NVR 8K Announces a 24% Increase In Earnings Per Share | NVR 16 Oct 03

NVR, INC. ANNOUNCES A 24% INCREASE IN EARNINGS PER SHARE

FOR THE THIRD QUARTER OF 2003

FOR IMMEDIATE RELEASE		CONTACT: Paul Columbus
		OFFICE: 703-761-2414

October 16, 2003 — McLean, VA — NVR, Inc. (AMEX: NVR), one of the nation’s largest homebuilding and mortgage banking companies, today announced that diluted earnings per share for its third quarter ended September 30, 2003 exceeded the 2002 third quarter by 24% and net income increased 19%. Net income for the 2003 third quarter was $109,403,000, $12.55 per diluted share, compared to net income of $91,980,000, $10.14 per diluted share, for the same period of 2002. Net income for the 2003 third quarter was reduced on a pre-tax basis by $8,503,000 ($5,207,000, $0.60 per diluted share, after tax) related to expenses recognized as a result of the redemption of the Company’s $115 million 8% senior notes due 2005 during the quarter. Total revenues increased 13% to $980,380,000 for the quarter when compared to $867,235,000 for the same period of 2002. In addition, the Company reported that new orders for the quarter ended September 2003 were virtually unchanged when compared to the third quarter of 2002. Backlog at the end of the period increased 19% to 7,320 units when compared to the same time last year. The dollar value of the backlog units totaled $2,400,984,000 at the end of the September 2003 quarter, a 31% increase from a year earlier.

Homebuilding revenues for the three months ended September 30, 2003, totaled $956,848,000, 13% higher than the year earlier period. Excluding the debt redemption expenses noted above, income before tax from the homebuilding segment totaled $177,912,000, an increase of 30% when compared to the third quarter of the previous year. Gross profit margins improved to 24.8% for the third quarter of 2003 when compared to 23.8% for the same quarter of 2002.

Pre-tax income from the mortgage banking segment for the 2003 third quarter increased to $15,383,000, 20% higher than the same period of 2002. The Company also reported that closed loan production increased 6% during the September 2003 quarter when compared to the third quarter of 2002.

For the nine months ended September 30, 2003, total revenues for NVR, Inc. were $2,572,455,000, 10% higher than the $2,347,929,000 reported for the same period of 2002. Net income for the nine months ended September 30, 2003, was $292,301,000, $33.53 per diluted share, compared to $252,523,000, $27.16 per diluted share, for the comparable period of 2002, increases of 16% and 23%, respectively.

The Company also reiterated its full year 2003 guidance of approximately 20% growth in net income when compared to 2002. In addition, the Company reported that during the first nine months of 2003 it repurchased approximately 644,000 shares of its common stock.

Some of the statements in this release made by the Company constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than of historical facts included herein, including those regarding market trends,

the Company’s financial position, business strategy, projected plans and objectives of management for future operations, mortgage banking operating income, new order trends, home settlement activity, average home prices, gross profit margins and other profitability measures, net income and earnings per share are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to, general economic conditions (on both a national and regional level), interest rate changes, access to suitable financing, competition, the availability and cost of land and other raw materials used by the Company in its homebuilding operations, shortages of labor, weather related slow downs, building moratoria, governmental regulation, the ability of the Company to integrate any acquired business, fluctuation and volatility of stock and other financial markets, and other factors over which the Company has little or no control. The Company has no obligation to update such forward-looking statements.

NVR, Inc.

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
*Homebuilding:*
Revenues	$	956,848		$	847,044		$	2,508,786		$	2,291,936
Other income		998			1,219			2,522			2,679
Cost of sales		(719,507	)		(645,869	)		(1,882,154	)		(1,744,928	)
Selling, general and administrative		(57,002	)		(62,474	)		(168,401	)		(167,954	)

Operating income		181,337			139,920			460,753			381,733
Loss from extinguishment of
8% Senior Notes due 2005		(8,503	)		—			(8,503	)		—
Interest expense		(3,425	)		(3,433	)		(10,486	)		(9,651	)

Homebuilding income		169,409			136,487			441,764			372,082


*Mortgage Banking:*
Mortgage banking fees		20,844			17,148			56,483			48,190
Interest income		1,393			1,644			3,960			4,662
Other income		297			180			704			462
General and administrative		(6,869	)		(5,526	)		(17,196	)		(16,979	)
Interest expense		(282	)		(617	)		(1,091	)		(1,408	)

Mortgage banking income		15,383			12,829			42,860			34,927


*Total segment income*		184,792			149,316			484,624			407,009

Income tax expense		(75,389	)		(57,336	)		(192,323	)		(154,486	)


*Net Income*	$	109,403		$	91,980		$	292,301		$	252,523


*Basic earnings per share*	$	15.30		$	12.58		$	41.06		$	34.36


*Diluted earnings per share*	$	12.55		$	10.14		$	33.53		$	27.16


*Basic average shares outstanding*		7,151			7,310			7,118			7,349


*Diluted average shares outstanding*		8,716			9,074			8,718			9,299

NVR, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share and share data)

	September 30, 2003		December 31, 2002
ASSETS		(unaudited)
*Homebuilding:*
Cash and cash equivalents	$	220,282	$	139,796
Receivables		15,444		10,807
Inventory:
Lots and housing units, covered under sales agreements with customers		553,545		400,008
Unsold lots and housing units		34,743		25,558
Manufacturing materials and other		5,226		11,108
Inventory not owned, consolidated per FIN 46		15,462		—

		608,976		436,674

Property, plant and equipment, net		22,151		22,126
Reorganization value in excess of amounts allocable to identifiable assets, net		41,580		41,580
Goodwill, net		6,379		6,379
Contract land deposits		270,962		231,229
Other assets		115,814		110,007

		1,301,588		998,598


*Mortgage Banking:*
Cash and cash equivalents		3,007		3,049
Mortgage loans held for sale, net		130,636		163,410
Mortgage servicing rights, net		158		5,611
Property and equipment, net		873		941
Reorganization value in excess of amounts allocable to identifiable assets, net		7,347		7,347
Other assets		2,868		3,332

		144,889		183,690

Total assets	$	1,446,477	$	1,182,288

(Continued)

NVR, Inc.

Condensed Consolidated Balance Sheets (Continued)

(in thousands, except per share and share data)

	September 30, 2003			December 31, 2002
	(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY

*Homebuilding:*
Accounts payable	$	171,221		$	145,209
Accrued expenses and other liabilities		208,566			240,018
Liabilities related to inventory not owned, consolidated per FIN 46		14,177			—
Customer deposits		165,515			118,174
Other term debt		4,627			4,903
Senior notes		200,000			115,000

		764,106			623,304


*Mortgage Banking:*
Accounts payable and other liabilities		19,627			16,482
Notes payable		97,672			139,257

		117,299			155,739

Total liabilities		881,405			779,043


*Commitments and contingencies*

*Shareholders’ equity:*
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,597,709 and 20,602,921 shares issued as of September 30, 2003 and December 31, 2002		206			206
Additional paid-in-capital		329,045			262,867
Deferred compensation trust – 453,207 and 428,698 shares as of September 30, 2003 and December 31, 2002, respectively, of NVR, Inc. common stock		(52,235	)		(35,647	)
Deferred compensation liability		52,235			35,647
Retained earnings		1,260,375			968,074
Less treasury stock at cost – 13,514,412 and 13,580,531 shares at September 30, 2003 and December 31, 2002, respectively		(1,024,554	)		(827,902	)

Total shareholders’ equity		565,072			403,245

Total liabilities and shareholders’ equity	$	1,446,477		$	1,182,288

NVR, Inc.

Operating Activity

(unaudited)

(dollars in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2003		2002		2003		2002
*Homebuilding data:*
New orders (units)		2,492		2,502		9,511		9,125
New orders (dollars)	$	797,471	$	723,735	$	2,938,533	$	2,609,383
Settlements (units)		3,189		3,097		8,548		8,549
Backlog (units)						7,320		6,134
Backlog (dollars)					$	2,400,984	$	1,836,338

*Mortgage banking data:*
Loan closings	$	624,637	$	591,595	$	1,719,191	$	1,605,363

*Common stock information:*
Shares outstanding at end of period						7,083,297		7,089,352
Weighted average shares outstanding		7,151,000		7,310,000		7,118,000		7,349,000
Diluted shares outstanding		8,716,000		9,074,000		8,718,000		9,299,000

NVR (NVR) 8-KNVR, Inc. Announces a 24% Increase In Earnings Per Share