|
☒
|
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.
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||
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PART III
|
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
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||
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|
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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;
|
•
|
employment levels, consumer confidence and spending and 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.
|
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, 2018 (1)
|
|
8,500
|
|
|
$
|
2,382.65
|
|
|
8,500
|
|
|
$
|
284,070
|
|
November 1 - 30, 2018
|
|
32,909
|
|
|
$
|
2,361.91
|
|
|
32,909
|
|
|
$
|
206,342
|
|
December 1 - 31, 2018
|
|
37,182
|
|
|
$
|
2,441.61
|
|
|
37,182
|
|
|
$
|
415,558
|
|
Total
|
|
78,591
|
|
|
$
|
2,401.86
|
|
|
78,591
|
|
|
|
(1)
|
1,707 outstanding shares were repurchased under the February 14, 2018 share repurchase authorization, which fully utilized the authorization. The remaining 6,793 outstanding shares were repurchased under the August 1, 2018 share repurchase authorization.
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||
Comparison of 5 Year Cumulative Total Return
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
NVR, Inc.
|
|
$
|
100
|
|
|
$
|
124
|
|
|
$
|
160
|
|
|
$
|
163
|
|
|
$
|
342
|
|
|
$
|
238
|
|
S&P 500
|
|
$
|
100
|
|
|
$
|
114
|
|
|
$
|
115
|
|
|
$
|
129
|
|
|
$
|
157
|
|
|
$
|
150
|
|
Dow Jones US Home Construction
|
|
$
|
100
|
|
|
$
|
108
|
|
|
$
|
119
|
|
|
$
|
111
|
|
|
$
|
196
|
|
|
$
|
134
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Consolidated income statement data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
7,004,304
|
|
|
$
|
6,175,521
|
|
|
$
|
5,709,223
|
|
|
$
|
5,065,200
|
|
|
$
|
4,375,059
|
|
Gross profit
|
|
$
|
1,312,177
|
|
|
$
|
1,185,143
|
|
|
$
|
1,001,362
|
|
|
$
|
946,418
|
|
|
$
|
806,473
|
|
Homebuilding income
|
|
$
|
871,106
|
|
|
$
|
776,370
|
|
|
$
|
601,102
|
|
|
$
|
555,329
|
|
|
$
|
427,884
|
|
Mortgage Banking data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage banking fees
|
|
$
|
159,370
|
|
|
$
|
130,319
|
|
|
$
|
113,321
|
|
|
$
|
93,808
|
|
|
$
|
69,509
|
|
Mortgage banking income
|
|
$
|
88,626
|
|
|
$
|
70,541
|
|
|
$
|
60,595
|
|
|
$
|
47,883
|
|
|
$
|
25,662
|
|
Consolidated data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
$
|
797,197
|
|
|
$
|
537,521
|
|
|
$
|
425,262
|
|
|
$
|
382,927
|
|
|
$
|
281,630
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
219.58
|
|
|
$
|
144.00
|
|
|
$
|
110.53
|
|
|
$
|
95.21
|
|
|
$
|
65.83
|
|
Diluted
|
|
$
|
194.80
|
|
|
$
|
126.77
|
|
|
$
|
103.61
|
|
|
$
|
89.99
|
|
|
$
|
63.50
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
|
3,631
|
|
|
3,733
|
|
|
3,847
|
|
|
4,022
|
|
|
4,278
|
|
|||||
Diluted
|
|
4,092
|
|
|
4,240
|
|
|
4,104
|
|
|
4,255
|
|
|
4,435
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding inventory
|
|
$
|
1,253,110
|
|
|
$
|
1,246,199
|
|
|
$
|
1,092,100
|
|
|
$
|
1,006,526
|
|
|
$
|
869,486
|
|
Contract land deposits, net
|
|
$
|
396,177
|
|
|
$
|
370,429
|
|
|
$
|
379,844
|
|
|
$
|
343,295
|
|
|
$
|
294,676
|
|
Total assets
|
|
$
|
3,165,933
|
|
|
$
|
2,989,279
|
|
|
$
|
2,643,943
|
|
|
$
|
2,511,718
|
|
|
$
|
2,347,413
|
|
Notes and loans payable (1)
|
|
$
|
597,681
|
|
|
$
|
597,066
|
|
|
$
|
596,455
|
|
|
$
|
595,847
|
|
|
$
|
595,244
|
|
Shareholders’ equity
|
|
$
|
1,808,562
|
|
|
$
|
1,605,492
|
|
|
$
|
1,304,441
|
|
|
$
|
1,239,165
|
|
|
$
|
1,124,255
|
|
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,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Financial data:
|
|
|
|
|
|
|
||||||
Revenues
|
|
$
|
7,004,304
|
|
|
$
|
6,175,521
|
|
|
$
|
5,709,223
|
|
Cost of sales
|
|
$
|
5,692,127
|
|
|
$
|
4,990,378
|
|
|
$
|
4,707,861
|
|
Gross profit margin percentage
|
|
18.7
|
%
|
|
19.2
|
%
|
|
17.5
|
%
|
|||
Selling, general and administrative expenses
|
|
$
|
428,874
|
|
|
$
|
392,272
|
|
|
$
|
382,459
|
|
Operating data:
|
|
|
|
|
|
|
||||||
New orders (units)
|
|
18,281
|
|
|
17,608
|
|
|
15,583
|
|
|||
Average new order price
|
|
$
|
376.3
|
|
|
$
|
383.2
|
|
|
$
|
386.4
|
|
Settlements (units)
|
|
18,447
|
|
|
15,961
|
|
|
14,928
|
|
|||
Average settlement price
|
|
$
|
379.7
|
|
|
$
|
386.9
|
|
|
$
|
381.2
|
|
Backlog (units)
|
|
8,365
|
|
|
8,531
|
|
|
6,884
|
|
|||
Average backlog price
|
|
$
|
376.9
|
|
|
$
|
384.2
|
|
|
$
|
392.8
|
|
New order cancellation rate
|
|
14.5
|
%
|
|
14.0
|
%
|
|
15.5
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Gross profit margin:
|
|
|
|
|
|
|
||||||
Mid Atlantic
|
|
$
|
726,655
|
|
|
$
|
663,650
|
|
|
$
|
561,857
|
|
North East
|
|
115,169
|
|
|
104,501
|
|
|
68,808
|
|
|||
Mid East
|
|
279,050
|
|
|
244,832
|
|
|
215,335
|
|
|||
South East
|
|
211,870
|
|
|
173,961
|
|
|
137,787
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Gross profit margin percentage:
|
|
|
|
|
|
|
|||
Mid Atlantic
|
|
18.7
|
%
|
|
18.7
|
%
|
|
16.9
|
%
|
North East
|
|
19.8
|
%
|
|
20.2
|
%
|
|
14.9
|
%
|
Mid East
|
|
19.2
|
%
|
|
19.6
|
%
|
|
18.1
|
%
|
South East
|
|
19.7
|
%
|
|
20.1
|
%
|
|
18.8
|
%
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
Price
|
|||||||||
New orders, net of cancellations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Mid Atlantic
|
|
8,906
|
|
|
$
|
429.4
|
|
|
8,654
|
|
|
$
|
438.9
|
|
|
7,916
|
|
|
$
|
443.1
|
|
North East
|
|
1,296
|
|
|
$
|
400.4
|
|
|
1,362
|
|
|
$
|
409.7
|
|
|
1,314
|
|
|
$
|
387.1
|
|
Mid East
|
|
4,314
|
|
|
$
|
328.0
|
|
|
4,171
|
|
|
$
|
332.7
|
|
|
3,659
|
|
|
$
|
329.2
|
|
South East
|
|
3,765
|
|
|
$
|
297.7
|
|
|
3,421
|
|
|
$
|
293.5
|
|
|
2,694
|
|
|
$
|
296.9
|
|
Total
|
|
18,281
|
|
|
$
|
376.3
|
|
|
17,608
|
|
|
$
|
383.2
|
|
|
15,583
|
|
|
$
|
386.4
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
Price
|
|||||||||
Settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Mid Atlantic
|
|
8,982
|
|
|
$
|
433.4
|
|
|
7,971
|
|
|
$
|
444.5
|
|
|
7,512
|
|
|
$
|
439.6
|
|
North East
|
|
1,415
|
|
|
$
|
410.4
|
|
|
1,288
|
|
|
$
|
401.5
|
|
|
1,246
|
|
|
$
|
371.1
|
|
Mid East
|
|
4,406
|
|
|
$
|
330.4
|
|
|
3,772
|
|
|
$
|
331.4
|
|
|
3,658
|
|
|
$
|
325.7
|
|
South East
|
|
3,644
|
|
|
$
|
294.8
|
|
|
2,930
|
|
|
$
|
295.1
|
|
|
2,512
|
|
|
$
|
292.4
|
|
Total
|
|
18,447
|
|
|
$
|
379.7
|
|
|
15,961
|
|
|
$
|
386.9
|
|
|
14,928
|
|
|
$
|
381.2
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
Price
|
|||||||||
Backlog:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Mid Atlantic
|
|
4,148
|
|
|
$
|
423.4
|
|
|
4,224
|
|
|
$
|
432.2
|
|
|
3,541
|
|
|
$
|
443.4
|
|
North East
|
|
563
|
|
|
$
|
404.1
|
|
|
682
|
|
|
$
|
424.3
|
|
|
608
|
|
|
$
|
408.7
|
|
Mid East
|
|
1,806
|
|
|
$
|
336.2
|
|
|
1,898
|
|
|
$
|
341.2
|
|
|
1,499
|
|
|
$
|
340.1
|
|
South East
|
|
1,848
|
|
|
$
|
304.1
|
|
|
1,727
|
|
|
$
|
298.4
|
|
|
1,236
|
|
|
$
|
304.1
|
|
Total
|
|
8,365
|
|
|
$
|
376.9
|
|
|
8,531
|
|
|
$
|
384.2
|
|
|
6,884
|
|
|
$
|
392.8
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
New order cancellation rate:
|
|
|
|
|
|
|
|||
Mid Atlantic
|
|
15.2
|
%
|
|
15.2
|
%
|
|
15.7
|
%
|
North East
|
|
12.5
|
%
|
|
13.3
|
%
|
|
15.1
|
%
|
Mid East
|
|
12.9
|
%
|
|
11.5
|
%
|
|
14.4
|
%
|
South East
|
|
15.5
|
%
|
|
14.3
|
%
|
|
16.5
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Average active communities:
|
|
|
|
|
|
|
|||
Mid Atlantic
|
|
234
|
|
|
238
|
|
|
239
|
|
North East
|
|
36
|
|
|
42
|
|
|
42
|
|
Mid East
|
|
119
|
|
|
121
|
|
|
128
|
|
South East
|
|
88
|
|
|
84
|
|
|
76
|
|
Total
|
|
477
|
|
|
485
|
|
|
485
|
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Sold inventory:
|
|
|
|
|
||||
Mid Atlantic
|
|
$
|
622,997
|
|
|
$
|
617,471
|
|
North East
|
|
79,530
|
|
|
96,412
|
|
||
Mid East
|
|
195,149
|
|
|
173,572
|
|
||
South East
|
|
182,458
|
|
|
151,219
|
|
||
Total (1)
|
|
$
|
1,080,134
|
|
|
$
|
1,038,674
|
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Unsold lots and housing units inventory:
|
|
|
|
|
||||
Mid Atlantic
|
|
$
|
74,689
|
|
|
$
|
118,209
|
|
North East
|
|
11,088
|
|
|
6,666
|
|
||
Mid East
|
|
9,045
|
|
|
7,112
|
|
||
South East
|
|
20,611
|
|
|
13,511
|
|
||
Total (1)
|
|
$
|
115,433
|
|
|
$
|
145,498
|
|
(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,
|
||||
|
|
2018
|
|
2017
|
||
Total lots controlled:
|
|
|
|
|
||
Mid Atlantic
|
|
40,350
|
|
|
38,450
|
|
North East
|
|
8,950
|
|
|
7,000
|
|
Mid East
|
|
24,350
|
|
|
22,250
|
|
South East
|
|
26,050
|
|
|
21,000
|
|
Total
|
|
99,700
|
|
|
88,700
|
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Contract land deposits, net:
|
|
|
|
|
||||
Mid Atlantic
|
|
$
|
199,917
|
|
|
$
|
209,759
|
|
North East
|
|
42,591
|
|
|
29,851
|
|
||
Mid East
|
|
52,899
|
|
|
49,838
|
|
||
South East
|
|
104,693
|
|
|
82,977
|
|
||
Total
|
|
$
|
400,100
|
|
|
$
|
372,425
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Contract land deposit impairments, net:
|
|
|
|
|
|
|
||||||
Mid Atlantic
|
|
$
|
2,743
|
|
|
$
|
2,945
|
|
|
$
|
2,240
|
|
North East
|
|
1,033
|
|
|
290
|
|
|
3,530
|
|
|||
Mid East
|
|
211
|
|
|
11
|
|
|
303
|
|
|||
South East
|
|
1,911
|
|
|
99
|
|
|
791
|
|
|||
Total
|
|
$
|
5,898
|
|
|
$
|
3,345
|
|
|
$
|
6,864
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Homebuilding consolidated gross profit:
|
|
|
|
|
|
|
||||||
Mid Atlantic
|
|
$
|
726,655
|
|
|
$
|
663,650
|
|
|
$
|
561,857
|
|
North East
|
|
115,169
|
|
|
104,501
|
|
|
68,808
|
|
|||
Mid East
|
|
279,050
|
|
|
244,832
|
|
|
215,335
|
|
|||
South East
|
|
211,870
|
|
|
173,961
|
|
|
137,787
|
|
|||
Consolidation adjustments and other
|
|
(20,567
|
)
|
|
(1,801
|
)
|
|
17,575
|
|
|||
Homebuilding consolidated gross profit
|
|
$
|
1,312,177
|
|
|
$
|
1,185,143
|
|
|
$
|
1,001,362
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Homebuilding consolidated profit before taxes:
|
|
|
|
|
|
|
||||||
Mid Atlantic
|
|
$
|
462,178
|
|
|
$
|
398,494
|
|
|
$
|
301,173
|
|
North East
|
|
69,789
|
|
|
60,218
|
|
|
21,947
|
|
|||
Mid East
|
|
175,134
|
|
|
149,639
|
|
|
121,166
|
|
|||
South East
|
|
118,296
|
|
|
95,826
|
|
|
71,098
|
|
|||
Reconciling items:
|
|
|
|
|
|
|
||||||
Contract land deposit impairment reserve (1)
|
|
783
|
|
|
1,307
|
|
|
10,933
|
|
|||
Equity-based compensation expense (2)
|
|
(70,865
|
)
|
|
(41,144
|
)
|
|
(40,482
|
)
|
|||
Corporate capital allocation (3)
|
|
213,903
|
|
|
198,384
|
|
|
189,992
|
|
|||
Unallocated corporate overhead
|
|
(89,973
|
)
|
|
(89,514
|
)
|
|
(89,376
|
)
|
|||
Consolidation adjustments and other
|
|
15,829
|
|
|
26,143
|
|
|
35,204
|
|
|||
Corporate interest expense
|
|
(23,968
|
)
|
|
(22,983
|
)
|
|
(20,553
|
)
|
|||
Reconciling items sub-total
|
|
45,709
|
|
|
72,193
|
|
|
85,718
|
|
|||
Homebuilding consolidated profit before taxes
|
|
$
|
871,106
|
|
|
$
|
776,370
|
|
|
$
|
601,102
|
|
(1)
|
This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments.
|
(2)
|
The increase in equity-based compensation expense for the year ended December 31, 2018 was primarily attributable to equity grants in the second quarter of 2018. See Note 12 in the accompanying consolidated financial statements for additional discussion of equity-based compensation.
|
(3)
|
This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance and is as follows for the years presented:
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Corporate capital allocation charge:
|
|
|
|
|
|
|
||||||
Mid Atlantic
|
|
$
|
123,855
|
|
|
$
|
123,028
|
|
|
$
|
119,758
|
|
North East
|
|
17,893
|
|
|
16,115
|
|
|
18,132
|
|
|||
Mid East
|
|
35,803
|
|
|
29,663
|
|
|
28,303
|
|
|||
South East
|
|
36,352
|
|
|
29,578
|
|
|
23,799
|
|
|||
Total corporate capital allocation charge
|
|
$
|
213,903
|
|
|
$
|
198,384
|
|
|
$
|
189,992
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Loan closing volume:
|
|
|
|
|
|
|
|
|
|
|||
Total principal
|
|
$
|
4,829,406
|
|
|
$
|
4,229,507
|
|
|
$
|
3,952,575
|
|
|
|
|
|
|
|
|
||||||
Loan volume mix:
|
|
|
|
|
|
|
|
|
|
|||
Adjustable rate mortgages
|
|
10
|
%
|
|
9
|
%
|
|
5
|
%
|
|||
Fixed-rate mortgages
|
|
90
|
%
|
|
91
|
%
|
|
95
|
%
|
|||
|
|
|
|
|
|
|
||||||
Operating profit:
|
|
|
|
|
|
|
|
|
|
|||
Segment profit
|
|
$
|
93,462
|
|
|
$
|
73,959
|
|
|
$
|
63,711
|
|
Equity-based compensation expense
|
|
(4,836
|
)
|
|
(3,418
|
)
|
|
(3,116
|
)
|
|||
Mortgage banking income
|
|
$
|
88,626
|
|
|
$
|
70,541
|
|
|
$
|
60,595
|
|
|
|
|
|
|
|
|
||||||
Capture rate:
|
|
88
|
%
|
|
88
|
%
|
|
88
|
%
|
|||
|
|
|
|
|
|
|
||||||
Mortgage banking fees:
|
|
|
|
|
|
|
|
|
|
|||
Net gain on sale of loans
|
|
$
|
122,755
|
|
|
$
|
99,132
|
|
|
$
|
85,535
|
|
Title services
|
|
36,001
|
|
|
30,626
|
|
|
27,233
|
|
|||
Servicing fees
|
|
614
|
|
|
561
|
|
|
553
|
|
|||
|
|
$
|
159,370
|
|
|
$
|
130,319
|
|
|
$
|
113,321
|
|
•
|
reduction in our federal statutory rate from 35% to 21% in 2018, and
|
•
|
remeasurement of our net deferred tax assets in the fourth quarter of 2017, which resulted in a charge to income tax expense of $62,702 in 2017.
|
|
|
Payments due by year
|
||||||||||||||||||
|
|
Total
|
|
2019
|
|
2020 to 2021
|
|
2022 to 2023
|
|
2024 and Later
|
||||||||||
Debt (1)
|
|
$
|
600,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
600,000
|
|
|
$
|
—
|
|
Interest on debt (1)
|
|
87,822
|
|
|
23,700
|
|
|
47,400
|
|
|
16,722
|
|
|
—
|
|
|||||
Operating leases (2)
|
|
107,703
|
|
|
31,564
|
|
|
39,541
|
|
|
23,991
|
|
|
12,607
|
|
|||||
Purchase obligations (3)
|
|
202,443
|
|
|
*
|
|
*
|
|
*
|
|
*
|
|||||||||
Uncertain tax positions (4)
|
|
34,300
|
|
|
*
|
|
*
|
|
*
|
|
*
|
|||||||||
Total
|
|
$
|
1,032,268
|
|
|
$
|
55,264
|
|
|
$
|
86,941
|
|
|
$
|
640,713
|
|
|
$
|
12,607
|
|
(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
|
(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)
|
|
|
|||||||||||||||||||||||
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|
Fair
Value
|
|||||||||||
Mortgage banking segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate sensitive assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Mortgage loans held for sale
|
|
$
|
447,444
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
447,444
|
|
|
$
|
458,324
|
|
Average interest rate
|
|
4.8
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.8
|
%
|
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Forward trades of mortgage-backed securities (a)
|
|
$
|
(10,057
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
(10,057
|
)
|
|
$
|
(10,057
|
)
|
Forward loan commitments (a)
|
|
$
|
13,486
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
13,486
|
|
|
$
|
13,486
|
|
Homebuilding segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate sensitive assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest-bearing deposits
|
|
$
|
571,841
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
571,841
|
|
|
$
|
571,841
|
|
Average interest rate
|
|
2.4
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
%
|
|
|
||||
Interest rate sensitive liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed rate obligations
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
600,000
|
|
|
—
|
|
|
—
|
|
|
$
|
600,000
|
|
|
$
|
594,000
|
|
Average interest rate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
%
|
|
—
|
|
|
—
|
|
|
4.0
|
%
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Represents the fair value recorded pursuant to ASC 815,
Derivatives and Hedging
.
|
Name
|
|
Age
|
|
Positions
|
Paul C. Saville
|
|
63
|
|
President and Chief Executive Officer of NVR
|
Daniel D. Malzahn
|
|
49
|
|
Senior Vice President, Chief Financial Officer and Treasurer of NVR
|
Jeffrey D. Martchek
|
|
53
|
|
President of Homebuilding Operations of NVR
|
Paul W. Praylo
|
|
47
|
|
Senior Vice President and Chief Operating Officer
|
Robert W. Henley
|
|
52
|
|
President of NVRM
|
Eugene J. Bredow
|
|
49
|
|
Senior Vice President and Chief Administrative Officer
|
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)
|
|
1,007,378
|
|
|
$
|
1,796.52
|
|
|
257,485
|
|
Equity compensation plans not approved by security holders
|
|
62,634
|
|
|
$
|
703.00
|
|
|
—
|
|
Total
|
|
1,070,012
|
|
|
$
|
1,732.51
|
|
|
257,485
|
|
(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, 2018
, there are 20,812 RSUs outstanding. Of the total
257,485
shares remaining available for future issuance under the shareholder approved plans, up to a total of 61,694 may be issued as RSUs. The weighted-average exercise price of outstanding options under security holder approved plans, excluding outstanding RSUs, was $1,834.42.
|
|
|
|
|
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*
|
|
|
10-Q
|
|
|
|
10.1
|
|
5/1/2018
|
|
10.8*
|
|
|
|
|
|
|
|
|
|
|
10.9*
|
|
|
S-8
|
|
333-29241
|
|
4.1
|
|
6/13/1997
|
|
10.10*
|
|
Employee Stock Ownership Plan of NVR, Inc.
|
|
10-K/A
|
|
|
|
|
|
12/31/1994
|
10.11*
|
|
|
S-8
|
|
333-79951
|
|
4
|
|
6/4/1999
|
|
10.12*
|
|
|
S-8
|
|
333-56732
|
|
99.1
|
|
3/8/2001
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
File
Number
|
|
Exhibit
Number
|
|
Filing Date
|
10.13*
|
|
|
10-Q
|
|
|
|
10.5
|
|
11/6/2015
|
|
10.14*
|
|
|
10-K
|
|
|
|
10.36
|
|
2/15/2017
|
|
10.15*
|
|
|
|
|
|
|
|
|
|
|
10.16*
|
|
|
S-8
|
|
333-224629
|
|
10.1
|
|
5/3/2018
|
|
10.17*
|
|
|
8-K
|
|
|
|
10.1
|
|
5/14/2018
|
|
10.18*
|
|
|
8-K
|
|
|
|
10.2
|
|
5/14/2018
|
|
10.19*
|
|
|
8-K
|
|
|
|
10.3
|
|
5/14/2018
|
|
10.20*
|
|
|
8-K
|
|
|
|
10.4
|
|
5/14/2018
|
|
10.21*
|
|
|
8-K
|
|
|
|
10.5
|
|
5/14/2018
|
|
10.22*
|
|
|
8-K
|
|
|
|
10.6
|
|
5/14/2018
|
|
10.23*
|
|
|
S-8
|
|
333-195756
|
|
10.1
|
|
5/7/2014
|
|
10.24*
|
|
|
10-K
|
|
|
|
10.2
|
|
2/14/2018
|
|
10.25*
|
|
|
8-K
|
|
|
|
10.2
|
|
5/7/2014
|
|
10.26*
|
|
|
10-K
|
|
|
|
10.17
|
|
2/14/2018
|
|
10.27*
|
|
|
8-K
|
|
|
|
10.4
|
|
5/7/2014
|
|
10.28*
|
|
|
S-8
|
|
333-166512
|
|
10.1
|
|
5/4/2010
|
|
10.29*
|
|
|
|
|
|
|
|
|
|
|
10.30*
|
|
|
|
|
|
|
|
|
|
|
10.31*
|
|
|
8-K
|
|
|
|
10.2
|
|
5/6/2010
|
|
10.32*
|
|
|
10-Q
|
|
|
|
10.2
|
|
7/30/2013
|
|
10.33*
|
|
|
8-K
|
|
|
|
10.4
|
|
5/6/2010
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
File
Number
|
|
Exhibit
Number
|
|
Filing Date
|
10.34*
|
|
|
8-K
|
|
|
|
10.1
|
|
1/7/2008
|
|
10.35*
|
|
|
8-K
|
|
|
|
10.1
|
|
1/21/2016
|
|
10.36*
|
|
|
8-K
|
|
|
|
10.2
|
|
1/21/2016
|
|
10.37*
|
|
|
8-K
|
|
|
|
10.3
|
|
1/21/2016
|
|
10.38*
|
|
|
8-K
|
|
|
|
10.4
|
|
1/21/2016
|
|
10.39*
|
|
|
8-K
|
|
|
|
10.5
|
|
1/21/2016
|
|
10.40*
|
|
|
8-K
|
|
|
|
10.6
|
|
1/21/2016
|
|
10.41*
|
|
|
8-K
|
|
|
|
10.7
|
|
1/21/2016
|
|
10.42*
|
|
|
8-K
|
|
|
|
10.8
|
|
1/21/2016
|
|
10.43*
|
|
|
10-Q
|
|
|
|
10.2
|
|
7/28/2016
|
|
10.44*
|
|
|
10-Q
|
|
|
|
10.1
|
|
7/28/2017
|
|
10.45*
|
|
|
10-Q
|
|
|
|
10.1
|
|
7/30/2018
|
|
10.46*
|
|
|
8-K
|
|
|
|
10.1
|
|
7/18/2016
|
|
10.47*
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
NVR, Inc.
|
|
|
|
By:
|
/s/ Paul C. Saville
|
|
|
|
Paul C. Saville
|
|
|
|
President and Chief Executive Officer
|
|
Signature
|
|
Title
|
|
Date
|
/s/ Dwight C. Schar
|
|
Chairman
|
|
February 13, 2019
|
Dwight C. Schar
|
|
|
|
|
/s/ C. E. Andrews
|
|
Director
|
|
February 13, 2019
|
C. E. Andrews
|
|
|
|
|
/s/ Timothy M. Donahue
|
|
Director
|
|
February 13, 2019
|
Timothy M. Donahue
|
|
|
|
|
/s/ Thomas D. Eckert
|
|
Director
|
|
February 13, 2019
|
Thomas D. Eckert
|
|
|
|
|
/s/ Alfred E. Festa
|
|
Director
|
|
February 13, 2019
|
Alfred E. Festa
|
|
|
|
|
/s/ Ed Grier
|
|
Director
|
|
February 13, 2019
|
Ed Grier
|
|
|
|
|
/s/ Manuel H. Johnson
|
|
Director
|
|
February 13, 2019
|
Manuel H. Johnson
|
|
|
|
|
/s/ Alexandra A. Jung
|
|
Director
|
|
February 13, 2019
|
Alexandra A. Jung
|
|
|
|
|
/s/ Mel Martinez
|
|
Director
|
|
February 13, 2019
|
Mel Martinez
|
|
|
|
|
/s/ William A. Moran
|
|
Director
|
|
February 13, 2019
|
William A. Moran
|
|
|
|
|
/s/ David A. Preiser
|
|
Director
|
|
February 13, 2019
|
David A. Preiser
|
|
|
|
|
/s/ W. Grady Rosier
|
|
Director
|
|
February 13, 2019
|
W. Grady Rosier
|
|
|
|
|
/s/ Susan Williamson Ross
|
|
Director
|
|
February 13, 2019
|
Susan Williamson Ross
|
|
|
|
|
/s/ Paul C. Saville
|
|
Principal Executive Officer
|
|
February 13, 2019
|
Paul C. Saville
|
|
|
|
|
/s/ Daniel D. Malzahn
|
|
Principal Financial Officer
|
|
February 13, 2019
|
Daniel D. Malzahn
|
|
|
|
|
/s/ Matthew B. Kelpy
|
|
Principal Accounting Officer
|
|
February 13, 2019
|
Matthew B. Kelpy
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Homebuilding:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
688,783
|
|
|
$
|
645,087
|
|
Restricted cash
|
16,982
|
|
|
19,438
|
|
||
Receivables
|
18,641
|
|
|
20,026
|
|
||
Inventory:
|
|
|
|
||||
Lots and housing units, covered under sales agreements with customers
|
1,076,904
|
|
|
1,046,094
|
|
||
Unsold lots and housing units
|
115,631
|
|
|
148,620
|
|
||
Land under development
|
38,857
|
|
|
34,212
|
|
||
Building materials and other
|
21,718
|
|
|
17,273
|
|
||
|
1,253,110
|
|
|
1,246,199
|
|
||
|
|
|
|
||||
Contract land deposits, net
|
396,177
|
|
|
370,429
|
|
||
Property, plant and equipment, net
|
42,234
|
|
|
43,191
|
|
||
Reorganization value in excess of amounts allocable to identifiable assets, net
|
41,580
|
|
|
41,580
|
|
||
Deferred tax assets, net
|
112,333
|
|
|
111,953
|
|
||
Other assets
|
71,671
|
|
|
86,977
|
|
||
|
2,641,511
|
|
|
2,584,880
|
|
||
Mortgage Banking:
|
|
|
|
||||
Cash and cash equivalents
|
23,092
|
|
|
21,707
|
|
||
Restricted cash
|
3,071
|
|
|
2,256
|
|
||
Mortgage loans held for sale, net
|
458,324
|
|
|
352,489
|
|
||
Property and equipment, net
|
6,510
|
|
|
6,327
|
|
||
Reorganization value in excess of amounts allocable to identifiable assets, net
|
7,347
|
|
|
7,347
|
|
||
Other assets
|
26,078
|
|
|
14,273
|
|
||
|
524,422
|
|
|
404,399
|
|
||
Total assets
|
$
|
3,165,933
|
|
|
$
|
2,989,279
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Homebuilding:
|
|
|
|
||||
Accounts payable
|
$
|
244,496
|
|
|
$
|
261,973
|
|
Accrued expenses and other liabilities
|
332,871
|
|
|
341,891
|
|
||
Customer deposits
|
138,246
|
|
|
150,033
|
|
||
Senior notes
|
597,681
|
|
|
597,066
|
|
||
|
1,313,294
|
|
|
1,350,963
|
|
||
Mortgage Banking:
|
|
|
|
||||
Accounts payable and other liabilities
|
44,077
|
|
|
32,824
|
|
||
|
44,077
|
|
|
32,824
|
|
||
Total liabilities
|
1,357,371
|
|
|
1,383,787
|
|
||
|
|
|
|
||||
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, 2018 and December 31, 2017
|
206
|
|
|
206
|
|
||
Additional paid-in capital
|
1,820,223
|
|
|
1,644,197
|
|
||
Deferred compensation trust – 107,340 and 108,640 shares of NVR, Inc. common stock as of December 31, 2018 and December 31, 2017, respectively
|
(16,937
|
)
|
|
(17,383
|
)
|
||
Deferred compensation liability
|
16,937
|
|
|
17,383
|
|
||
Retained earnings
|
7,031,333
|
|
|
6,231,940
|
|
||
Less treasury stock at cost – 16,977,499 and 16,864,324 shares as of December 31, 2018 and December 31, 2017, respectively
|
(7,043,200
|
)
|
|
(6,270,851
|
)
|
||
Total shareholders' equity
|
1,808,562
|
|
|
1,605,492
|
|
||
Total liabilities and shareholders' equity
|
$
|
3,165,933
|
|
|
$
|
2,989,279
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Homebuilding:
|
|
|
|
|
|
||||||
Revenues
|
$
|
7,004,304
|
|
|
$
|
6,175,521
|
|
|
$
|
5,709,223
|
|
Other income
|
11,839
|
|
|
6,536
|
|
|
2,820
|
|
|||
Cost of sales
|
(5,692,127
|
)
|
|
(4,990,378
|
)
|
|
(4,707,861
|
)
|
|||
Selling, general and administrative
|
(428,874
|
)
|
|
(392,272
|
)
|
|
(382,459
|
)
|
|||
Operating income
|
895,142
|
|
|
799,407
|
|
|
621,723
|
|
|||
Interest expense
|
(24,036
|
)
|
|
(23,037
|
)
|
|
(20,621
|
)
|
|||
Homebuilding income
|
871,106
|
|
|
776,370
|
|
|
601,102
|
|
|||
|
|
|
|
|
|
||||||
Mortgage Banking:
|
|
|
|
|
|
||||||
Mortgage banking fees
|
159,370
|
|
|
130,319
|
|
|
113,321
|
|
|||
Interest income
|
11,593
|
|
|
7,850
|
|
|
7,569
|
|
|||
Other income
|
2,546
|
|
|
2,048
|
|
|
1,652
|
|
|||
General and administrative
|
(83,838
|
)
|
|
(68,528
|
)
|
|
(60,861
|
)
|
|||
Interest expense
|
(1,045
|
)
|
|
(1,148
|
)
|
|
(1,086
|
)
|
|||
Mortgage banking income
|
88,626
|
|
|
70,541
|
|
|
60,595
|
|
|||
|
|
|
|
|
|
||||||
Income before taxes
|
959,732
|
|
|
846,911
|
|
|
661,697
|
|
|||
Income tax expense
|
(162,535
|
)
|
|
(309,390
|
)
|
|
(236,435
|
)
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
797,197
|
|
|
$
|
537,521
|
|
|
$
|
425,262
|
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
219.58
|
|
|
$
|
144.00
|
|
|
$
|
110.53
|
|
|
|
|
|
|
|
||||||
Diluted earnings per share
|
$
|
194.80
|
|
|
$
|
126.77
|
|
|
$
|
103.61
|
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
3,631
|
|
|
3,733
|
|
|
3,847
|
|
|||
|
|
|
|
|
|
||||||
Diluted weighted average shares outstanding
|
4,092
|
|
|
4,240
|
|
|
4,104
|
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Deferred
Compensation
Trust
|
|
Deferred
Compensation
Liability
|
|
Total
|
||||||||||||||
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, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cumulative-effect adjustment from adoption of ASU 2014-09, net of tax
|
—
|
|
|
—
|
|
|
2,196
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,196
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
797,197
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
797,197
|
|
|||||||
Deferred compensation activity, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
446
|
|
|
(446
|
)
|
|
—
|
|
|||||||
Purchase of common stock for treasury
|
—
|
|
|
—
|
|
|
—
|
|
|
(846,134
|
)
|
|
—
|
|
|
—
|
|
|
(846,134
|
)
|
|||||||
Equity-based compensation
|
—
|
|
|
75,701
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75,701
|
|
|||||||
Proceeds from stock options exercised
|
—
|
|
|
174,110
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
174,110
|
|
|||||||
Treasury stock issued upon option exercise and restricted share vesting
|
—
|
|
|
(73,785
|
)
|
|
—
|
|
|
73,785
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Balance, December 31, 2018
|
$
|
206
|
|
|
$
|
1,820,223
|
|
|
$
|
7,031,333
|
|
|
$
|
(7,043,200
|
)
|
|
$
|
(16,937
|
)
|
|
$
|
16,937
|
|
|
$
|
1,808,562
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
797,197
|
|
|
$
|
537,521
|
|
|
$
|
425,262
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||||||
Depreciation and amortization
|
20,168
|
|
|
22,667
|
|
|
22,269
|
|
|||
Equity-based compensation expense
|
75,701
|
|
|
44,562
|
|
|
43,598
|
|
|||
Contract land deposit and other impairments (recoveries), net
|
11,760
|
|
|
1,238
|
|
|
(4,269
|
)
|
|||
Gain on sale of loans, net
|
(122,755
|
)
|
|
(99,132
|
)
|
|
(85,535
|
)
|
|||
Deferred tax expense (benefit)
|
914
|
|
|
61,290
|
|
|
(10,024
|
)
|
|||
Mortgage loans closed
|
(4,828,615
|
)
|
|
(4,077,372
|
)
|
|
(3,660,269
|
)
|
|||
Mortgage loans sold and principal payments on mortgage loans held for sale
|
4,845,999
|
|
|
4,182,220
|
|
|
3,710,250
|
|
|||
Distribution of earnings from unconsolidated joint ventures
|
4,596
|
|
|
4,788
|
|
|
10,016
|
|
|||
Net change in assets and liabilities:
|
|
|
|
|
|
||||||
Increase in inventory
|
(6,911
|
)
|
|
(154,099
|
)
|
|
(85,194
|
)
|
|||
(Increase) decrease in contract land deposits
|
(30,863
|
)
|
|
8,177
|
|
|
(32,280
|
)
|
|||
Increase in receivables
|
(1,008
|
)
|
|
(348
|
)
|
|
(8,779
|
)
|
|||
(Decrease) increase in accounts payable and accrued expenses
|
(30,713
|
)
|
|
10,789
|
|
|
58,532
|
|
|||
(Decrease) increase in customer deposits
|
(11,787
|
)
|
|
27,797
|
|
|
11,271
|
|
|||
Other, net
|
(557
|
)
|
|
256
|
|
|
(1,860
|
)
|
|||
Net cash provided by operating activities
|
723,126
|
|
|
570,354
|
|
|
392,988
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Investments in and advances to unconsolidated joint ventures
|
(284
|
)
|
|
(3,800
|
)
|
|
(653
|
)
|
|||
Distribution of capital from unconsolidated joint ventures
|
10,515
|
|
|
8,029
|
|
|
11,672
|
|
|||
Purchase of property, plant and equipment
|
(19,665
|
)
|
|
(20,269
|
)
|
|
(22,369
|
)
|
|||
Proceeds from the sale of property, plant and equipment
|
1,257
|
|
|
847
|
|
|
1,000
|
|
|||
Net cash used in investing activities
|
(8,177
|
)
|
|
(15,193
|
)
|
|
(10,350
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Purchase of treasury stock
|
(846,134
|
)
|
|
(422,166
|
)
|
|
(455,351
|
)
|
|||
Distributions to partner in consolidated variable interest entity
|
(234
|
)
|
|
—
|
|
|
(150
|
)
|
|||
Proceeds from the exercise of stock options
|
174,110
|
|
|
140,525
|
|
|
38,106
|
|
|||
Net cash used in financing activities
|
(672,258
|
)
|
|
(281,641
|
)
|
|
(417,395
|
)
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash, restricted cash, and cash equivalents
|
42,691
|
|
|
273,520
|
|
|
(34,757
|
)
|
|||
Cash, restricted cash, and cash equivalents, beginning of the year
|
689,557
|
|
|
416,037
|
|
|
450,794
|
|
|||
|
|
|
|
|
|
||||||
Cash, restricted cash, and cash equivalents, end of the year
|
$
|
732,248
|
|
|
$
|
689,557
|
|
|
$
|
416,037
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Interest paid during the year, net of interest capitalized
|
$
|
24,178
|
|
|
$
|
23,251
|
|
|
$
|
20,922
|
|
Income taxes paid during the year, net of refunds
|
$
|
181,166
|
|
|
$
|
260,232
|
|
|
$
|
218,984
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Weighted average number of shares outstanding used to
calculate basic EPS
|
|
3,631
|
|
|
3,733
|
|
|
3,847
|
|
Dilutive securities:
|
|
|
|
|
|
|
|
||
Stock options and restricted share units
|
|
461
|
|
|
507
|
|
|
257
|
|
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS
|
|
4,092
|
|
|
4,240
|
|
|
4,104
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Anti-dilutive securities
|
|
370
|
|
|
15
|
|
|
87
|
|
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,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Homebuilding Mid Atlantic
|
|
$
|
3,893,358
|
|
|
$
|
3,543,687
|
|
|
$
|
3,319,776
|
|
Homebuilding North East
|
|
580,726
|
|
|
517,141
|
|
|
462,385
|
|
|||
Homebuilding Mid East
|
|
1,455,834
|
|
|
1,250,165
|
|
|
1,192,472
|
|
|||
Homebuilding South East
|
|
1,074,386
|
|
|
864,528
|
|
|
734,590
|
|
|||
Mortgage Banking
|
|
159,370
|
|
|
130,319
|
|
|
113,321
|
|
|||
Consolidated revenues
|
|
$
|
7,163,674
|
|
|
$
|
6,305,840
|
|
|
$
|
5,822,544
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Profit before taxes:
|
|
|
|
|
|
|
||||||
Homebuilding Mid Atlantic
|
|
$
|
462,178
|
|
|
$
|
398,494
|
|
|
$
|
301,173
|
|
Homebuilding North East
|
|
69,789
|
|
|
60,218
|
|
|
21,947
|
|
|||
Homebuilding Mid East
|
|
175,134
|
|
|
149,639
|
|
|
121,166
|
|
|||
Homebuilding South East
|
|
118,296
|
|
|
95,826
|
|
|
71,098
|
|
|||
Mortgage Banking
|
|
93,462
|
|
|
73,959
|
|
|
63,711
|
|
|||
Total segment profit
|
|
918,859
|
|
|
778,136
|
|
|
579,095
|
|
|||
Reconciling items:
|
|
|
|
|
|
|
||||||
Contract land deposit reserve adjustment (1)
|
|
783
|
|
|
1,307
|
|
|
10,933
|
|
|||
Equity-based compensation expense (2)
|
|
(75,701
|
)
|
|
(44,562
|
)
|
|
(43,598
|
)
|
|||
Corporate capital allocation (3)
|
|
213,903
|
|
|
198,384
|
|
|
189,992
|
|
|||
Unallocated corporate overhead
|
|
(89,973
|
)
|
|
(89,514
|
)
|
|
(89,376
|
)
|
|||
Consolidation adjustments and other
|
|
15,829
|
|
|
26,143
|
|
|
35,204
|
|
|||
Corporate interest expense
|
|
(23,968
|
)
|
|
(22,983
|
)
|
|
(20,553
|
)
|
|||
Reconciling items sub-total
|
|
40,873
|
|
|
68,775
|
|
|
82,602
|
|
|||
Consolidated profit before taxes
|
|
$
|
959,732
|
|
|
$
|
846,911
|
|
|
$
|
661,697
|
|
(1)
|
This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments.
|
(2)
|
The increase in equity-based compensation expense for the year ended December 31, 2018 was primarily attributable to the issuance of Options and RSUs in the second quarter of 2018. See Note 12 for additional discussion of equity-based compensation.
|
(3)
|
This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the years presented:
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Corporate capital allocation charge:
|
|
|
|
|
|
|
|
|||||
Homebuilding Mid Atlantic
|
|
$
|
123,855
|
|
|
$
|
123,028
|
|
|
$
|
119,758
|
|
Homebuilding North East
|
|
17,893
|
|
|
16,115
|
|
|
18,132
|
|
|||
Homebuilding Mid East
|
|
35,803
|
|
|
29,663
|
|
|
28,303
|
|
|||
Homebuilding South East
|
|
36,352
|
|
|
29,578
|
|
|
23,799
|
|
|||
Total corporate capital allocation charge
|
|
$
|
213,903
|
|
|
$
|
198,384
|
|
|
$
|
189,992
|
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Assets:
|
|
|
|
|
||||
Homebuilding Mid Atlantic
|
|
$
|
1,018,953
|
|
|
$
|
1,079,225
|
|
Homebuilding North East
|
|
144,412
|
|
|
143,008
|
|
||
Homebuilding Mid East
|
|
290,815
|
|
|
263,019
|
|
||
Homebuilding South East
|
|
332,468
|
|
|
277,705
|
|
||
Mortgage Banking
|
|
517,075
|
|
|
397,052
|
|
||
Total segment assets
|
|
2,303,723
|
|
|
2,160,009
|
|
||
Reconciling items:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
688,783
|
|
|
645,087
|
|
||
Deferred taxes
|
|
112,333
|
|
|
111,953
|
|
||
Intangible assets and goodwill
|
|
49,989
|
|
|
50,144
|
|
||
Contract land deposit reserve
|
|
(29,216
|
)
|
|
(29,999
|
)
|
||
Consolidation adjustments and other
|
|
40,321
|
|
|
52,085
|
|
||
Reconciling items sub-total
|
|
862,210
|
|
|
829,270
|
|
||
Consolidated assets
|
|
$
|
3,165,933
|
|
|
$
|
2,989,279
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Interest income:
|
|
|
|
|
|
|
||||||
Mortgage Banking
|
|
$
|
11,593
|
|
|
$
|
7,850
|
|
|
$
|
7,569
|
|
Total segment interest income
|
|
11,593
|
|
|
7,850
|
|
|
7,569
|
|
|||
Other unallocated interest income
|
|
8,588
|
|
|
4,554
|
|
|
1,111
|
|
|||
Consolidated interest income
|
|
$
|
20,181
|
|
|
$
|
12,404
|
|
|
$
|
8,680
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Interest expense:
|
|
|
|
|
|
|
||||||
Homebuilding Mid Atlantic
|
|
$
|
123,908
|
|
|
$
|
123,075
|
|
|
$
|
119,808
|
|
Homebuilding North East
|
|
17,897
|
|
|
16,117
|
|
|
18,141
|
|
|||
Homebuilding Mid East
|
|
35,804
|
|
|
29,663
|
|
|
28,307
|
|
|||
Homebuilding South East
|
|
36,362
|
|
|
29,583
|
|
|
23,804
|
|
|||
Mortgage Banking
|
|
1,045
|
|
|
1,148
|
|
|
1,086
|
|
|||
Total segment interest expense
|
|
215,016
|
|
|
199,586
|
|
|
191,146
|
|
|||
Corporate capital allocation (3)
|
|
(213,903
|
)
|
|
(198,384
|
)
|
|
(189,992
|
)
|
|||
Senior Notes and other interest
|
|
23,968
|
|
|
22,983
|
|
|
20,553
|
|
|||
Consolidated interest expense
|
|
$
|
25,081
|
|
|
$
|
24,185
|
|
|
$
|
21,707
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
|
||||||
Homebuilding Mid Atlantic
|
|
$
|
7,753
|
|
|
$
|
8,095
|
|
|
$
|
8,089
|
|
Homebuilding North East
|
|
1,600
|
|
|
2,034
|
|
|
2,053
|
|
|||
Homebuilding Mid East
|
|
3,481
|
|
|
3,590
|
|
|
3,748
|
|
|||
Homebuilding South East
|
|
2,523
|
|
|
2,531
|
|
|
2,276
|
|
|||
Mortgage Banking
|
|
1,489
|
|
|
1,297
|
|
|
1,117
|
|
|||
Total segment depreciation and amortization
|
|
16,846
|
|
|
17,547
|
|
|
17,283
|
|
|||
Unallocated corporate
|
|
3,322
|
|
|
5,120
|
|
|
4,986
|
|
|||
Consolidated depreciation and amortization
|
|
$
|
20,168
|
|
|
$
|
22,667
|
|
|
$
|
22,269
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Expenditures for property and equipment:
|
|
|
|
|
|
|
||||||
Homebuilding Mid Atlantic
|
|
$
|
6,657
|
|
|
$
|
9,257
|
|
|
$
|
8,838
|
|
Homebuilding North East
|
|
1,074
|
|
|
1,299
|
|
|
3,423
|
|
|||
Homebuilding Mid East
|
|
4,302
|
|
|
3,117
|
|
|
4,027
|
|
|||
Homebuilding South East
|
|
2,732
|
|
|
3,313
|
|
|
3,594
|
|
|||
Mortgage Banking
|
|
1,677
|
|
|
2,723
|
|
|
726
|
|
|||
Total segment expenditures for property and equipment
|
|
16,442
|
|
|
19,709
|
|
|
20,608
|
|
|||
Unallocated corporate
|
|
3,223
|
|
|
560
|
|
|
1,761
|
|
|||
Consolidated expenditures for property and equipment
|
|
$
|
19,665
|
|
|
$
|
20,269
|
|
|
$
|
22,369
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Contract land deposits
|
|
$
|
425,393
|
|
|
$
|
400,428
|
|
Loss reserve on contract land deposits
|
|
(29,216
|
)
|
|
(29,999
|
)
|
||
Contract land deposits, net
|
|
396,177
|
|
|
370,429
|
|
||
Contingent obligations in the form of letters of credit
|
|
3,923
|
|
|
1,996
|
|
||
Contingent specific performance obligations (1)
|
|
1,505
|
|
|
1,505
|
|
||
Total risk of loss
|
|
$
|
401,605
|
|
|
$
|
373,930
|
|
(1)
|
As of both
December 31, 2018
and
2017
, the Company was committed to purchase
10
finished lots under specific performance obligations.
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Assets:
|
|
|
|
|
||||
Cash
|
|
$
|
320
|
|
|
$
|
1,069
|
|
Other assets
|
|
—
|
|
|
37
|
|
||
Total assets
|
|
$
|
320
|
|
|
$
|
1,106
|
|
|
|
|
|
|
||||
Liabilities and equity:
|
|
|
|
|
||||
Accrued expenses
|
|
$
|
282
|
|
|
$
|
487
|
|
Equity
|
|
38
|
|
|
619
|
|
||
Total liabilities and equity
|
|
$
|
320
|
|
|
$
|
1,106
|
|
|
|
December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Interest capitalized, beginning of year
|
|
$
|
5,583
|
|
|
$
|
5,106
|
|
|
$
|
4,434
|
|
Interest incurred
|
|
26,277
|
|
|
26,384
|
|
|
25,951
|
|
|||
Interest charged to interest expense
|
|
(25,081
|
)
|
|
(24,185
|
)
|
|
(21,707
|
)
|
|||
Interest charged to cost of sales
|
|
(2,625
|
)
|
|
(1,722
|
)
|
|
(3,572
|
)
|
|||
Interest capitalized, end of year
|
|
$
|
4,154
|
|
|
$
|
5,583
|
|
|
$
|
5,106
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Homebuilding:
|
|
|
|
|
||||
Office facilities and other
|
|
$
|
37,789
|
|
|
$
|
35,219
|
|
Model home furniture and fixtures
|
|
31,593
|
|
|
33,901
|
|
||
Production facilities
|
|
64,667
|
|
|
61,348
|
|
||
Gross Homebuilding PP&E
|
|
134,049
|
|
|
130,468
|
|
||
Less: accumulated depreciation
|
|
(91,815
|
)
|
|
(87,277
|
)
|
||
Net Homebuilding PP&E
|
|
$
|
42,234
|
|
|
$
|
43,191
|
|
|
|
|
|
|
||||
Mortgage Banking:
|
|
|
|
|
||||
Office facilities and other
|
|
$
|
13,724
|
|
|
$
|
14,069
|
|
Less: accumulated depreciation
|
|
(7,214
|
)
|
|
(7,742
|
)
|
||
Net Mortgage Banking PP&E
|
|
$
|
6,510
|
|
|
$
|
6,327
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Aggregate purchase price
|
|
$
|
846,134
|
|
|
$
|
422,166
|
|
|
$
|
455,351
|
|
Number of shares repurchased
|
|
301
|
|
|
167
|
|
|
280
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
126,358
|
|
|
$
|
211,641
|
|
|
$
|
209,454
|
|
State
|
|
37,038
|
|
|
37,006
|
|
|
38,095
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
138
|
|
|
60,785
|
|
|
(9,230
|
)
|
|||
State
|
|
(999
|
)
|
|
(42
|
)
|
|
(1,884
|
)
|
|||
Income tax expense
|
|
$
|
162,535
|
|
|
$
|
309,390
|
|
|
$
|
236,435
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Other accrued expenses and contract land deposit reserve
|
|
$
|
51,316
|
|
|
$
|
49,063
|
|
Deferred compensation
|
|
4,693
|
|
|
4,743
|
|
||
Equity-based compensation expense
|
|
40,744
|
|
|
36,799
|
|
||
Inventory
|
|
9,242
|
|
|
9,393
|
|
||
Unrecognized tax benefit
|
|
13,587
|
|
|
14,351
|
|
||
Other
|
|
5,113
|
|
|
9,681
|
|
||
Total deferred tax assets
|
|
124,695
|
|
|
124,030
|
|
||
Less: Deferred tax liabilities
|
|
6,091
|
|
|
4,511
|
|
||
Net deferred tax asset
|
|
$
|
118,604
|
|
|
$
|
119,519
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income taxes computed at the federal statutory rate
|
|
$
|
201,544
|
|
|
$
|
296,419
|
|
|
$
|
231,595
|
|
State income taxes, net of federal income tax benefit (1)
|
|
42,944
|
|
|
30,046
|
|
|
23,738
|
|
|||
Excess tax benefits from equity-based compensation (2)
|
|
(77,478
|
)
|
|
(58,681
|
)
|
|
—
|
|
|||
Remeasurement of net deferred tax assets due to enactment of Tax Cut and Jobs Act (3)
|
|
(497
|
)
|
|
62,702
|
|
|
—
|
|
|||
Other, net (4)
|
|
(3,978
|
)
|
|
(21,096
|
)
|
|
(18,898
|
)
|
|||
Income tax expense
|
|
$
|
162,535
|
|
|
$
|
309,390
|
|
|
$
|
236,435
|
|
(1)
|
Excludes state excess tax benefits from equity-based compensation included in the line below.
|
(2)
|
ASU 2016-09 adopted January 1, 2017. Excess tax benefits related to equity-based compensation of
$13,661
in 2016 were recorded to shareholders' equity.
|
(3)
|
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
.
|
(4)
|
Primarily attributable to tax benefits from certain energy credits for the year ended December 31, 2018. For the years ended December 31, 2017 and 2016, this was primarily attributable to tax benefits from the domestic production activities deduction. The domestic production activities deduction was eliminated effective January 1, 2018, following the enactment of the Tax Cuts and Jobs Act in December 2017.
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Balance at beginning of year
|
|
$
|
45,337
|
|
|
$
|
46,110
|
|
Additions based on tax positions related to the current year
|
|
4,340
|
|
|
4,793
|
|
||
Reductions for tax positions of prior years
|
|
(6,259
|
)
|
|
(5,566
|
)
|
||
Settlements
|
|
—
|
|
|
—
|
|
||
Balance at end of year
|
|
$
|
43,418
|
|
|
$
|
45,337
|
|
Equity-Based Compensation Plans
|
|
Shares
Authorized
|
|
Options/RSUs
Outstanding
|
|
Shares
Available to Issue
|
|||
2000 Broadly-Based Stock Option Plan
|
|
2,000
|
|
|
63
|
|
|
—
|
|
2010 Equity Incentive Plan (1)
|
|
700
|
|
|
160
|
|
|
26
|
|
2014 Equity Incentive Plan (2)
|
|
950
|
|
|
701
|
|
|
102
|
|
2018 Equity Incentive Plan (3)
|
|
275
|
|
|
146
|
|
|
129
|
|
(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 Directors. Of the
700
aggregate shares available to issue, up to
240
may be granted in the form of RSUs. There were
139
Options and
21
RSUs outstanding as of
December 31, 2018
. Of the
26
shares available to be issued under the 2010 Plan,
22
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 Directors.
|
(3)
|
The Company’s shareholders approved the 2018 Equity Incentive Plan (the "2018 Plan") at the Company’s Annual Meeting of Shareholders held on May 2, 2018. The 2018 Plan authorizes the Company to issue up to an aggregate of
275
shares of the Company’s common stock in the form of Options and RSUs to key management employees, including executive officers and Directors. Of the
275
aggregate shares available to issue, all may be granted in the form of Options and up to
40
may be granted in the form of RSUs.
|
|
|
2010 Plan
|
|
2014 Plan
|
|
2018 Plan
|
|||
Options Granted
|
|
|
|
|
|
|
|||
Options (4)
|
|
6
|
|
|
93
|
|
|
73
|
|
Performance-based Options (5)
|
|
—
|
|
|
100
|
|
|
73
|
|
Total Options Granted
|
|
6
|
|
|
193
|
|
|
146
|
|
|
|
|
|
|
|
|
|||
RSUs Granted
|
|
|
|
|
|
|
|||
RSUs (6)
|
|
8
|
|
|
—
|
|
|
—
|
|
Performance-based RSUs (7)
|
|
8
|
|
|
—
|
|
|
—
|
|
Total RSUs Granted
|
|
16
|
|
|
—
|
|
|
—
|
|
|
|
Shares
|
|
Weighted Avg. Per Share
Exercise Price
|
|
Weighted Avg. Remaining
Contract Life (years)
|
|
Aggregate
Intrinsic Value
|
|||||
Stock Options
|
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2017
|
|
916
|
|
|
$
|
1,119.92
|
|
|
|
|
|
||
Granted
|
|
345
|
|
|
3,013.61
|
|
|
|
|
|
|||
Exercised
|
|
(182
|
)
|
|
954.49
|
|
|
|
|
|
|||
Forfeited
|
|
(30
|
)
|
|
1,283.48
|
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
|
1,049
|
|
|
$
|
1,766.87
|
|
|
6.5
|
|
$
|
910,014
|
|
Exercisable at December 31, 2018
|
|
466
|
|
|
$
|
1,032.44
|
|
|
4.6
|
|
$
|
655,141
|
|
|
|
|
|
|
|
|
|
|
|||||
RSUs
|
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2017
|
|
10
|
|
|
|
|
|
|
|
||||
Granted
|
|
16
|
|
|
|
|
|
|
|
||||
Vested
|
|
(5
|
)
|
|
|
|
|
|
|
||||
Forfeited
|
|
—
|
|
|
|
|
|
|
|
||||
Outstanding at December 31, 2018
|
|
21
|
|
|
|
|
|
|
$
|
50,719
|
|
||
Vested, but not issued at December 31, 2018
|
|
5
|
|
|
|
|
|
|
$
|
11,532
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Estimated option life (years)
|
|
5.06
|
|
5.26
|
|
5.27
|
||||||
Risk free interest rate (range)
|
|
2.19%-3.13%
|
|
|
1.53%-2.38%
|
|
|
0.86%-2.21%
|
|
|||
Expected volatility (range)
|
|
16.57%-20.05%
|
|
|
15.09%-17.95%
|
|
|
15.91%-23.49%
|
|
|||
Expected dividend rate
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Weighted average grant-date fair value per share of options granted
|
|
$
|
687.81
|
|
|
$
|
494.17
|
|
|
$
|
320.21
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Aggregate exercise proceeds
|
|
$
|
174,110
|
|
|
$
|
140,525
|
|
|
$
|
38,106
|
|
Aggregate intrinsic value on exercise dates
|
|
$
|
355,318
|
|
|
$
|
206,890
|
|
|
$
|
96,600
|
|
Year Ending December 31,
|
|
||
2019
|
$
|
31,564
|
|
2020
|
22,210
|
|
|
2021
|
17,331
|
|
|
2022
|
13,667
|
|
|
2023
|
10,324
|
|
|
Thereafter
|
12,607
|
|
|
|
107,703
|
|
|
Sublease income
|
(25
|
)
|
|
|
$
|
107,678
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Warranty reserve, beginning of year
|
|
$
|
94,513
|
|
|
$
|
93,895
|
|
|
$
|
87,407
|
|
Provision
|
|
62,553
|
|
|
44,652
|
|
|
50,787
|
|
|||
Payments
|
|
(53,366
|
)
|
|
(44,034
|
)
|
|
(44,299
|
)
|
|||
Warranty reserve, end of year
|
|
$
|
103,700
|
|
|
$
|
94,513
|
|
|
$
|
93,895
|
|
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,
|
||||||
|
|
2018
|
|
2017
|
||||
Rate lock commitments:
|
|
|
|
|
||||
Gross assets
|
|
$
|
13,831
|
|
|
$
|
5,400
|
|
Gross liabilities
|
|
345
|
|
|
1,832
|
|
||
Net rate lock commitments
|
|
$
|
13,486
|
|
|
$
|
3,568
|
|
Forward sales contracts:
|
|
|
|
|
||||
Gross assets
|
|
$
|
64
|
|
|
$
|
992
|
|
Gross liabilities
|
|
10,121
|
|
|
667
|
|
||
Net forward sales contracts
|
|
$
|
(10,057
|
)
|
|
$
|
325
|
|
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
|
4th
Quarter
|
|
3rd
Quarter
|
|
2nd
Quarter
|
|
1st
Quarter
|
||||||||
Revenues – homebuilding operations
|
|
$
|
1,954,403
|
|
|
$
|
1,809,345
|
|
|
$
|
1,750,463
|
|
|
$
|
1,490,093
|
|
Gross profit – homebuilding operations
|
|
$
|
363,668
|
|
|
$
|
336,696
|
|
|
$
|
333,666
|
|
|
$
|
278,147
|
|
Mortgage banking fees
|
|
$
|
40,145
|
|
|
$
|
43,062
|
|
|
$
|
36,842
|
|
|
$
|
39,321
|
|
Net income
|
|
$
|
232,158
|
|
|
$
|
195,816
|
|
|
$
|
203,174
|
|
|
$
|
166,049
|
|
Diluted earnings per share
|
|
$
|
58.57
|
|
|
$
|
48.28
|
|
|
$
|
49.05
|
|
|
$
|
39.34
|
|
New orders (units)
|
|
3,841
|
|
|
4,302
|
|
|
4,964
|
|
|
5,174
|
|
||||
Settlements (units)
|
|
5,186
|
|
|
4,754
|
|
|
4,611
|
|
|
3,896
|
|
||||
Backlog, end of period (units)
|
|
8,365
|
|
|
9,710
|
|
|
10,162
|
|
|
9,809
|
|
||||
Loans closed
|
|
$
|
1,356,430
|
|
|
$
|
1,249,199
|
|
|
$
|
1,214,101
|
|
|
$
|
1,009,673
|
|
|
|
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
|
|
1.
|
Employment, Duties and Acceptance
.
|
1.1
|
Employment by the Company
. The Company hereby employs the Executive, for itself and its affiliates, to render exclusive and full-time services to the Company. The Executive will serve in the capacity of Senior Vice President and Chief Operating Officer. The Executive will perform such duties as are imposed on the holder of that office by the By-laws of the Company and such other duties as are customarily performed by one holding such position in the same or similar businesses or enterprises as those of the Company. The Executive will perform such other related duties as may be assigned to him from time to time by the Company’s Board of Directors or Chief Executive Officer. The Executive will devote his entire full working time and attention to the performance of such duties and to the promotion of the business and interests of the Company. This provision, however, will not prevent the Executive from investing his funds or assets in any form or manner, or from acting as a member of the board of directors of any companies, businesses, or charitable organizations, so long as such investments or companies do not compete with the Company, subject to the limitations set forth in Section 7.1.
|
1.2
|
Acceptance of Employment by the Executive
. The Executive accepts such employment and shall render the services described above.
|
1.3
|
Place of Employment
. The Executive’s principal place of employment shall be the Washington, D.C. metropolitan area, subject to such reasonable travel as the rendering of services associated with such position may require.
|
1.4
|
Acknowledgement
. By signing this Agreement, the Executive acknowledges that he has received copies of the Company’s current Code of Ethics and Standards of Business Conduct (collectively, the “Code”), has read and understood the Code’s content, and agrees to comply with the Code in all respects.
|
3.1
|
Base Salary
. As compensation for all services rendered pursuant to this Agreement, the Company will pay to the Executive an annual Base Salary of FIVE HUNDRED FIFTY THOUSAND DOLLARS ($550,000) payable in equal monthly installments of FORTY-FIVE THOUSAND EIGHT HUNDRED AND THIRTY-THREE DOLLARS AND 33 CENTS ($45,833.33). The Company’s Compensation Committee of the Board of Directors (the “Compensation Committee”) in its sole discretion may increase, but may not reduce, the Executive’s annual base salary.
|
3.2
|
Annual Bonus
. The Executive shall be eligible to be paid a bonus annually in cash pursuant to the Company’s annual incentive plan, as determined by the Compensation Committee (the “Annual Bonus”), in a maximum amount of 100% of the Executive’s annual base salary. The Annual Bonus (if any) shall be earned on the last day of the calendar year to which it relates, and shall be paid at the same time (or times) and in the same manner as annual bonuses for other senior executives of the Company. Entitlement to the Annual Bonus is dependent on the Executive meeting certain goals, which shall be established annually by the Company,
|
3.3
|
Participation in Employee Benefit Plans
. The Executive shall be permitted during the term of this Agreement, if and to the extent eligible, to participate in any group life, hospitalization or disability insurance plan, health program, pension plan, employee stock ownership plan or similar benefit plan of the Company, which may be available to other comparable executives of the Company generally, on the same terms as such other executives. The Executive shall be entitled to paid vacation and all customary holidays each year during the term of this Agreement in accordance with the Company’s policies.
|
3.4
|
Expenses
. Subject to such policies as may from time to time be established by the Company’s Board of Directors, the Company shall pay or reimburse the Executive for all reasonable expenses actually incurred or paid by the Executive in the performance of the Executive’s services under this Agreement upon presentation of expense statements or vouchers or such other supporting information as it may require.
|
3.5
|
Stock Holding Requirement
. The Executive is required to continuously hold at all times NVR, Inc. common stock with a value equal to six (6) times the Executive’s base salary as then in effect, subject to the Company’s policy titled the NVR, Inc. Stock Holding Requirement for NVR’s Board of Directors (“Directors”) and Certain Members of Senior Management (“Senior Management”), which is incorporated herein by reference. The stock holding requirement described in this Section 3.5 may be adjusted at any time by the Company’s Board of Directors upon thirty days’ written notice, but not more than once in any twelve (12) month period.
|
3.6
|
Hiring Bonus
. The Executive shall be eligible to earn a hiring bonus of $500,000 on the one (1) year anniversary date following the Effective Date and $500,000 on the two (2) year anniversary date following the Effective Date. The Executive must be employed by the Company on the specified anniversary date to earn the hiring bonus. In the event this Agreement terminates on December 31, 2020 and provided the Executive is employed by the Company on the two (2) year anniversary following the Effective Date, the Executive shall remain eligible to earn the hiring bonus due on the two (2) year anniversary date. Any hiring
|
3.7
|
Relocation Benefits
. The Executive shall be eligible to receive standard relocation benefits provided by the Company.
|
4.
|
Equity Incentive And Long-Term Incentive Plans
.
|
5.
|
Deferred Compensation Plan
.
|
6.
|
Termination, Disability or Retirement
.
|
6.1
|
Termination Upon Death
. If the Executive dies during the term hereof, this Agreement shall terminate, except that the Executive’s legal representatives shall be entitled to receive the Executive’s Base Salary and accrued Annual Bonus for the period ending on the last day of the second calendar month following the month in which the Executive’s death occurred. For purposes of this Section 6.1, the accrued Annual Bonus shall be calculated as one hundred percent (100%) of Base Salary multiplied by the fraction of (x) the number of days in the
|
6.2
|
Disability
. If during the term hereof the Executive becomes physically or mentally disabled, whether totally or partially, so that the Executive is, as determined by the Company’s Board of Directors in its sole discretion taking into account the Executive’s eligibility for benefits under Company-sponsored long-term disability plans or programs, substantially unable to perform his services hereunder, the Executive shall transfer from active to disability status. Nothing in this Section 6.2 shall be deemed to in any way affect the Executive’s right to participate in any disability plan maintained by the Company and for which the Executive is otherwise eligible. If the Executive transfers to disability status, he would be entitled to receive the Executive’s Base Salary and accrued Annual Bonus for the period ending on the last day of the second calendar month following the month in which the Executive is transferred to disability status. For purposes of this Section 6.2, the accrued Annual Bonus shall be calculated as one hundred percent (100%) of Base Salary multiplied by the fraction of (x) the number of days in the calendar year through the last day of the second calendar month following the month in which the Executive was transferred to disability status divided by (y) 365 days (regardless of whether the performance goals established pursuant to Section 3.2 are actually met for such year). Payments due under this Section 6.2 will be made in a lump sum within 10 days following six months and one day after the date the Executive transferred to disability status.
|
6.3
|
Retirement
. If the Executive elects to terminate employment upon meeting the established criteria for Retirement prior to the end of the term of this agreement, the Executive will be entitled to receive the Executive’s Base Salary for the period ending on the last day worked. “Retirement” means voluntary termination of employment after attainment of age 65. Any Annual Bonus amounts due to the Executive shall be payable, in the same form and at the same time that all other employees receive their bonus payment, to the extent performance goals for the year are achieved. The Annual Bonus shall be calculated as one hundred percent (100%) of Base Salary multiplied by the fraction of (x) the number of days in the calendar year through the last day worked by the Executive divided by (y) 365 days, multiplied by the
|
6.4
|
Termination for Cause
. The Company may terminate the Executive’s employment hereunder for Cause at any time by written notice to the Executive. In such event, the Executive is not entitled to any severance pay. A termination of the Executive under this Section 6.4 does not affect the Executive’s rights pursuant to Section 5 of this Agreement. “Cause”
means, as determined by the Board of Directors and described herein, (i) conviction of (a) a felony, (b) a willful or knowing violation of any federal or state securities law, or (c) a crime involving moral turpitude; (ii) gross negligence or gross misconduct in connection with the performance of the Executive’s duties as described in Section 1.1 herein (which shall include a breach of the Executive’s fiduciary duty of loyalty); or (iii) a material breach of any covenants by the Executive contained in any agreement between the Executive and the Company or its affiliates (including but not limited to breaching affirmative or negative covenants or undertakings set forth in Section 7 herein).
|
6.5
|
Termination Without Cause
. The Company may on sixty (60) days’ notice terminate the Executive’s employment without Cause (as such term is defined in Section 6.4) during the term of this Agreement. In the event of a termination without Cause on or prior to the one (1) year anniversary date following the Effective Date, as full satisfaction of the Company’s obligations to the Executive, the Executive shall be entitled to receive (i) the Executive’s Base Salary for the period ending on the date of termination and (ii) an amount equal to TWO HUNDRED PERCENT (200%) of his then annual Base Salary, paid in a lump sum within 10 days following six months and one day after the date of termination. In the event of a termination without Cause after the one (1) year anniversary date following the Effective Date, as full satisfaction of the Company’s obligations to the Executive, the Executive shall be entitled to receive (i) the Executive’s Base Salary and accrued Annual Bonus for the period ending on the date of termination and (ii) an amount equal to ONE HUNDRED PERCENT (100%) of his then annual Base Salary, paid in a lump sum within 10 days following six months and one day after the date of termination. For purposes of this Section 6.5, the accrued Annual Bonus shall be calculated as one hundred percent (100%) of Base Salary multiplied
|
6.6
|
Voluntary Termination
. The Executive may on ninety (90) days’ notice terminate his employment hereunder at any time during the term of this Agreement. In such event, he shall not be entitled to any severance pay except in the circumstances described in Section 6.7 below.
|
6.7
|
Voluntary Termination With Good Reason
. In the event of a voluntary termination by the Executive with Good Reason, the Executive shall be entitled to receive the same severance pay and benefits due upon a termination without Cause after the one-year anniversary date following the Effective Date pursuant to Section 6.5 above. “Good Reason” means (i) a material diminution in the Executive’s authority, duties or responsibilities as described herein; (ii) a material change in the Executive’s principal place of employment to a location that is more than 50 miles from Reston, Virginia; (iii) the failure of any successor of the Company to expressly in writing assume the Company’s obligations under this Agreement; or (iv) any other action or inaction that constitutes a material breach by the Company of any agreement between the Executive and the Company or its successor. Notwithstanding the foregoing, the Executive shall not be treated as having terminated with Good Reason unless (a) the Executive notifies the Company in writing of the event or condition constituting Good Reason within sixty (60) days after he knows, or with the exercise of reasonable diligence would have known, of the occurrence of such event or condition; (b) the Company fails within thirty (30) days after receipt of such notice to cure such event and return the Executive to the position he would have been in had the event or condition not occurred; and (c) within thirty (30) days after the end of the cure period described in clause (b), the Executive notifies the Company in writing of his intent to terminate employment; provided, however, that in no event shall the Executive’s failure to notify the Company of the occurrence of any event constituting Good Reason, or to voluntarily terminate as a result of such event, be construed as a consent to the occurrence of future events, whether or not similar to the initial occurrence, or a waiver of his right to resign for Good Reason as a result thereof.
|
6.8
|
[Reserved]
|
6.9
|
Voluntary Termination-Change in Senior Leadership Accompanied by Change in Business Philosophy
. If the Company elects a new Chairman and/or appoints a Chief Executive Officer (the “New Senior Leader”) and provided that on or after the date of such election and/or appointment, the Board of Directors or New Senior Leader enacts major changes in the Company’s business philosophy, mission or business strategies, the Executive may voluntarily terminate his employment. To provide sufficient time for a transfer of the Executive’s responsibilities and duties, he shall be required to provide ninety (90) days’ notice prior to such voluntary termination and the Company shall have the option of extending the notice an additional thirty (30) days. In the event the Executive voluntarily terminates his employment in connection with or within one year after the election of a New Senior Leader accompanied by any of the changes described in this Section 6.9, he shall not be entitled to any severance pay and shall not be bound by the “Covenant Not to Compete” described in Section 7.
|
6.10
|
Continuing Payments
. In the event any of the events described in this Section 6 should occur during the term of this Agreement, and result in payments to the Executive which would in their normal course continue beyond the term of this Agreement, such payments shall be made at such times and in such amounts as if the term of this Agreement had not expired.
|
6.11
|
Effect of Termination
. Except as otherwise expressly agreed to in writing by the Executive and the Company, in the event of the Executive’s termination of employment for any reason, he shall automatically be deemed to have resigned from all assignments or appointments by or positions with the Company and its affiliates. Any such resignation shall not affect the characterization of the Executive’s termination of employment as voluntary or involuntary or with or without Cause or Good Reason.
|
7.
|
Covenant Not to Compete
.
|
7.1
|
Scope
. During the term of Executive’s employment under this Agreement, and for the applicable period thereafter, Executive hereby covenants and agrees that he shall not, at any time, directly or indirectly, anywhere in the Restricted Area (i) 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; or (ii) work for, become employed by, or provide 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 (including but not limited to an entity owned or managed by a Family member). “Restricted Area” means the counties and other units of local government in which the Company engaged in the residential Homebuilding Business, Mortgage Financing Business or Settlement Services Business, within the 24-month period prior to Executive’s termination of employment
.
Further, Executive will not (a) hire or solicit for hiring, any person, who, during the last twelve (12) months prior to Executive’s termination of employment, was an employee of the Company or provided services as a subcontractor to the Company; (b) utilize or solicit the services of, or acquire or attempt to acquire real property, goods, or services from, any developer or subcontractor utilized by the Company; or (c) solicit any customer or client or prospective customer or client of the Company with whom the Executive had any communications with or about whom the Executive had any access to information during the 12-month period prior to the Executive’s termination of employment. Any investments made by the Executive in private equity or hedge funds/vehicles for which the Executive does not hold a controlling financial or management interest is not considered a violation of this Section 7.1.
|
7.2
|
Definitions
. For purposes of this Agreement, (i) the term “Family” shall mean Executive, Executive’s spouse, and any minor children and any entity that Executive, Executive’s spouse, and any minor children control, either directly or indirectly; (ii) “control” for purposes of the immediately preceding clause shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract, or otherwise); (iii) the term “Homebuilding Business” shall mean the
|
7.3
|
Reasonableness
. The Executive acknowledges that the restrictions contained in this Section 7 are reasonable and necessary to protect the business and interests of the Company, and that it would be impossible to measure in money the damages that would accrue to the Company by reason of the Executive’s failure to perform his obligations under this Section 7. Therefore, the Executive hereby agrees that in addition to any other remedies that the Company may have at law or at equity with respect to this Section 7, the Company shall have the right to have all obligations, undertakings, agreements, and covenants set forth herein specifically performed, and that the Company shall have the right to obtain an order of such specific performance (including preliminary and permanent injunctive relief to prevent a breach or contemplated breach of any provision of this Section 7) in any court of the United States or any state or political subdivision thereof, without the necessity of proving actual damage; provided that the Company is not in breach of any of its obligations hereunder.
|
7.4
|
Confidentiality
. In connection with the Executive’s employment with the Company, Executive has 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 the Executive’s employment with the Company (regardless of whether he, or the Company or an affiliate terminates his employment), he shall not misappropriate, use or disclose to any third party any Confidential Information for any reason other than as intended within the scope of his employment. In the event that the Executive is required by law to disclose any Confidential Information, the Executive agrees to give the Company prompt advance written notice thereof, to the extent possible, 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 the Executive’s employment for any reason, or at any other time upon request of the
|
7.5
|
No Conflict
. The Covenant Not to Compete set forth in this Section 7 shall supersede and override any and all limitations on Executive’s right to compete with the Company including, without limitation, any similar covenants not to compete in the Equity Incentive Plans and shall be the sole standard by which Executive shall be bound.
|
8.1
|
Notices
. Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid, and shall be deemed given when so delivered personally, telegraphed, telexed, or sent by facsimile transmission, or if mailed, four days after the date of mailing as follows:
|
(i)
|
if the Company, to:
|
(ii)
|
if the Executive, to:
|
8.2
|
Entire Agreement
. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.
|
8.3.
|
Waiver and Amendments
. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. No waiver by the Company or the Executive of a breach of, or of a default under, any of the provisions of this Agreement, nor the Company’s or the Executive’s failure on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as to the waiver of any such provision, rights, or privileges hereunder.
|
8.4
|
Governing Law
. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Virginia.
|
8.5
|
Assignability
. This Agreement, and the Executive’s rights and obligations hereunder, may not be assigned by the Executive. The Company shall assign this Agreement and its rights, together with its obligations, to any entity which will substantially carry on the business of the Company subject to the Executive’s rights set forth in this Agreement.
|
8.6
|
Counterparts
. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
|
8.7
|
Headings
. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
|
8.8
|
Indemnification
. The Company agrees to indemnify the Executive, to the fullest extent permitted under Virginia and any other applicable law, against any and all expenses reasonably incurred by the Executive, including attorney’s fees, in connection with any action, suit, or proceeding, whether civil, criminal, or administrative and whether formal or informal, including but not limited to any judgment, settlement, fine or penalty or any excise tax related to any employee benefit plan, (each a “proceeding”), to which the Executive is a party (whether
|
8.9
|
Termination of Employment
.
The Executive will be deemed to have a termination of employment for purposes of determining the timing of any payments or benefits hereunder that are classified as deferred compensation only upon a “separation from service” within the meaning of Internal revenue Code Section 409A.
|
NVR, INC.
|
|
|
|
|
|
|
|
|
By: /s/ Gary Brown
|
|
/s/ Paul W. Praylo
|
|
|
|
GARY BROWN
|
|
PAUL W. PRAYLO
|
|
|
|
Grantee:
|
|
Date:
|
|
|
(Signature)
|
|
|
|
|
|
|
Company:
|
|
Date:
|
|
|
(Signature)
|
|
|
|
|
|
|
Title:
|
|
|
|
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.
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Forfeiture of Rights
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If you should take actions in violation or breach of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees, customers, or other business partners of the Company or any Affiliate or any confidentiality, non-disclosure, or non-disparagement 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:
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(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 or its Affiliates, including but not limited to trade secrets (as defined in the Defend Trade Secrets Act, 18 U.S.C. § 1839(3), or 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 retain, 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 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 lawfully 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 in violation of this or any other applicable Agreement or any statutory prohibition against the misappropriation or distribution of confidential information.
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(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.
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(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.
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(iv)
Non-Solicitation of Employees
. During the Restricted Period, you will not, directly or indirectly, hire or attempt to hire 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.
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(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 or negotiated for a contract 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. You further agree not to encourage, directly or indirectly, any such developer or subcontractor to limit, reduce or terminate such entity’s relationship or business dealings with the Company or any Affiliate.
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(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 person or entity that was a customer or client, or prospective customer or client, of the Company or any of its Affiliates 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.
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You agree to provide notice to any person or entity with which you may seek or enter into an employment, consulting or other business relationship during the Restricted Period of your obligations under this Agreement prior to entering into such relationship or performing services in conjunction with such relationship. You further agree that the Company may provide notice of your obligations under this Agreement to any person or entity with which you may enter into an employment, consulting or other business relationship during the Restricted Period.
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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.
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In addition, if you have exercised any options during the one-year
period prior to any action that violates your obligations of confidentiality, non-competition or non-solicitation to the Company, 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).
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Leaves of Absence
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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 Laws. Your Service terminates in any event when the approved leave ends unless you immediately return to active Service as an employee.
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.
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Notice of Exercise
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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.
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Form of Payment
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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.
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Withholding Taxes
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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, 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 14.3 of the Plan (including in connection with a same day sale). Payment must be made in immediately available funds.
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Retention Rights
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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.
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Stockholder Rights
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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 13 of the Plan.
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Clawback
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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. Without limiting the foregoing, you will also be subject to the terms of Section 3.3 of the Plan.
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Attorney’s Fees and Costs
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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, including in securing my compliance with the provisions of this Agreement or obtaining damages for any breach.
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Applicable Law
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This Agreement will be interpreted and enforced under the laws of the state in which you primarily performed services for the Company at the time that this Agreement is executed, not including 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.
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Venue
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The Company and I irrevocably and unconditionally agree that the state and federal courts in the Commonwealth of Virginia are an appropriate and convenient forum for any dispute between the parties, and both the Company and I agree that either party may 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 state or federal court in the Commonwealth of Virginia. The Company and I irrevocably and unconditionally submit to the jurisdiction of the Commonwealth of Virginia's state and federal courts for all actions, litigations, or proceedings whether brought by me or the Company, and waive any defenses based on personal jurisdiction or convenience of such forum.
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The Plan
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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.
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Data Privacy
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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.
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Code Section 409A
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It is intended that this Award comply with Section 409A of the Code (“Section 409A”) or an exemption from 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. For purposes of this Award, a termination of employment only occurs upon an event that would be a Separation from Service within the meaning of Section 409A.
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Grantee:
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Date:
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(Signature)
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Company:
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Date:
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(Signature)
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Title:
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Option
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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.
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Transfer of Unvested Options
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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.
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Issuance and Vesting
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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.
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In the event of a termination of your employment resulting from your death or Disability or from your retirement at normal retirement age (age 65) on or after January 1, 2021:
(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 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. 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.
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In the event of a termination of your employment due to your death or Disability or by the Company for any reason other than Cause, in all cases, on or after December 31, 2021 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 vested Option shall become exercisable based on the achievement of the performance criteria and shall remain exercisable for ninety days following such Compensation Committee determination.
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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, 2022, no exercise of the Option for such portion will be effective until, at the earliest, February 16, 2022, 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.
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Corporate Transaction
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Notwithstanding the performance metrics and vesting schedule set forth on Exhibit A, but in addition to the acceleration of vesting events 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 by the Company without Cause within the 12 month period following the consummation of the Corporate Transaction.
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
.
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Evidence of Issuance
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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.
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Forfeiture of Unvested Options
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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.
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Expiration of Vested Options After Service Terminates
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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.
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Forfeiture of Rights
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If you should take actions in violation or breach of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees, customers, or other business partners of the Company or any Affiliate or any confidentiality, non-disclosure, or non-disparagement 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:
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(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 or its Affiliates, including but not limited to trade secrets (as defined in the Defend Trade Secrets Act, 18 U.S.C. § 1839(3), or 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 retain, 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 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 lawfully 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 in violation of this or any other applicable Agreement or any statutory prohibition against the misappropriation or distribution of confidential information.
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(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.
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(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.
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(iv)
Non-Solicitation of Employees
. During the Restricted Period, you will not, directly or indirectly, hire or attempt to hire 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.
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(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 or negotiated for a contract 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. You further agree not to encourage, directly or indirectly, any such developer or subcontractor to limit, reduce or terminate such entity’s relationship or business dealings with the Company or any Affiliate.
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(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 person or entity that was a customer or client, or prospective customer or client, of the Company or any of its Affiliates 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.
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You agree to provide notice to any person or entity with which you may seek or enter into an employment, consulting or other business relationship during the Restricted Period of your obligations under this Agreement prior to entering into such relationship or performing services in conjunction with such relationship. You further agree that the Company may provide notice of your obligations under this Agreement to any person or entity with which you may enter into an employment, consulting or other business relationship during the Restricted Period.
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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.
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In addition, if you have exercised any options during the one-year
period prior to any action that violates your obligations of confidentiality, non-competition or non-solicitation to the Company, 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).
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Leaves of Absence
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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 Laws. Your Service terminates in any event when the approved leave ends unless you immediately return to active Service as an employee.
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.
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Notice of Exercise
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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.
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Form of Payment
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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.
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Withholding Taxes
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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, 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 14.3 of the Plan (including in connection with a same day sale). Payment must be made in immediately available funds.
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Retention Rights
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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.
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Stockholder Rights
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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 13 of the Plan.
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Clawback
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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. Without limiting the foregoing, you will also be subject to the terms of Section 3.3 of the Plan.
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Attorney’s Fees and Costs
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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, including in securing my compliance with the provisions of this Agreement or obtaining damages for any breach.
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Applicable Law
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This Agreement will be interpreted and enforced under the laws of the state in which you primarily performed services for the Company at the time that this Agreement is executed, not including 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.
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Venue
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The Company and I irrevocably and unconditionally agree that the state and federal courts in the Commonwealth of Virginia are an appropriate and convenient forum for any dispute between the parties, and both the Company and I agree that either party may 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 state or federal court in the Commonwealth of Virginia. The Company and I irrevocably and unconditionally submit to the jurisdiction of the Commonwealth of Virginia's state and federal courts for all actions, litigations, or proceedings whether brought by me or the Company, and waive any defenses based on personal jurisdiction or convenience of such forum.
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The Plan
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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.
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Data Privacy
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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.
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Code Section 409A
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It is intended that this Award comply with Section 409A of the Code (“Section 409A”) or an exemption from 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. For purposes of this Award, a termination of employment only occurs upon an event that would be a Separation from Service within the meaning of Section 409A.
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Name of Subsidiary
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State of Incorporation or Organization
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NVR Mortgage Finance, Inc.
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Virginia
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NVR Settlement Services, Inc.
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Pennsylvania
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RVN, Inc.
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Delaware
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NVR Services, Inc.
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Delaware
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NVR Funding II, Inc.
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Delaware
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1.
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I have reviewed this Annual Report on Form 10-K of NVR, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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Date: February 13, 2019
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By:
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/s/ Paul C. Saville
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Paul C. Saville
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President and Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K of NVR, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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Date: February 13, 2019
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By:
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/s/ Daniel D. Malzahn
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Daniel D. Malzahn
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Senior Vice President, Chief Financial Officer and Treasurer
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NVR, Inc.
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Date: February 13, 2019
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By:
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/s/ Paul C. Saville
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Paul C. Saville
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President and Chief Executive Officer
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By:
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/s/ Daniel D. Malzahn
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Daniel D. Malzahn
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Senior Vice President, Chief Financial Officer and Treasurer
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