interim basis, title fees, gains and losses on the sale of mortgage loans and mortgage servicing and other activities incidental to mortgage banking. Mortgage banking fees are generally recognized after the loan has been sold to an unaffiliated, third party investor. |
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Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 11 herein for discussion of the impact on the Company's deferred tax asset resulting from the enactment of the Tax Cuts and Jobs Act in December 2017. ASC 740-10, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statements of income. The Company recognizes interest related to unrecognized tax benefits as a component of income tax expense. Based on its historical experience in dealing with various taxing authorities, the Company has found that it is the administrative practice of the taxing authorities to not seek penalties from the Company for the tax positions it has taken on its returns, related to its unrecognized tax benefits. Therefore, the Company does not accrue penalties for the positions in which it has an unrecognized tax benefit. However, if such penalties were to be accrued, they would be recorded as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, by expiration of the applicable statute of limitation, or by determination in accordance with certain states’ administrative practices that the uncertain tax position has been effectively settled (see Note 11 herein for further information). |
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Financial Instruments | Financial Instruments Except as otherwise noted herein, NVR believes that insignificant differences exist between the carrying value and the fair value of its financial instruments (see Note 14 herein for further information). |
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Equity-Based Compensation | Equity-Based Compensation The Company accounts for its equity-based compensation in accordance with ASC 718, Compensation – Stock Compensation. ASC 718 requires an entity to recognize an expense within its income statement for all share-based payment arrangements, which includes employee stock option and restricted share unit plans. The expense is based on the grant-date fair value of the stock options and restricted share units granted, and is recognized ratably over the requisite service period. Recognition of compensation expense for the stock options which are subject to a performance condition are treated as a separate award from the “service-only” stock options, and expense is recognized when it becomes probable that the stated performance target will be achieved. The Company calculates the fair value of its non-publicly traded, employee stock options using the Black-Scholes option-pricing model. The grant date fair value of the restricted share units is the closing price of the Company’s common stock on the day immediately preceding the date of grant. The Company’s equity-based compensation programs are accounted for as equity-classified awards (see Note 12 herein for further discussion of equity-based compensation plans). |
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Comprehensive Income | Comprehensive Income For the years ended December 31, 2017, 2016 and 2015, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying consolidated financial statements. |
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Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current year's presentation. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements The Company adopted Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, effective January 1, 2017. In connection with the adoption of ASU 2016-09, the Company:
No other adjustments were made as a result of the adoption of ASU 2016-09. The Company also adopted ASU 2015-11, Inventory – Simplifying the Measurement of Inventory effective January 1, 2017. The standard requires inventory to be measured at the lower of cost or net realizable value. Under prior GAAP, impaired inventory was written down to net realizable value less a normal profit margin. Under the new standard, impaired inventory is written down to the net realizable value. ASU 2015-11 was adopted prospectively and did not have a material effect on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires 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 standard is effective for the Company as of January 1, 2018 and replaces most existing revenue recognition guidance in GAAP. The Company will adopt the standard using the cumulative effect transition method. The Company has determined that the adoption of this standard will not have a material effect on its consolidated financial statements and related disclosures. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on-balance sheet with a liability equal to the present value of lease payments over the lease term and a right-of-use asset for the right to use the underlying asset over the lease term. Lessees will recognize expenses on their income statements in a manner similar to current GAAP. The standard also requires additional disclosures of key information about leasing arrangements. The standard is effective for the Company as of January 1, 2019. The Company believes that the adoption of this standard will have a material effect on both assets and liabilities presented on the balance sheet, and is further evaluating the impact of its adoption. In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes the way impairment of financial assets is recognized. The standard will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. The standard’s provisions will be applied as a cumulative-effect adjustment to beginning retained earnings as of the effective date. The standard is effective for the Company as of January 1, 2020. Early adoption is permitted for annual and interim periods beginning January 1, 2019. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. In August 2016, FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The objective of the standard is to address the diversity in practice of how certain cash receipts and payments are presented on the statement of cash flows. The standard requires that the guidance be applied retrospectively in the first interim and annual periods in which an entity adopts the guidance. The standard is effective for the Company as of January 1, 2018. The Company expects the standard to affect the presentation of distributions from joint ventures on its consolidated statements of cash flows. In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. The amendments in the standard require that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. As a result, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The standard is effective for the Company as of January 1, 2018. The Company does not believe that the adoption of this standard will have a material effect on its consolidated statements of cash flows and related disclosures. In January 2017, FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The standard’s objective is to simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. Under the amendments in the standard, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would then be recognized, not to exceed the amount of goodwill allocated to that reporting unit. The standard is effective for the Company on January 1, 2020, and early adoption is permitted. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures. In May 2017, FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments in the standard clarify when changes in a share-based payment award must be accounted for as a modification, and will allow entities to make certain changes to share-based payment awards without accounting for them as modifications. Under the new guidance, entities will only apply modification accounting if there are substantive changes made to share-based payment awards. If a change made to a share-based payment award does not affect the fair value, vesting conditions and classification as either an equity or liability instrument, modification accounting will not need to be applied. The standard is effective for the Company on January 1, 2018. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Shares and Share Equivalents Used to Calculate Basic and Diluted Earnings Per Share | The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for the years ended December 31, 2017, 2016 and 2015:
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Summary of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following stock options issued under equity incentive plans were outstanding during the years ended December 31, 2017, 2016 and 2015, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.
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Segment Information, Nature of Operations, and Certain Concentrations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | Following are tables presenting segment revenues, profit before taxes, assets, interest income, interest expense, depreciation and amortization and expenditures for property and equipment, with reconciliations to the amounts reported for the consolidated enterprise, where applicable:
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Profit before Taxes |
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Assets |
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Interest Income |
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Interest Expense |
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Depreciation and Amortization |
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Expenditures for Property and Equipment |
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Corporate Capital Allocation Charge |
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Variable Interest Entities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Risk of Loss Related to Contract Land Deposits | NVR’s total risk of loss related to contract land deposits as of December 31, 2017 and 2016 was as follows:
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Joint Ventures (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Joint Venture | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheets | The condensed balance sheets of the consolidated JV at December 31, 2017 and 2016 were as follows:
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Capitalized Interest (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Interest Costs, Including Allowance for Funds Used During Construction [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Interest Costs Incurred, Capitalized, Expensed and Charged to Cost of Sales | NVR’s interest costs incurred, capitalized, expensed and charged to cost of sales during the years ended December 31, 2017, 2016 and 2015 was as follows:
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Property, Plant and Equipment ("PP&E") (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property, Plant and Equipment ("PP&E") |
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Common Stock (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchases of Common Stock | The Company made the following share repurchases during the years indicated:
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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for Income Taxes | The provision for income taxes consists of the following:
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Income Tax Benefits in Shareholders' Equity | In addition to amounts applicable to income before taxes, the following income tax benefits were recorded in shareholders’ equity:
(1) During 2017, these income tax benefits were recognized in the consolidated statement of income as required under ASU 2016-09. |
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Deferred Income Taxes on Consolidated Balance Sheets | Deferred income taxes on NVR’s consolidated balance sheets were comprised of the following:
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Income Tax Expense Reconciliation | A reconciliation of income tax expense in the accompanying consolidated statements of income to the amount computed by applying the statutory federal income tax rate of 35% to income before taxes is as follows:
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Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Equity-Based Compensation, Profit Sharing and Deferred Compensation Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Equity-Based Compensation Plans with Grants Outstanding | The following table provides a summary of each of the Company’s equity-based compensation plans for any plan with grants outstanding at December 31, 2017:
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Equity-Based Compensation Plans | The following table provides additional information relative to NVR’s equity-based compensation plans for the year ended December 31, 2017:
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Black-Scholes Option-Pricing Model Assumptions | The fair value of the Options granted during 2017, 2016 and 2015 was estimated on the grant date using the Pricing Model, based on the following assumptions:
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Exercised Option Proceeds | Information with respect to the vested RSUs and exercised Options is as follows:
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Commitments and Contingent Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments under Operating Leases | Future minimum lease payments under these operating leases as of December 31, 2017 are as follows:
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Summary of Changes in Product Warranties Reserve | The following table reflects the changes in the Company’s warranty reserve (see Note 1 herein for further discussion of warranty/product liability reserves):
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Fair Value (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Undesignated Derivative Instruments | The fair value measurement of NVRM's undesignated derivative instruments was as follows:
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Fair Value Measurement | The fair value measurement as of December 31, 2017 was as follows:
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Quarterly Results (unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data and Operating Information | The following table sets forth unaudited selected financial data and operating information on a quarterly basis for the years ended December 31, 2017 and 2016.
|
Summary of Significant Accounting Policies - Weighted Average Shares and Share Equivalents Used to Calculate Basic and Diluted Earnings Per Share (Detail) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Accounting Policies [Abstract] | |||
Weighted average number of shares outstanding used to calculate basic EPS (in Shares) | 3,733 | 3,847 | 4,022 |
Dilutive securities: | |||
Stock options and restricted share units (in Shares) | 507 | 257 | 233 |
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS (in Shares) | 4,240 | 4,104 | 4,255 |
Summary of Significant Accounting Policies - Summary of Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Accounting Policies [Abstract] | |||
Anti-dilutive securities (in Shares) | 15 | 87 | 50 |
Segment Information, Nature of Operations, and Certain Concentrations - Additional Information (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017
Trade_Names
metropolitan_area
segment
|
Sep. 10, 2012 |
|
Segment Reporting Information [Line Items] | ||
Number of trade names | Trade_Names | 3 | |
Number of metropolitan areas Ryan Homes product are sold | metropolitan_area | 29 | |
Senior Notes due 2022 | ||
Segment Reporting Information [Line Items] | ||
Senior notes interest rate | 3.95% | 3.95% |
Homebuilding: | ||
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 4 | |
Mortgage Banking: | ||
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 1 | |
Geographic Concentration Risk | Homebuilding: | District of Columbia | ||
Segment Reporting Information [Line Items] | ||
Revenue derived | 30.00% | |
Geographic Concentration Risk | Homebuilding: | Maryland, Baltimore | ||
Segment Reporting Information [Line Items] | ||
Revenue derived | 11.00% |
Segment Information, Nature of Operations, and Certain Concentrations - Revenues (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Consolidated revenues | $ 6,305,840 | $ 5,822,544 | $ 5,159,008 | ||||||||
Homebuilding: | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Revenues | $ 1,781,494 | $ 1,633,726 | $ 1,512,714 | $ 1,247,587 | $ 1,718,527 | $ 1,507,451 | $ 1,361,741 | $ 1,121,504 | 6,175,521 | 5,709,223 | 5,065,200 |
Homebuilding: | Mid Atlantic | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Revenues | 3,543,687 | 3,319,776 | 3,022,789 | ||||||||
Homebuilding: | North East | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Revenues | 517,141 | 462,385 | 432,145 | ||||||||
Homebuilding: | Mid East | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Revenues | 1,250,165 | 1,192,472 | 1,014,920 | ||||||||
Homebuilding: | South East | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Revenues | 864,528 | 734,590 | 595,346 | ||||||||
Mortgage Banking: | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Mortgage Banking | $ 34,842 | $ 34,194 | $ 31,778 | $ 29,505 | $ 34,239 | $ 30,118 | $ 26,442 | $ 22,522 | $ 130,319 | $ 113,321 | $ 93,808 |
Segment Information, Nature of Operations, and Certain Concentrations - Interest Income (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Consolidated interest income | $ 12,404 | $ 8,680 | $ 7,696 |
Mortgage Banking: | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Interest income | 7,850 | 7,569 | 6,485 |
Profit before taxes: | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Interest income | 7,850 | 7,569 | 6,485 |
Other unallocated interest income | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Other unallocated interest income | $ 4,554 | $ 1,111 | $ 1,211 |
Segment Information, Nature of Operations, and Certain Concentrations - Corporate Capital Allocation Charge (Detail) - Reconciling items: - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Corporate capital allocation charge | $ 198,384 | $ 189,992 | $ 171,170 |
Homebuilding: | Mid Atlantic | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Corporate capital allocation charge | 123,028 | 119,758 | 107,705 |
Homebuilding: | North East | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Corporate capital allocation charge | 16,115 | 18,132 | 16,987 |
Homebuilding: | Mid East | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Corporate capital allocation charge | 29,663 | 28,303 | 27,263 |
Homebuilding: | South East | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Corporate capital allocation charge | $ 29,578 | $ 23,799 | $ 19,215 |
Variable Interest Entities - Additional Information (Detail) $ in Thousands |
Dec. 31, 2017
USD ($)
lot
|
Dec. 31, 2016
USD ($)
|
---|---|---|
Variable Interest Entity [Line Items] | ||
Maximum range of deposits required under the purchase agreements | 10.00% | |
Contract land deposits in cash | $ 400,428 | $ 411,150 |
Variable Interest Entities | ||
Variable Interest Entity [Line Items] | ||
Maximum range of deposits required under the purchase agreements | 10.00% | |
Lots controlled by NVR | lot | 84,300 | |
Contract land deposits in cash under Lot Purchase Agreements | $ 393,900 | |
Letters of credit related to lots | $ 1,900 | |
Contract on Raw Ground with Landowners | ||
Variable Interest Entity [Line Items] | ||
Lots controlled by NVR | lot | 10,700 | |
Contract land deposits in cash | $ 6,600 | |
Letters of credit on raw land contracts | 100 | |
Refundable deposits | $ 5,800 |
Variable Interest Entities - Total Risk of Loss Related to Contract Land Deposits (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | ||
Contract land deposits | $ 400,428 | $ 411,150 |
Loss reserve on contract land deposits | (29,999) | (31,306) |
Contract land deposits, net | 370,429 | 379,844 |
Contingent obligations in the form of letters of credit | 1,996 | 2,379 |
Contingent specific performance obligations | 1,505 | 1,505 |
Total risk of loss | $ 373,930 | $ 383,728 |
Variable Interest Entities - Total Risk of Loss Related to Contract Land Deposits (Textual) (Detail) - lot |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | ||
Finished lots committed to purchase under specific performance obligations | 10 | 10 |
Joint Ventures - Additional Information (Detail) $ in Thousands |
Dec. 31, 2017
USD ($)
lot
joint_venture
|
Dec. 31, 2016
USD ($)
lot
joint_venture
|
---|---|---|
Joint Ventures [Line Items] | ||
Aggregate investment | $ | $ 45,500 | $ 49,400 |
Number of joint ventures | joint_venture | 6 | 6 |
Expected production of finished lots | lot | 7,300 | 7,400 |
Total lots controlled by company under the joint venture | lot | 3,900 | 4,200 |
Total lots either under contract with unrelated parties or not under the current contract | lot | 3,400 | 3,200 |
Additional funding commitments in the aggregate | $ | $ 5,300 | $ 6,200 |
Number of joint ventures with additional funding commitment | joint_venture | 3 | 3 |
Number of joint ventures NVR is not primary beneficiary | joint_venture | 5 | |
Other Assets | ||
Joint Ventures [Line Items] | ||
Aggregate investment | $ | $ 45,200 | $ 49,000 |
Joint Ventures - Condensed Balance Sheets (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Assets: | ||||
Cash | $ 667,863 | $ 396,619 | $ 425,316 | $ 545,419 |
Liabilities and equity: | ||||
Equity | 1,605,492 | 1,304,441 | $ 1,239,165 | $ 1,124,255 |
Total liabilities and shareholders' equity | 2,989,279 | 2,643,943 | ||
Consolidated Joint Venture | ||||
Assets: | ||||
Cash | 1,069 | 1,214 | ||
Other assets | 37 | 37 | ||
Total assets | 1,106 | 1,251 | ||
Liabilities and equity: | ||||
Accrued expenses | 487 | 550 | ||
Equity | 619 | 701 | ||
Total liabilities and shareholders' equity | $ 1,106 | $ 1,251 |
Land Under Development - Additional Information (Detail) $ in Thousands |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Oct. 31, 2017
USD ($)
lot
|
Dec. 31, 2017
USD ($)
lot
parcel
|
Dec. 31, 2016
USD ($)
lot
parcel
|
|
Real Estate [Abstract] | |||
Acquisition costs of land under development and finished lots | $ 14,800 | ||
Number of finished lots for use in homebuilding operations | lot | 150 | 500 | 600 |
Number of raw parcels of land owned | parcel | 4 | 4 | |
Carrying value of raw parcels of land | $ 34,212 | $ 46,999 | |
Aggregate additional funding commitments related to raw land property under joint development | 7,900 | ||
Expected development credits that will offset the aggregate additional funding commitments related to raw land property development | $ 4,700 |
Capitalized Interest - Summary of Interest Costs Incurred, Capitalized, Expensed and Charged to Cost of Sales (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Capitalized Interest Costs Including Allowance for Funds Used During Construction RollForward | |||
Interest capitalized, beginning of year | $ 5,106 | $ 4,434 | $ 4,072 |
Interest incurred | 26,384 | 25,951 | 25,155 |
Interest expense | (24,185) | (21,707) | (23,559) |
Interest charged to cost of sales | (1,722) | (3,572) | (1,234) |
Interest capitalized, end of year | $ 5,583 | $ 5,106 | $ 4,434 |
Related Party Transactions - Additional Information (Detail) - Elm Street |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017
USD ($)
lot
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Related Party Transaction [Line Items] | |||
Related party forward lot purchase agreements purchase price | $ 66,600,000 | ||
Number of related parties for forward lot purchase agreement | lot | 1 | ||
Market price of developed lots | $ 37,100,000 | $ 44,500,000 | $ 41,200,000 |
Expected number of lots from joint venture with Elm Street | lot | 2,400 | ||
Additional funding to joint venture by NVR and Elm Street | $ 2,900,000 | ||
Development costs to manage property under related party transactions | $ 0 | $ 143,000 | $ 143,000 |
Common Stock - Additional Information (Detail) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Stockholders' Equity [Abstract] | |||
Common shares outstanding (in Shares) | 3,691 | 3,693 | |
Reissued shares during the period, shares (in Shares) | 165 | 83 | 131 |
Common Stock - Share Repurchase of Common Stock (Detail) - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Stockholders' Equity [Abstract] | |||
Aggregate purchase price | $ 422,166 | $ 455,351 | $ 431,367 |
Number of shares repurchased (in Shares) | 167 | 280 | 290 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | ||||
Remeasurement of net deferred tax assets due to enactment of Tax Cut and Jobs Act | $ 62,702 | $ 0 | $ 0 | |
Excess tax benefits from equity-based compensation | 58,681 | 0 | $ 0 | |
Estimated federal taxable income | $ 614,562 | $ 578,882 | ||
Statutory federal income tax rate | 35.00% | |||
Effective tax rate | 36.53% | 35.73% | 36.52% | |
Unrecognized tax benefits that would affect effective tax rate | $ 35,816 | |||
Reversal of accrued interest on unrecognized tax benefits | 1,065 | $ 1,582 | ||
Unrecognized tax benefits expense | $ 125 | |||
Total accrued interest on unrecognized tax benefits | 18,575 | $ 19,639 | ||
Reduction in unrecognized tax benefits | $ 11,971 |
Income Taxes - Provision for Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current: | |||
Federal | $ 211,641 | $ 209,454 | $ 180,895 |
State | 37,006 | 38,095 | 36,142 |
Deferred: | |||
Federal | 60,785 | (9,230) | 2,681 |
State | (42) | (1,884) | 567 |
Total | $ 309,390 | $ 236,435 | $ 220,285 |
Income Taxes - Income Tax Benefits in Shareholders' Equity (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Income tax benefits arising from compensation expense for tax purposes in excess of amounts recognized for financial statement purposes | $ 0 | $ 13,661 | $ 23,311 |
Income Taxes - Deferred Income Taxes on Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets: | ||
Other accrued expenses and contract land deposit reserve | $ 49,063 | $ 76,498 |
Deferred compensation | 4,743 | 7,075 |
Equity-based compensation expense | 36,799 | 55,077 |
Inventory | 9,393 | 13,514 |
Unrecognized tax benefit | 14,351 | 23,954 |
Other | 9,681 | 10,106 |
Total deferred tax assets | 124,030 | 186,224 |
Less: Deferred tax liabilities | 4,511 | 5,414 |
Net deferred tax asset | $ 119,519 | $ 180,810 |
Income Taxes - Income Tax Expense Reconciliation (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Income taxes computed at the federal statutory rate | $ 296,419 | $ 231,595 | $ 211,124 |
State income taxes, net of federal income tax benefit | 30,046 | 23,738 | 23,919 |
Excess tax benefits from equity-based compensation | (58,681) | 0 | 0 |
Remeasurement of net deferred tax assets due to enactment of Tax Cut and Jobs Act | 62,702 | 0 | 0 |
Other, net | (21,096) | (18,898) | (14,758) |
Total | $ 309,390 | $ 236,435 | $ 220,285 |
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance at beginning of year | $ 46,110 | $ 46,591 |
Additions based on tax positions related to the current year | 4,793 | 4,440 |
Reductions for tax positions of prior years | (5,566) | (4,921) |
Settlements | 0 | 0 |
Balance at end of year | $ 45,337 | $ 46,110 |
Equity-Based Compensation, Profit Sharing and Deferred Compensation Plans - Summary of Equity-Based Compensation Plans with Grants Outstanding (Detail) |
Dec. 31, 2017
shares
|
---|---|
1998 Management Long-Term Stock Option Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Authorized | 1,000,000 |
Options/RSUs Outstanding | 6,000 |
Shares Available to Issue | 0 |
2000 Broadly-Based Stock Option Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Authorized | 2,000,000 |
Options/RSUs Outstanding | 89,000 |
Shares Available to Issue | 0 |
2010 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Authorized | 700,000 |
Options/RSUs Outstanding | 218,000 |
Shares Available to Issue | 38,000 |
2014 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Authorized | 950,000 |
Options/RSUs Outstanding | 613,000 |
Shares Available to Issue | 276,000 |
Equity-Based Compensation, Profit Sharing and Deferred Compensation Plans - Black-Scholes Option-Pricing Model Assumptions (Detail) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Estimated option life | 5 years 3 months 4 days | 5 years 3 months 7 days | 5 years 2 months 1 day |
Risk free interest rate (range), minimum | 1.53% | 0.86% | 1.04% |
Risk free interest rate (range), maximum | 2.38% | 2.21% | 2.07% |
Expected volatility (range), minimum | 15.09% | 15.91% | 17.00% |
Expected volatility (range), maximum | 17.95% | 23.49% | 26.79% |
Expected dividend rate | 0.00% | 0.00% | 0.00% |
Weighted average grant-date fair value per share of options granted | $ 494.17 | $ 320.21 | $ 296.50 |
Equity-Based Compensation, Profit Sharing and Deferred Compensation Plans - Exercised Option Proceeds (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Aggregate exercise proceeds | $ 140,525 | $ 38,106 | $ 85,948 |
Aggregate intrinsic value on exercise dates | $ 206,890 | $ 96,600 | $ 99,288 |
Commitments and Contingent Liabilities - Future Minimum Lease Payments under Operating Leases (Detail) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 | $ 29,366 |
2019 | 21,569 |
2020 | 17,799 |
2021 | 13,436 |
2022 | 10,780 |
Thereafter | 17,202 |
Subtotal | 110,152 |
Sublease income | (30) |
Total minimum lease payments | $ 110,122 |
Commitments and Contingent Liabilities - Summary of Changes in Product Warranty/Liability Reserve (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Movement in Warranty Reserve [Roll Forward] | |||
Warranty reserve, beginning of year | $ 93,895 | $ 87,407 | $ 94,060 |
Provision | 44,652 | 50,787 | 47,003 |
Payments | (44,034) | (44,299) | (53,656) |
Warranty reserve, end of year | $ 94,513 | $ 93,895 | $ 87,407 |
Fair Value - Undesignated Derivative Instruments (Detail) - Mortgage Banking: - Level 2 - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Rate lock commitments | ||
Derivatives, Fair Value [Line Items] | ||
Gross assets | $ 5,400 | $ 5,403 |
Gross liabilities | 1,832 | 3,327 |
Net commitments | 3,568 | 2,076 |
Forward sales contracts | ||
Derivatives, Fair Value [Line Items] | ||
Gross assets | 992 | 9,148 |
Gross liabilities | 667 | 1,084 |
Net commitments | $ 325 | $ 8,064 |
Mortgage Loan Losses Allowance - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Mortgage Repurchase Reserve [Abstract] | |||
Pre-tax charges for loan losses related to mortgage loans sold | $ 2,900 | $ 2,000 | $ 2,700 |
Mortgage repurchase reserve | $ 14,000 | $ 12,700 |
Quarterly Results (unaudited) - Quarterly Financial Data and Operating Information (Detail) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017
USD ($)
Settlements
Backlog
order
$ / shares
|
Sep. 30, 2017
USD ($)
Settlements
Backlog
order
$ / shares
|
Jun. 30, 2017
USD ($)
Settlements
Backlog
order
$ / shares
|
Mar. 31, 2017
USD ($)
Settlements
Backlog
order
$ / shares
|
Dec. 31, 2016
USD ($)
Settlements
Backlog
order
$ / shares
|
Sep. 30, 2016
USD ($)
Settlements
Backlog
order
$ / shares
|
Jun. 30, 2016
USD ($)
Settlements
Backlog
order
$ / shares
|
Mar. 31, 2016
USD ($)
Settlements
Backlog
order
$ / shares
|
Dec. 31, 2017
USD ($)
$ / shares
|
Dec. 31, 2016
USD ($)
$ / shares
|
Dec. 31, 2015
USD ($)
$ / shares
|
|
Quarterly Financial Information [Line Items] | |||||||||||
Net income | $ 124,619 | $ 162,102 | $ 147,877 | $ 102,923 | $ 150,891 | $ 117,392 | $ 91,676 | $ 65,303 | $ 537,521 | $ 425,262 | $ 382,927 |
Diluted earnings per share (USD per share) | $ / shares | $ 28.88 | $ 38.02 | $ 35.19 | $ 25.12 | $ 37.80 | $ 28.46 | $ 22.01 | $ 15.79 | $ 126.77 | $ 103.61 | $ 89.99 |
New orders (units) | order | 4,306 | 4,200 | 4,678 | 4,424 | 3,645 | 3,477 | 4,324 | 4,137 | |||
Settlements (units) | Settlements | 4,630 | 4,158 | 3,917 | 3,256 | 4,419 | 3,922 | 3,581 | 3,006 | |||
Backlog, end of period (units) | Backlog | 8,531 | 8,855 | 8,813 | 8,052 | 6,884 | 7,658 | 8,103 | 7,360 | |||
Loans closed | $ 1,229,695 | $ 1,115,494 | $ 1,041,613 | $ 843,341 | $ 1,201,164 | $ 1,055,163 | $ 942,407 | $ 753,840 | |||
Homebuilding: | |||||||||||
Quarterly Financial Information [Line Items] | |||||||||||
Revenues – homebuilding operations | 1,781,494 | 1,633,726 | 1,512,714 | 1,247,587 | 1,718,527 | 1,507,451 | 1,361,741 | 1,121,504 | $ 6,175,521 | $ 5,709,223 | $ 5,065,200 |
Gross profit – homebuilding operations | 343,187 | 325,755 | 294,631 | 221,570 | 305,087 | 265,159 | 235,372 | 195,744 | |||
Mortgage Banking: | |||||||||||
Quarterly Financial Information [Line Items] | |||||||||||
Mortgage banking fees | $ 34,842 | $ 34,194 | $ 31,778 | $ 29,505 | $ 34,239 | $ 30,118 | $ 26,442 | $ 22,522 | $ 130,319 | $ 113,321 | $ 93,808 |
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