##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
 For the transition period from  to
 Commission file number 1-12378
 NVR, Inc.
 (Exact name of registrant as specified in its charter)
 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 registeredCommon stock, par value $0.01 per share 
5% Senior Notes due 2010
    
    New York Stock Exchange
New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
 þ o
 o þ
 þ o
 o o
 þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a Smaller Reporting Company)
    
    Smaller Reporting Company o
 o þ




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##### 



INDEX
 PagePART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    6Item 1B.
    
    Unresolved Staff Comments
    
    
    12Item 2.
    
    Properties
    
    
    12Item 3.
    
    Legal Proceedings
    
    
    12Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    13Executive Officers of the Registrant
    
    
    13PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    14Item 6.
    
    Selected Financial Data
    
    
    15Item 7.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    16Item 7A.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    
    39Item 8.
    
    Financial Statements and Supplementary Data
    
    
    41Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    41Item 9A.
    
    Controls and Procedures
    
    
    41Item 9B.
    
    Other Information
    
    
    41PART IIIItem 10.
    
    Directors, Executive Officers, and Corporate Governance
    
    
    42Item 11.
    
    Executive Compensation
    
    
    42Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    42Item 13.
    
    Certain Relationships and Related Transactions, and Director
Independence
    
    
    43Item 14.
    
    Principal Accountant Fees and Services
    
    
    43PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    43EX-10.28EX-21EX-23EX-31.1EX-31.2EX-32
  1




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PART I
 
 Item 1. Business.
 General
      2




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Current Business Environment
  Homebuilding
 Products
  Markets
  Mid Atlantic:
    
    Maryland, Virginia, West Virginia and DelawareNorth East:
    
    New Jersey and eastern PennsylvaniaMid East:
    
    Kentucky, New York, Ohio, western Pennsylvania and IndianaSouth East:
    
    North Carolina, South Carolina, Florida and Tennessee
  3




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Backlog
  Construction
  Land Development
  Sales and Marketing
  Regulation
  Competition and Market Factors
  4




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Mortgage Banking
   Competition and Market Factors
  Regulation
  Pipeline
  5




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Employees
  Available Information
 http://www.sec.gov
 http://www.nvrinc.com.
  
 Item 1A. Risk Factors.
 Forward-Looking Statements
  6




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RISK FACTORS
  
    
    the availability of mortgage financing;
    
    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 adequate land in desirable locations on favorable
terms;
    
    unexpected changes in customer preferences; and
    
    changes in the national economy and in the local economies of the markets
in which we have operations.
  The homebuilding industry is experiencing a significant downturn. The continuation of this
downturn could adversely affect our business and our results of operations.
  If the market value of our inventory or controlled lot position declines, our profit could decrease
and we may incur losses.
  If the tax credit available to first time homebuyers expires on July 1, 2010 and is not
renewed, it may negatively impact our future sales.
  7




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Because almost all of our customers require mortgage financing, the availability of suitable
mortgage financing could impair the affordability of our homes, lower demand for our products, and
limit our ability to fully deliver our backlog.
  If our ability to sell mortgages to investors is impaired, we may be required to fund these
commitments ourselves, or may not be able to originate loans at all.
  Interest rate movements, inflation and other economic factors can negatively impact our business.
   8




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Our inability to secure and control an adequate inventory of lots could adversely impact our
operations.
  Volatility in the credit and capital markets may impact our ability to access necessary
financing.
   9




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Our current indebtedness may impact our future operations.
  Government regulations and environmental matters could negatively affect our operations.
    We face competition in our housing and mortgage banking operations.
  
    
    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.
  10




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A shortage of building materials or labor, or increases in materials or labor costs may adversely
impact our operations.
  Product liability litigation and warranty claims may adversely impact our operations.
  We are subject to litigation proceedings that could harm our business if an unfavorable ruling were
to occur.
  Changes in tax laws or the interpretation of tax laws may negatively affect our operating results.
  Certain of our net deferred tax assets could be substantially limited if we experience an ownership
change as defined in the Internal Revenue Code.
  11




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Weather-related and other events beyond our control may adversely impact our operations.
  
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
    
 Item 3. Legal Proceedings.
  12




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
  Executive Officers of the Registrant
 Name
    
    Age
    
    PositionsDwight C. Schar
    
    68
    
    Chairman of the Board of NVRPaul C. Saville
    
    54
    
    President and Chief Executive Officer of NVRWilliam J. Inman
    
    62
    
    President of NVRMDennis M. Seremet
    
    54
    
    Senior Vice President, Chief Financial Officer and Treasurer of NVRRobert W. Henley
    
    43
    
    Vice President and Controller of NVR
 Dwight C. Schar
 Paul C. Saville
 William J. Inman
 Dennis M. Seremet
 Robert W. Henley
 13




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##### Table of Contents



PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
  HIGH
    
    LOWPrices per Share:2009Fourth Quarter
    
    $
    742.00
    
    
    $
    607.00Third Quarter
    
    $
    698.28
    
    
    $
    477.41Second Quarter
    
    $
    533.89
    
    
    $
    416.24First Quarter
    
    $
    500.05
    
    
    $
    310.692008Fourth Quarter
    
    $
    600.00
    
    
    $
    316.82Third Quarter
    
    $
    639.80
    
    
    $
    452.00Second Quarter
    
    $
    679.37
    
    
    $
    498.00First Quarter
    
    $
    661.00
    
    
    $
    436.20
    Stock Performance Graph
 COMPARISON OF CUMULATIVE TOTAL EQUITYHOLDER RETURN ON EQUITY
  14




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##### Table of Contents



Item 6.
    
    Selected Financial Data.
   15




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##### Table of Contents



Year Ended December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005Consolidated Income Statement Data:Homebuilding data:Revenues
    
    $
    2,683,467
    
    
    $
    3,638,702
    
    
    $
    5,048,187
    
    
    $
    6,036,236
    
    
    $
    5,177,743Gross profit
    
    
    497,734
    
    
    
    457,692
    
    
    
    821,128
    
    
    
    1,334,971
    
    
    
    1,439,713Mortgage Banking data:Mortgage banking fees
    
    
    60,381
    
    
    
    54,337
    
    
    
    81,155
    
    
    
    97,888
    
    
    
    84,604Interest income
    
    
    2,979
    
    
    
    3,955
    
    
    
    4,900
    
    
    
    7,704
    
    
    
    5,014Interest expense
    
    
    1,184
    
    
    
    754
    
    
    
    681
    
    
    
    2,805
    
    
    
    1,759Consolidated data:Income from
continuing
operations (1)
    
    $
    192,180
    
    
    $
    100,892
    
    
    $
    333,955
    
    
    $
    587,412
    
    
    $
    697,559Income from
continuing
operations per
diluted share (2)
    
    $
    31.26
    
    
    $
    17.04
    
    
    $
    54.14
    
    
    $
    88.05
    
    
    $
    89.61
 December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005Consolidated Balance Sheet Data:Homebuilding inventory
    
    $
    418,718
    
    
    $
    400,570
    
    
    $
    688,854
    
    
    $
    733,616
    
    
    $
    793,975Contract land deposits, net
    
    
    49,906
    
    
    
    29,073
    
    
    
    188,528
    
    
    
    402,170
    
    
    
    517,241Total assets
    
    
    2,395,770
    
    
    
    2,103,236
    
    
    
    2,194,416
    
    
    
    2,473,808
    
    
    
    2,237,669Notes and loans payable
    
    
    147,880
    
    
    
    210,389
    
    
    
    286,283
    
    
    
    356,632
    
    
    
    463,141Shareholders equity
    
    
    1,757,262
    
    
    
    1,373,789
    
    
    
    1,129,375
    
    
    
    1,152,074
    
    
    
    677,162Cash dividends per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No.
123(R), Share-Based Payment,as codified in Accounting Standards Codification ASC 718,
Compensation Stock Compensation, pursuant to which we recognized $29,944, $31,560, $11,669
and $37,982 of stock-based compensation costs, net of tax, during 2009, 2008, 2007 and 2006,
respectively. The 2007 stock-based compensation amount is net of approximately $19,200 of
stock-based compensation expense, net of tax, that we reversed based on our determination that
the performance metric related to certain outstanding stock options would not be met. As of
December 31, 2008 the performance target was not met and all 348,490 outstanding options
subject to the performance target expired unexercisable. The year ended December 31, 2005
does not include any stock-based compensation expense.(2)
    
    For the years ended December 31, 2009, 2008, 2007, 2006 and 2005, income from continuing
operations per diluted share was computed based on 6,148,769; 5,920,285; 6,167,795; 6,671,571;
and 7,784,382 shares, respectively, which represents the weighted average number of shares and
share equivalents outstanding for each year. 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Results of Operations for the Years Ended December 31, 2009, 2008, and 2007
 Overview
 Business
  16




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Mid Atlantic:
    
    Maryland, Virginia, West Virginia and DelawareNorth East:
    
    New Jersey and eastern PennsylvaniaMid East:
    
    Kentucky, New York, Ohio, Indiana and western PennsylvaniaSouth East:
    
    North Carolina, South Carolina, Tennessee and Florida
   Overview of Current Business Environment
   17




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##### Table of Contents



Homebuilding Operations
  Year Ended December 31,2009
    
    2008
    
    2007Revenues
    
    $
    2,683,467
    
    
    $
    3,638,702
    
    
    $
    5,048,187Cost of sales
    
    $
    2,185,733
    
    
    $
    3,181,010
    
    
    $
    4,227,059Gross profit margin percentage
    
    
    18.5
    %
    
    
    12.6
    %
    
    
    16.3
    %Selling, general and administrative expenses
    
    $
    233,152
    
    
    $
    308,739
    
    
    $
    343,520Settlements (units)
    
    
    9,042
    
    
    
    10,741
    
    
    
    13,513Average settlement price
    
    $
    296.4
    
    
    $
    338.4
    
    
    $
    373.2New orders (units)
    
    
    9,409
    
    
    
    8,760
    
    
    
    12,270Average new order price
    
    $
    292.7
    
    
    $
    311.3
    
    
    $
    352.0Backlog (units)
    
    
    3,531
    
    
    
    3,164
    
    
    
    5,145Average backlog price
    
    $
    304.9
    
    
    $
    316.9
    
    
    $
    371.3
 Consolidated Homebuilding Revenues
  18




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##### Table of Contents



Consolidated Homebuilding New Orders
   Consolidated Homebuilding Gross Profit
   19




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Consolidated Homebuilding Selling, General and Administrative (SG&A)
   Consolidated Homebuilding Backlog
    Consolidated Homebuilding  Other Charges
  20




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Reportable Homebuilding Segments
 Critical
Accounting Policies
 21




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##### Table of Contents



Year Ended December 31,2009
    
    2008
    
    2007Mid Atlantic:Revenues
    
    $
    1,661,244
    
    
    $
    2,161,764
    
    
    $
    3,099,053Settlements (units)
    
    
    4,722
    
    
    
    5,240
    
    
    
    6,634Average settlement price
    
    $
    351.8
    
    
    $
    412.5
    
    
    $
    467.0New Orders (units)
    
    
    4,809
    
    
    
    4,290
    
    
    
    5,695Average new order price
    
    $
    347.4
    
    
    $
    373.4
    
    
    $
    436.5Backlog (units)
    
    
    1,863
    
    
    
    1,776
    
    
    
    2,726Average backlog price
    
    $
    359.0
    
    
    $
    371.3
    
    
    $
    447.2Gross profit margin
    
    $
    307,525
    
    
    $
    294,699
    
    
    $
    547,753Gross profit margin percentage
    
    
    18.51
    %
    
    
    13.63
    %
    
    
    17.67
    %Segment profit
    
    $
    185,861
    
    
    $
    103,690
    
    
    $
    291,012New order cancellation rate
    
    
    14.40
    %
    
    
    24.40
    %
    
    
    25.20
    %Inventory:Sold inventory
    
    $
    219,885
    
    
    $
    215,587
    
    
    $
    369,025Unsold lots and housing units
    
    $
    47,120
    
    
    $
    30,370
    
    
    $
    81,752Unsold inventory impairments
    
    $
    1,286
    
    
    $
    1,163
    
    
    $
    2,143Contract land deposits, net
    
    $
    36,643
    
    
    $
    14,808
    
    
    $
    91,290Total lots controlled
    
    
    26,938
    
    
    
    23,711
    
    
    
    36,102Total lots reserved
    
    
    6,575
    
    
    
    7,565
    
    
    
    8,970Contract land deposit impairments
    
    $
    18,425
    
    
    $
    81,834
    
    
    $
    153,601Average active communities
    
    
    168
    
    
    
    205
    
    
    
    242North East:Revenues
    
    $
    254,654
    
    
    $
    347,142
    
    
    $
    433,631Settlements (units)
    
    
    882
    
    
    
    1,086
    
    
    
    1,247Average settlement price
    
    $
    288.7
    
    
    $
    319.7
    
    
    $
    347.7New Orders (units)
    
    
    904
    
    
    
    884
    
    
    
    1,212Average new order price
    
    $
    293.5
    
    
    $
    298.5
    
    
    $
    338.7Backlog (units)
    
    
    325
    
    
    
    303
    
    
    
    505Average backlog price
    
    $
    302.8
    
    
    $
    288.8
    
    
    $
    338.8Gross profit margin
    
    $
    42,282
    
    
    $
    46,607
    
    
    $
    57,860Gross profit margin percentage
    
    
    16.60
    %
    
    
    13.43
    %
    
    
    13.34
    %Segment profit
    
    $
    19,572
    
    
    $
    13,182
    
    
    $
    11,176New order cancellation rate
    
    
    14.50
    %
    
    
    19.70
    %
    
    
    19.00
    %Inventory:Sold inventory
    
    $
    36,315
    
    
    $
    31,321
    
    
    $
    55,441Unsold lots and housing units
    
    $
    4,152
    
    
    $
    4,195
    
    
    $
    5,011Unsold inventory impairments
    
    $
    598
    
    
    $
    573
    
    
    $
    268Contract land deposits, net
    
    $
    2,646
    
    
    $
    1,233
    
    
    $
    8,426Total lots controlled
    
    
    3,898
    
    
    
    3,619
    
    
    
    6,176Total lots reserved
    
    
    846
    
    
    
    1,879
    
    
    
    2,336Contract land deposit impairments
    
    $
    2,489
    
    
    $
    11,190
    
    
    $
    13,553Average active communities
    
    
    37
    
    
    
    39
    
    
    
    50
 22




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Year Ended December 31,2009
    
    2008
    
    2007Mid East:Revenues
    
    $
    505,431
    
    
    $
    659,649
    
    
    $
    860,139Settlements (units)
    
    
    2,323
    
    
    
    2,762
    
    
    
    3,321Average settlement price
    
    $
    216.3
    
    
    $
    237.4
    
    
    $
    257.7New Orders (units)
    
    
    2,552
    
    
    
    2,380
    
    
    
    3,160Average new order price
    
    $
    217.3
    
    
    $
    229.5
    
    
    $
    248.2Backlog (units)
    
    
    960
    
    
    
    731
    
    
    
    1,113Average backlog price
    
    $
    224.7
    
    
    $
    223.9
    
    
    $
    245.4Gross profit margin
    
    $
    85,931
    
    
    $
    104,761
    
    
    $
    155,736Gross profit margin percentage
    
    
    17.00
    %
    
    
    15.88
    %
    
    
    18.11
    %Segment profit
    
    $
    38,012
    
    
    $
    39,643
    
    
    $
    78,547New order cancellation rate
    
    
    13.90
    %
    
    
    17.70
    %
    
    
    14.90
    %Inventory:Sold inventory
    
    $
    60,107
    
    
    $
    41,751
    
    
    $
    74,455Unsold lots and housing units
    
    $
    16,353
    
    
    $
    14,549
    
    
    $
    5,534Unsold inventory impairments
    
    $
    592
    
    
    $
    69
    
    
    $
    367Contract land deposits, net
    
    $
    4,182
    
    
    $
    5,578
    
    
    $
    17,828Total lots controlled
    
    
    10,163
    
    
    
    11,027
    
    
    
    14,191Total lots reserved
    
    
    2,022
    
    
    
    3,553
    
    
    
    3,053Contract land deposit impairments
    
    $
    7,244
    
    
    $
    10,393
    
    
    $
    10,838Average active communities
    
    
    100
    
    
    
    118
    
    
    
    140South East:Revenues
    
    $
    262,138
    
    
    $
    470,147
    
    
    $
    655,364Settlements (units)
    
    
    1,115
    
    
    
    1,653
    
    
    
    2,311Average settlement price
    
    $
    235.1
    
    
    $
    284.4
    
    
    $
    283.6New Orders (units)
    
    
    1,144
    
    
    
    1,206
    
    
    
    2,203Average new order price
    
    $
    230.2
    
    
    $
    261.2
    
    
    $
    290.0Backlog (units)
    
    
    383
    
    
    
    354
    
    
    
    801Average backlog price
    
    $
    244.1
    
    
    $
    260.5
    
    
    $
    308.6Gross profit margin
    
    $
    36,490
    
    
    $
    60,173
    
    
    $
    144,253Gross profit margin percentage
    
    
    13.92
    %
    
    
    12.80
    %
    
    
    22.01
    %Segment profit
    
    $
    7,384
    
    
    $
    7,904
    
    
    $
    87,701New order cancellation rate
    
    
    14.80
    %
    
    
    28.90
    %
    
    
    20.30
    %Inventory:Sold inventory
    
    $
    21,521
    
    
    $
    29,781
    
    
    $
    55,658Unsold lots and housing units
    
    $
    4,783
    
    
    $
    5,878
    
    
    $
    8,271Unsold inventory impairments
    
    $
    268
    
    
    $
    129
    
    
    $
    Contract land deposits, net
    
    $
    2,272
    
    
    $
    302
    
    
    $
    24,103Total lots controlled
    
    
    5,338
    
    
    
    6,626
    
    
    
    11,089Total lots reserved
    
    
    1,363
    
    
    
    3,738
    
    
    
    2,641Contract land deposit impairments
    
    $
    5,236
    
    
    $
    20,081
    
    
    $
    4,766Average active communities
    
    
    50
    
    
    
    65
    
    
    
    73
 23




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Mid Atlantic
 2009 versus 2008
    2008 versus 2007
  24




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North East
 2009 versus 2008
    2008 versus 2007
  25




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Mid East
 2009 versus 2008
    2008 versus 2007
  26




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South East
 2009 versus 2008
    2008 versus 2007
  27




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Homebuilding Segment Reconciliations to Consolidated Homebuilding Operations
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Homebuilding Consolidated Gross Profit:Homebuilding Mid Atlantic
    
    $
    307,525
    
    
    $
    294,699
    
    
    $
    547,753Homebuilding North East
    
    
    42,282
    
    
    
    46,607
    
    
    
    57,860Homebuilding Mid East
    
    
    85,931
    
    
    
    104,761
    
    
    
    155,736Homebuilding South East
    
    
    36,490
    
    
    
    60,173
    
    
    
    144,253Consolidation adjustments and other (1)
    
    
    25,506
    
    
    
    (48,548
    )
    
    
    (84,474
    )Consolidated homebuilding gross profit
    
    $
    497,734
    
    
    $
    457,692
    
    
    $
    821,128
 28




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##### Table of Contents



Year Ended December 31,2009
    
    
    2008
    
    
    2007Homebuilding Consolidated Profit Before Tax:Homebuilding Mid Atlantic
    
    $
    185,861
    
    
    $
    103,690
    
    
    $
    291,012Homebuilding North East
    
    
    19,572
    
    
    
    13,182
    
    
    
    11,176Homebuilding Mid East
    
    
    38,012
    
    
    
    39,643
    
    
    
    78,547Homebuilding South East
    
    
    7,384
    
    
    
    7,904
    
    
    
    87,701Reconciling items:Contract land deposit recoveries
(impairments) (1)
    
    
    42,939
    
    
    
    (41,134
    )
    
    
    (79,002
    )Stock option expense (2)
    
    
    (43,495
    )
    
    
    (38,681
    )
    
    
    (13,542
    )Corporate capital allocation (3)
    
    
    61,753
    
    
    
    108,509
    
    
    
    152,363Unallocated corporate overhead (4)
    
    
    (44,103
    )
    
    
    (52,696
    )
    
    
    (58,990
    )Consolidation adjustments and other (5)
    
    
    4,970
    
    
    
    24,437
    
    
    
    28,846Impairment of goodwill and intangible
assets (6)
    
    
    
    
    
    
    (11,686
    )
    
    
    Corporate interest expense
    
    
    (9,810
    )
    
    
    (12,417
    )
    
    
    (12,535
    )Reconciling items sub-total
    
    
    12,254
    
    
    
    (23,668
    )
    
    
    17,140Homebuilding consolidated profit
before taxes
    
    $
    263,083
    
    
    $
    140,751
    
    
    $
    485,576
 
 (1)
    
    This item primarily represents changes to the contract land deposit impairment reserve,
which is not allocated to the reportable segments. During both 2009 and 2008,
unallocated reserves decreased from the respective prior year as a result of charging
previously reserved land impairments to the operating segments, and to certain recoveries
of deposits previously determined in prior periods to be impaired.(2)
    
    The increase in stock option expense in 2009 and 2008 compared to 2007 is due to the
reversal of stock-based compensation costs of $29,350 during the third quarter of 2007
related to certain stock options subject to a performance metric. During 2007, we
determined that it was improbable that we would meet the performance metric and
accordingly reversed all performance-based option expense recorded through that period.(3)
    
    This item represents the elimination of the corporate capital allocation charge included
in the respective homebuilding reportable segments. The decrease in the corporate
capital allocation charge from 2007 to 2008 and from 2008 to 2009 is due to decreases in
segment asset balances in each of the respective years, due to the decrease in operating
activity year over year. 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 31,2009
    
    
    2008
    
    
    2007Homebuilding Mid Atlantic
    
    $
    40,765
    
    
    $
    73,042
    
    
    $
    106,032Homebuilding North East
    
    
    6,473
    
    
    
    10,081
    
    
    
    14,669Homebuilding Mid East
    
    
    8,863
    
    
    
    12,902
    
    
    
    17,381Homebuilding South East
    
    
    5,652
    
    
    
    12,484
    
    
    
    14,281Total
    
    $
    61,753
    
    
    $
    108,509
    
    
    $
    152,363
 
 (4)
    
    The decreases in unallocated corporate overhead year over year are primarily driven by a
reduction in personnel and other overhead costs as part of our focus to size our
organization to meet current year activity levels.(5)
    
    The decrease in 2009 from 2008 is attributable primarily to changes in the corporate
consolidation entries based on production volumes year over year, as well as to a
decrease in interest income earned related to lower interest rates in 2009 as compared to
2008.(6)
    
    The 2008 impairment charge relates to the write-off of goodwill and indefinite life
intangible assets related to our 2005 acquisition of Rymarc Homes and the goodwill
related to our 1997 acquisition of Fox Ridge Homes. 29




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##### Table of Contents



Mortgage Banking Segment
  2009
    
    
    2008
    
    
    2007Loan closing volume:Total principal
    
    $
    2,060,376
    
    
    $
    2,351,341
    
    
    $
    3,225,324Loan volume mix:Adjustable rate mortgages
    
    
    1
    %
    
    
    5
    %
    
    
    17
    %Fixed-rate mortgages
    
    
    99
    %
    
    
    95
    %
    
    
    83
    %Operating Profit:Segment Profit
    
    $
    38,138
    
    
    $
    29,227
    
    
    $
    54,576Stock option expense
    
    
    (2,807
    )
    
    
    (2,523
    )
    
    
    (647
    )Mortgage banking
income before tax
    
    $
    35,331
    
    
    $
    26,704
    
    
    $
    53,929Capture rate:
    
    
    91
    %
    
    
    85
    %
    
    
    85
    %Mortgage Banking Fees:Net gain on sale of loans
    
    $
    46,960
    
    
    $
    38,921
    
    
    $
    60,128Title services
    
    
    12,787
    
    
    
    14,581
    
    
    
    20,304Servicing fees
    
    
    634
    
    
    
    835
    
    
    
    723$
    60,381
    
    
    $
    54,337
    
    
    $
    81,155
 2009 versus 2008
   30




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##### Table of Contents



2008 versus 2007
    Mortgage Banking  Other
  Seasonality
  Effective Tax Rate
  31




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##### Table of Contents



Recent Accounting Pronouncements Pending Adoption
 Accounting for Transfers of Financial Assets Transfers and Servicing
 Amendments to FASB Interpretation No. 46(R), Consolidation
 Liquidity and Capital Resources
 Lines of Credit and Notes Payable
   32




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##### Table of Contents



Equity Repurchases
  33




---



##### Table of Contents



Cash Flows
        34




---



##### Table of Contents



Off Balance Sheet Arrangements
 Lot Acquisition Strategy
   .
 Bonds and Letters of Credit
  Mortgage Commitments and Forward Sales
  35




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##### Table of Contents



Contractual Obligations
  Payments due by periodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsDebt (a)
    
    $
    148,770
    
    
    $
    148,770
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital leases (b)
    
    $
    3,066
    
    
    
    408
    
    
    
    1,289
    
    
    
    1,313
    
    
    
    56Operating leases (c)
    
    $
    70,551
    
    
    
    19,678
    
    
    
    22,742
    
    
    
    13,227
    
    
    
    14,904Purchase obligations (d)
    
    
    21,534
    
    
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    *Executive officer
employment
contracts (e)
    
    $
    1,705
    
    
    
    1,705
    
    
    
    
    
    
    
    
    
    
    
    Other long-term
liabilities (f)
    
    $
    23,926
    
    
    
    23,480
    
    
    
    446
    
    
    
    
    
    
    
    Total
    
    $
    269,552
    
    
    $
    194,041
    
    
    $
    24,477
    
    
    $
    14,540
    
    
    $
    14,960
 
 (a)
    
    Payments include interest payments due on the 5% Senior Notes due 2010. See Note 6 in
the accompanying consolidated financial statements for additional information regarding
debt and related matters.(b)
    
    The present value of these obligations is included on the Consolidated Balance Sheets.
See Note 6 in the accompanying consolidated financial statements for additional
information regarding capital lease obligations.(c)
    
    See Note 10 in the accompanying consolidated financial statements for additional
information regarding operating leases.(d)(*)
    
    Amounts represent required payments of forfeitable deposits with land developers under
existing, fixed price purchase agreements, assuming that contractual development
milestones are met by the developers. We expect to make all payments of these deposits
within the next three years, but due to the nature of the contractual development
milestones that must be met, we are unable to accurately estimate the portion of the
deposit obligation that will be made within one year and that portion that will be made
within one to three years.(e)
    
    We have entered into employment agreements with three of our executive officers. Each of the
agreements expires on January 1, 2011 and provides for payment of a minimum base salary, which
may be increased at the discretion of the Compensation Committee of NVRs Board of Directors
(the Compensation Committee), and annual incentive compensation of up to 100% of base salary
upon achievement of annual performance objectives established by the Compensation Committee.
The agreements also provide for payment of severance benefits upon termination of employment,
in amounts ranging from $0 to two times the executive officers then annual base salary,
depending on the reason for termination, plus up to $60 in outplacement assistance.
Accordingly, total payments under these agreements will vary based on length of service, any
future increases to base salaries, annual incentive payments earned, and the reason for
termination. The agreements have been reflected in the above table assuming the continued
employment of the executive officers for the full term of the respective agreements, and at
the executive officers current base salaries. The above balances do not include any
potential annual incentive compensation. The actual amounts paid could differ from that
presented.(f)
    
    Amounts represent payments due under incentive compensation plans and are included on the
Consolidated Balance Sheet, $2,100 of which is recorded in the Mortgage Banking accounts
payable and other liabilities line item. Critical Accounting Policies
 General
  36




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##### Table of Contents



Variable Interest Entities
   Homebuilding Inventory
   Contract Land Deposits
   37




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##### Table of Contents



Intangible Assets
  Warranty / Product Liability Accruals
  38




---



##### Table of Contents



Stock Option Expense
   Impact of Inflation, Changing Prices and Economic Conditions
  
 Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
      39




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##### Table of Contents



Maturities (000s)
 Fair2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    Total
    
    
    ValueMortgage banking segmentInterest rate sensitive assets:Mortgage loans held for sale
    
    $
    40,492
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,492
    
    
    $
    40,097Average interest rate
    
    
    4.9
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.9
    %Interest rate sensitive liabilities:Variable rate repurchase agreement
    
    $
    12,344
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,344
    
    
    $
    12,344Average interest rate (a)
    
    
    4.1
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.1
    %Other:Forward trades of mortgage-backed
securities (b)
    
    $
    2,445
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,445
    
    
    $
    2,445Forward loan commitments (b)
    
    
    (707
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (707
    )
    
    
    (707
    )Homebuilding segmentInterest rate sensitive assets:Interest-bearing deposits
    
    $
    1,458,077
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,458,077
    
    
    $
    1,458,077Average interest rate
    
    
    0.4
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    %Interest rate sensitive liabilities:Fixed rate obligations (c)
    
    $
    133,486
    
    
    $
    402
    
    
    $
    456
    
    
    $
    520
    
    
    $
    617
    
    
    $
    55
    
    
    $
    135,536
    
    
    $
    136,995Average interest rate
    
    
    5.3
    %
    
    
    13.1
    %
    
    
    13.2
    %
    
    
    13.3
    %
    
    
    13.9
    %
    
    
    14.1
    %
    
    
    5.8
    %
 
 (a)
    
    Average interest rate is net of credits received for compensating cash balances.(b)
    
    Represents the fair value recorded pursuant to ASC 815, Derivatives and Hedging.(c)
    
    The $133,486 maturing in 2010 includes $133,370 for NVRs 5% Senior Notes due June 2010. 40




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
    Managements Report on Internal Control Over Financial Reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
 
 Item 9B. Other Information.
  41




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers, and Corporate Governance.
  
 Item 11. Executive Compensation.
  
 Item 12.

    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
  Equity Compensation Plan Information
  Number of securitiesremaining available forNumber of securities
    
    
    
    
    
    
    future issuance underto be issued upon
    
    
    Weighted-average
    
    
    equity compensationexercise of
    
    
    exercise price of
    
    
    plans (excludingoutstanding options,
    
    
    outstanding options,
    
    
    securities reflected inPlan category
    
    warrants and rights
    
    
    warrants and rights
    
    
    the first column)Equity compensation
plans
approved by security
holders
    
    
    119,913
    
    
    $
    490.92
    
    
    
    Equity compensation
plans
not approved by security
holders
    
    
    879,229
    
    
    $
    321.78
    
    
    
    134,022Total
    
    
    999,142
    
    
    $
    342.08
    
    
    
    134,022
  42




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions, and Director
Independence.
  
 Item 14. Principal Accountant Fees and Services.
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
  1.
    
    Financial StatementsNVR, Inc.  Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
 2. Exhibits
 ExhibitNumber

    
    Description3.1
    
    Restated Articles of Incorporation of NVR, Inc. (NVR). Filed as
Exhibit 99.1 to NVRs Form 8-K filed May 4, 2007 and incorporated herein by
reference.3.2
    
    Bylaws, as amended, of NVR, Inc. Filed as Exhibit 99.2 to Form 8-K
filed on May 4, 2007 and incorporated herein by reference.4.1
    
    Indenture dated as of April 14, 1998 between NVR, as issuer and the
Bank of New York as trustee. Filed as Exhibit 4.3 to NVRs Current Report on Form
8-K filed April 23, 1998 and incorporated herein by reference.4.2
    
    Form of Note (included in Indenture filed as Exhibit 4.1).4.3
    
    Fourth Supplemental Indenture, dated June 17, 2003, between NVR and
U.S. Bank Trust National Association, as successor to The Bank of New York, as
trustee. Filed as Exhibit 4.1 to NVRs Current Report on Form 8-K filed June 17,
2003 and incorporated herein by reference.4.4
    
    Form of Note (included in Indenture filed as Exhibit 4.3).10.1*
    
    Employment Agreement between NVR, Inc. and Dwight C. Schar dated July
1, 2005. Filed as Exhibit 10.1 to NVRs Form 8-K filed on June 29, 2005 and
incorporated herein by reference.10.2*
    
    Employment Agreement between NVR, Inc. and Paul C. Saville dated July
1, 2005. Filed as Exhibit 10.2 to NVRs Form 8-K filed on June 29, 2005 and
incorporated herein by reference.
 43




---



##### Table of Contents



10.3*
    
    Employment Agreement between NVR, Inc. and Dennis M. Seremet dated
July 1, 2005. Filed as Exhibit 10.3 to NVRs Form 8-K filed on June 29, 2005 and
incorporated herein by reference.10.4*
    
    Employment Agreement between NVR, Inc. and William J. Inman dated July
1, 2005. Filed as Exhibit 10.4 to NVRs Form 8-K filed on June 29, 2005 and
incorporated herein by reference.10.5*
    
    Profit Sharing Plan of NVR, Inc. and Affiliated Companies. Filed as
Exhibit 4.1 to NVRs Registration Statement on Form S-8 (No. 333-29241) filed June
13, 1997 and incorporated herein by reference.10.6*
    
    Employee Stock Ownership Plan of NVR, Inc. Incorporated by reference
to NVRs Annual Report on Form 10-K/A for the year ended December 31, 1994.10.7*
    
    NVR, Inc. 1998 Management Long-Term Stock Option Plan. Filed as
Exhibit 4 to NVRs Registration Statement on Form S-8 (No. 333-79951) filed June
4, 1999 and incorporated herein by reference.10.8*
    
    NVR, Inc. 1998 Directors Long-Term Stock Option Plan. Filed as
Exhibit 4 to NVRs Registration Statement on Form S-8 (No. 333-79949) filed June
4, 1999 and incorporated herein by reference.10.09*
    
    NVR, Inc. Management Long-Term Stock Option Plan. Filed as Exhibit 99.3 to
NVRs Registration Statement on Form S-8 (No. 333-04975) filed May 31, 1996 and
incorporated herein by reference.10.10*
    
    NVR, Inc. 2000 Broadly-Based Stock Option Plan. Filed as Exhibit 99.1 to NVRs
Registration Statement on Form S-8 (No. 333-56732) filed March 8, 2001 and
incorporated herein by reference.10.11*
    
    NVR, Inc. Nonqualified Deferred Compensation Plan. Filed as Exhibit 10.1 to
NVRs Form 8-K filed on December 16, 2005 and incorporated herein by reference.10.12
    
    Credit Agreement dated as of December 7, 2005 among NVR, Inc. and the
lenders party hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, U.S.
Bank, National Association, as Syndication Agent, SunTrust Bank and Wachovia Bank,
National Association, as Documentation Agents, AmSouth Bank, Comerica Bank, Calyon
New York Branch and Mizuho Corporate Bank, Ltd., as Managing Agents, and J.P.
Morgan Securities Inc., as Lead Arranger and Sole Book Runner. Filed as Exhibit
10.1 to NVRs Form 8-K filed December 12, 2005 and incorporated herein by
reference.10.13*
    
    Description of the Board of Directors compensation arrangement. Filed as
Exhibit 10.27 to NVRs Annual Report on Form 10-K for the period ended December
31, 2004 and incorporated herein by reference.10.14*
    
    Amendment No. 1 to Employment Agreement between NVR, Inc. and Dwight C. Schar
dated December 21, 2006. Filed as Exhibit 10.1 to NVRs Form 8-K filed December
22, 2006 and incorporated herein by reference.10.15
    
    Fifteenth Amendment to Loan Agreement dated as of August 24, 2006
between NVR Mortgage Finance, Inc. and U.S. Bank National Association, JPMorgan
Chase Bank, Guaranty Bank, Comerica Bank, National City Bank and Washington Mutual Bank,
F.A. Filed as Exhibit 10.1 to NVRs Form 8-K filed August 24, 2006 and
incorporated herein by reference.10.16
    
    Commitment and Acceptance dated March 27, 2006 increasing the
commitment under NVR, Inc.s existing revolving credit agreement with JPMorgan
Chase Bank, as Administrative Agent, and the Lenders that are parties thereto,
dated December 7, 2005 by $45 million to an aggregate commitment of $445 million.
Filed as Exhibit 10.1 to NVRs Form 8-K filed March 30, 2006 and incorporated
herein by reference.
 44




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##### Table of Contents



10.17
    
    Commitment and Acceptance dated August 16, 2006 increasing the
commitment under NVR, Inc.s existing revolving credit agreement with JPMorgan
Chase Bank, as Administrative Agent, and the Lenders that are parties thereto,
dated December 7, 2005 by $155 million to an aggregate commitment of $600 million.
Filed as Exhibit 10.1 to NVRs Form 8-K filed August 17, 2006 and incorporated
herein by reference.10.18*
    
    Amendment No. 2 to Employment Agreement between NVR, Inc. and Dwight C. Schar
dated November 6, 2007. Filed as Exhibit 10.1 to NVRs Form 8-K filed November 7,
2007 and incorporated herein by reference.10.19*
    
    The Form of Non-Qualified Stock Option Agreement under the NVR, Inc. 2000
Broadly Based Stock Option Plan. Filed as Exhibit 10.1 to NVRs Form 8-K filed
January 3, 2008 and incorporated herein by reference.10.20*
    
    The Form of Non-Qualified Stock Option Agreement under the 1998 Directors
Long-Term Stock Option Plan. Filed as Exhibit 10.34 to NVRs Annual Report on
Form 10-K for the period ended December 31, 2007 and incorporated herein by
reference.10.21
    
    Repurchase Agreement dated August 5, 2008 among NVR Finance and U.S.
Bank National Association, as Agent, and other lenders party thereto. Filed as
Exhibit 10.1 to NVRs Form 8-K filed on August 8, 2008 and incorporated herein by
reference.10.22*
    
    Amendment No. 3 to Employment Agreement between NVR, Inc. and Dwight C. Schar
dated November 6, 2008. Filed as Exhibit 10.1 to NVRs Form 8-K filed November 6,
2008 and incorporated herein by reference.10.23*
    
    Amendment No. 4 to Employment Agreement between NVR, Inc. and Dwight C. Schar
dated January 1, 2009. Filed as Exhibit 10.24 to NVRs Annual Report on form 10-K
for the period ended December 31, 2008 and incorporated herein by reference.10.24*
    
    Amendment No. 1 to Employment Agreement between NVR, Inc. and Paul C. Saville
dated January 1, 2009. Filed as Exhibit 10.25 to NVRs Annual Report on form 10-K
for the period ended December 31, 2008 and incorporated herein by reference.10.25*
    
    Amendment No. 1 to Employment Agreement between NVR, Inc. and William J. Inman
dated January 1, 2009. Filed as Exhibit 10.26 to NVRs Annual Report on form 10-K
for the period ended December 31, 2008 and incorporated herein by reference.10.26*
    
    Amendment No. 1 to Employment Agreement between NVR, Inc. and Dennis M. Seremet
dated July 30, 2008. Filed as Exhibit 10.27 to NVRs Annual Report on form 10-K
for the period ended December 31, 2008 and incorporated herein by reference.10.27*
    
    Amendment No. 2 to Employment Agreement between NVR, Inc. and Dennis M. Seremet
dated January 1, 2009. Filed as Exhibit 10.28 to NVRs Annual Report on form 10-K
for the period ended December 31, 2008 and incorporated herein by reference.10.28*
    
    Summary of 2010 Named Executive Officer annual incentive compensation plan.
Filed herewith.10.29
    
    First Amendment to Repurchase Agreement dated August 5, 2008 among NVR
Finance and U.S. Bank National Association, as agent and a Buyer, and the other
Buyers. Filed as Exhibit 10.1 to NVRs Form 8-K filed August 7, 2009 and
incorporated herein by reference.10.30
    
    First Amendment to Credit Agreement dated as of December 7, 2005 among
NVR, Inc. and the lenders party hereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, U.S. Bank, National Association, as Syndication Agent,
SunTrust Bank and Wachovia Bank, National Association, as Documentation Agents,
AmSouth Bank, Comerica Bank, Calyon New York Branch and Mizuho Corporate Bank,
Ltd., as Managing Agents, and J.P. Morgan Securities Inc., as Lead Arranger and
Sole Book Runner. Filed as Exhibit 10.2 to NVRs Form 8-K filed August 7, 2009 and incorporated herein by reference.
 45




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##### Table of Contents



21
    
    NVR, Inc. Subsidiaries. Filed herewith.23
    
    Consent of KPMG LLP (Independent Registered Public Accounting Firm).
Filed herewith.31.1
    
    Certification of NVRs Chief Executive Officer pursuant to Rule
13a-14(a). Filed herewith.31.2
    
    Certification of NVRs Chief Financial Officer pursuant to Rule
13a-14(a). Filed herewith.32
    
    Certification of NVRs Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002. Filed herewith.
 
 *
    
    Exhibit is a management contract or compensatory plan or arrangement. 46




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##### Table of Contents



SIGNATURES
  NVR, Inc.By:
    /s/ Paul C. SavillePaul C. SavillePresident and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Dwight C. Schar
    
    ChairmanDwight C. Schar
    
    
    
    February 26, 2010/s/ C. E. Andrews
    
    DirectorC. E. Andrews
    
    
    
    February 26, 2010/s/ Robert C. Butler
    
    DirectorRobert C. Butler
    
    
    
    February 26, 2010/s/ Timothy M. Donahue
    
    DirectorTimothy M. Donahue
    
    
    
    February 26, 2010/s/ Alfred E. Festa
    
    DirectorAlfred E. Festa
    
    
    
    February 26, 2010/s/ Manuel H. Johnson
    
    DirectorManuel H. Johnson
    
    
    
    February 26, 2010/s/ William A. Moran
    
    DirectorWilliam A. Moran
    
    
    
    February 26, 2010/s/ David A. Preiser
    
    DirectorDavid A. Preiser
    
    
    
    February 26, 2010/s/ W. Grady Rosier
    
    DirectorW. Grady Rosier
    
    
    
    February 26, 2010/s/ John M. Toups
    
    DirectorJohn M. Toups
    
    
    
    February 26, 2010/s/ Paul W. Whetsell
    
    DirectorPaul W. Whetsell
    
    
    
    February 26, 2010/s/ Paul C. Saville
    
    Principal Executive OfficerPaul C. Saville
    
    
    
    February 26, 2010/s/ Dennis M. Seremet
    
    Principal Financial OfficerDennis M. Seremet
    
    
    
    February 26, 2010
 47




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/s/ Robert W. Henley
    
    Principal Accounting OfficerRobert W. Henley
    
    
    
    February 26, 2010
 48




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Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework .
  
 49




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
    Internal Control -
Integrated Framework
   
 50




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NVR, Inc.
 December 31,2009
    
    
    2008ASSETSHomebuilding:Cash and cash equivalents
    
    $
    1,248,689
    
    
    $
    1,146,426Marketable securities
    
    
    219,535
    
    
    
    Receivables
    
    
    7,995
    
    
    
    11,594Inventory:Lots and housing units, covered under
sales agreements with customers
    
    
    337,523
    
    
    
    335,238Unsold lots and housing units
    
    
    73,673
    
    
    
    57,639Manufacturing materials and other
    
    
    7,522
    
    
    
    7,693418,718
    
    
    
    400,570Contract land deposits, net
    
    
    49,906
    
    
    
    29,073Consolidated assets not owned
    
    
    70,430
    
    
    
    114,930Property, plant and equipment, net
    
    
    20,215
    
    
    
    25,658Reorganization value in excess of amounts
allocable to identifiable assets, net
    
    
    41,580
    
    
    
    41,580Deferred tax assets, net
    
    
    200,340
    
    
    
    223,393Other assets
    
    
    58,319
    
    
    
    19,2332,335,727
    
    
    
    2,012,457Mortgage Banking:Cash and cash equivalents
    
    
    1,461
    
    
    
    1,217Mortgage loans held for sale, net
    
    
    40,097
    
    
    
    72,488Property and equipment, net
    
    
    446
    
    
    
    759Reorganization value in excess of amounts
allocable to identifiable assets, net
    
    
    7,347
    
    
    
    7,347Other assets
    
    
    10,692
    
    
    
    8,96860,043
    
    
    
    90,779Total assets
    
    $
    2,395,770
    
    
    $
    2,103,236
   51




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NVR, Inc.
 December 31,2009
    
    
    2008LIABILITIES AND SHAREHOLDERS EQUITYHomebuilding:Accounts payable
    
    $
    120,464
    
    
    $
    137,285Accrued expenses and other liabilities
    
    
    221,352
    
    
    
    194,869Liabilities related to consolidated assets not owned
    
    
    65,915
    
    
    
    109,439Customer deposits
    
    
    63,591
    
    
    
    59,623Other term debt
    
    
    2,166
    
    
    
    2,530Senior notes
    
    
    133,370
    
    
    
    163,320606,858
    
    
    
    667,066Mortgage Banking:Accounts payable and other liabilities
    
    
    19,306
    
    
    
    17,842Notes payable
    
    
    12,344
    
    
    
    44,53931,650
    
    
    
    62,381Total liabilities
    
    
    638,508
    
    
    
    729,447Commitments and contingenciesShareholders equity:Common stock, $0.01 par value;60,000,000 shares authorized; 20,559,671
and 20,561,187 shares issued as of December 31,
2009 and 2008, respectively
    
    
    206
    
    
    
    206Additional paid-in-capital
    
    
    830,531
    
    
    
    722,265Deferred compensation trust - 265,278 and 514,470
shares of NVR, Inc. common stock as of
December 31, 2009 and 2008, respectively
    
    
    (40,799
    )
    
    
    (74,978
    )Deferred compensation liability
    
    
    40,799
    
    
    
    74,978Retained earnings
    
    
    3,823,067
    
    
    
    3,630,887Less treasury stock at cost  14,609,560 and
15,028,335 shares as of December 31, 2009
and 2008, respectively
    
    
    (2,896,542
    )
    
    
    (2,979,569
    )Total shareholders equity
    
    
    1,757,262
    
    
    
    1,373,789Total liabilities and shareholders equity
    
    $
    2,395,770
    
    
    $
    2,103,236
  52




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NVR, Inc.
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Homebuilding:Revenues
    
    $
    2,683,467
    
    
    $
    3,638,702
    
    
    $
    5,048,187Other income
    
    
    8,697
    
    
    
    16,386
    
    
    
    21,118Cost of sales
    
    
    (2,185,733
    )
    
    
    (3,181,010
    )
    
    
    (4,227,059
    )Selling, general and administrative
    
    
    (233,152
    )
    
    
    (308,739
    )
    
    
    (343,520
    )Operating income
    
    
    273,279
    
    
    
    165,339
    
    
    
    498,726Interest expense
    
    
    (10,196
    )
    
    
    (12,902
    )
    
    
    (13,150
    )Goodwill and intangible asset impairment
    
    
    
    
    
    
    (11,686
    )
    
    
    Homebuilding income
    
    
    263,083
    
    
    
    140,751
    
    
    
    485,576Mortgage Banking:Mortgage banking fees
    
    
    60,381
    
    
    
    54,337
    
    
    
    81,155Interest income
    
    
    2,979
    
    
    
    3,955
    
    
    
    4,900Other income
    
    
    629
    
    
    
    745
    
    
    
    1,060General and administrative
    
    
    (27,474
    )
    
    
    (31,579
    )
    
    
    (32,505
    )Interest expense
    
    
    (1,184
    )
    
    
    (754
    )
    
    
    (681
    )Mortgage banking income
    
    
    35,331
    
    
    
    26,704
    
    
    
    53,929Income before taxes
    
    
    298,414
    
    
    
    167,455
    
    
    
    539,505Income tax expense
    
    
    (106,234
    )
    
    
    (66,563
    )
    
    
    (205,550
    )Net income
    
    $
    192,180
    
    
    $
    100,892
    
    
    $
    333,955Basic earnings per share
    
    $
    33.10
    
    
    $
    18.76
    
    
    $
    61.61Diluted earnings per share
    
    $
    31.26
    
    
    $
    17.04
    
    
    $
    54.14Basic weighted averageshares outstanding
    
    
    5,807
    
    
    
    5,379
    
    
    
    5,420Diluted weighted averageshares outstanding
    
    
    6,149
    
    
    
    5,920
    
    
    
    6,168
  53




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NVR, Inc.
 Additional
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    DeferredCommon
    
    
    Paid-in
    
    
    Retained
    
    
    Treasury
    
    
    Compensation
    
    
    CompensationStock
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    Trust
    
    
    Liability
    
    
    TotalBalance, December 31, 2006
    
    $
    206
    
    
    $
    585,438
    
    
    $
    3,196,040
    
    
    $
    (2,629,610
    )
    
    $
    (80,491
    )
    
    $
    80,491
    
    
    $
    1,152,074Net income
    
    
    
    
    
    
    
    
    
    
    333,955
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333,955Deferred compensation
activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,024
    
    
    
    (5,024
    )
    
    
    Purchase of common stock
for treasury
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (507,472
    )
    
    
    (169
    )
    
    
    169
    
    
    
    (507,472
    )Stock-based compensation
    
    
    
    
    
    
    14,189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,189Tax benefit from stock options
exercised and deferred
compensation distributions
    
    
    
    
    
    
    69,046
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,046Stock option activity
    
    
    
    
    
    
    67,583
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,583Treasury stock issued
upon option exercise
    
    
    
    
    
    
    (72,625
    )
    
    
    
    
    
    
    72,625
    
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2007
    
    
    206
    
    
    
    663,631
    
    
    
    3,529,995
    
    
    
    (3,064,457
    )
    
    
    (75,636
    )
    
    
    75,636
    
    
    
    1,129,375Net income
    
    
    
    
    
    
    
    
    
    
    100,892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,892Deferred compensation
activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    786
    
    
    
    (786
    )
    
    
    Purchase of common stock
for treasury
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (128
    )
    
    
    128
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    41,204
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,204Tax benefit from stock options
exercised and deferred
compensation distributions
    
    
    
    
    
    
    50,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,240Stock option activity
    
    
    
    
    
    
    52,078
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,078Treasury stock issued
upon option exercise
    
    
    
    
    
    
    (84,888
    )
    
    
    
    
    
    
    84,888
    
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2008
    
    
    206
    
    
    
    722,265
    
    
    
    3,630,887
    
    
    
    (2,979,569
    )
    
    
    (74,978
    )
    
    
    74,978
    
    
    
    1,373,789Net income
    
    
    
    
    
    
    
    
    
    
    192,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192,180Deferred compensation
activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,179
    
    
    
    (34,179
    )
    
    
    Stock-based compensation
    
    
    
    
    
    
    46,302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,302Tax benefit from stock options
exercised and deferred
compensation distributions
    
    
    
    
    
    
    66,448
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,448Stock option activity
    
    
    
    
    
    
    78,543
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,543Treasury stock issued
upon option exercise
    
    
    
    
    
    
    (83,027
    )
    
    
    
    
    
    
    83,027
    
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2009
    
    $
    206
    
    
    $
    830,531
    
    
    $
    3,823,067
    
    
    $
    (2,896,542
    )
    
    $
    (40,799
    )
    
    $
    40,799
    
    
    $
    1,757,262
  54




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NVR, Inc.
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Cash flows from operating activities:Net income
    
    $
    192,180
    
    
    $
    100,892
    
    
    $
    333,955Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    9,713
    
    
    
    13,641
    
    
    
    17,036Excess income tax benefit from exercise of stock options
    
    
    (66,448
    )
    
    
    (50,240
    )
    
    
    (69,046
    )Stock option compensation expense
    
    
    46,302
    
    
    
    41,204
    
    
    
    14,189Contract land deposit (recoveries) impairments
    
    
    (6,464
    )
    
    
    165,024
    
    
    
    261,760Gain on sales of loans
    
    
    (46,960
    )
    
    
    (38,921
    )
    
    
    (60,128
    )Gain (loss) on sale of fixed assets
    
    
    (358
    )
    
    
    472
    
    
    
    1,383Gain on extinguishment of debt
    
    
    
    
    
    
    (251
    )
    
    
    Impairment of goodwill and intangible assets
    
    
    
    
    
    
    11,686
    
    
    
    Deferred tax expense (benefit)
    
    
    21,905
    
    
    
    (12,048
    )
    
    
    (43,343
    )Mortgage loans closed
    
    
    (1,943,074
    )
    
    
    (2,046,575
    )
    
    
    (2,392,395
    )Proceeds from sales of mortgage loans
    
    
    2,018,151
    
    
    
    2,115,607
    
    
    
    2,515,973Principal payments on mortgage loans held for sale
    
    
    
    
    
    
    4,321
    
    
    
    7,393Net change in assets and liabilities:(Increase) decrease in inventories
    
    
    (18,148
    )
    
    
    288,284
    
    
    
    44,762(Increase) decrease in contract land deposits
    
    
    (14,848
    )
    
    
    29
    
    
    
    (31,893
    )Decrease (increase) in receivables
    
    
    3,682
    
    
    
    (1,016
    )
    
    
    2,730Increase (decrease) in accounts payable, accrued
expenses and customer deposits
    
    
    82,578
    
    
    
    (157,111
    )
    
    
    (39,351
    )Other, net
    
    
    (36,569
    )
    
    
    27,363
    
    
    
    (4,259
    )Net cash provided by operating activities
    
    
    241,642
    
    
    
    462,361
    
    
    
    558,766Cash flows from investing activities:Purchase of marketable securities
    
    
    (858,362
    )
    
    
    
    
    
    
    Marketable securities maturing
    
    
    638,827
    
    
    
    
    
    
    
    Purchase of property, plant and equipment
    
    
    (3,044
    )
    
    
    (6,899
    )
    
    
    (10,545
    )Proceeds from the sale of property, plant and equipment
    
    
    962
    
    
    
    1,401
    
    
    
    1,230Net cash used by investing activities
    
    
    (221,617
    )
    
    
    (5,498
    )
    
    
    (9,315
    )Cash flows from financing activities:Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (507,472
    )Purchase of NVR common stock for deferred compensation plan
    
    
    
    
    
    
    (128
    )
    
    
    (169
    )Net repayments under notes payable and credit lines
    
    
    (32,559
    )
    
    
    (39,214
    )
    
    
    (70,349
    )Repurchase of Senior Notes
    
    
    (29,950
    )
    
    
    (36,405
    )
    
    
    Excess income tax benefit from exercise of stock options
    
    
    66,448
    
    
    
    50,240
    
    
    
    69,046Exercise of stock options
    
    
    78,543
    
    
    
    52,078
    
    
    
    67,583Net cash provided (used) by financing activities
    
    
    82,482
    
    
    
    26,571
    
    
    
    (441,361
    )Net increase in cash and cash equivalents
    
    
    102,507
    
    
    
    483,434
    
    
    
    108,090Cash and cash equivalents, beginning of year
    
    
    1,147,643
    
    
    
    664,209
    
    
    
    556,119Cash and cash equivalents, end of year
    
    $
    1,250,150
    
    
    $
    1,147,643
    
    
    $
    664,209Supplemental disclosures of cash flow information:Interest paid during the year
    
    $
    10,010
    
    
    $
    12,656
    
    
    $
    12,744Income taxes paid during the year, net of refunds
    
    $
    (28,807
    )
    
    $
    65,128
    
    
    $
    157,081Supplemental disclosures of non-cash activities:Change in net consolidated assets not owned
    
    $
    (976
    )
    
    $
    (10,346
    )
    
    $
    (15,777
    )
  55




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##### Table of Contents



1.

    
    Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe accompanying consolidated financial statements include the accounts of
NVR, Inc. (NVR or the Company), its wholly owned subsidiaries, certain partially
owned entities, and variable interest entities of which the Company has determined that
it is the primary beneficiary. All significant intercompany transactions have been
eliminated in consolidation.Use of Estimates in the Preparation of Financial StatementsThe preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America (GAAP) requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting
periods. We continually evaluate the estimates we use to prepare the consolidated
financial statements, and update those estimates as necessary. In general, our
estimates are based on historical experience, on information from third party
professionals, and other various assumptions that are believed to be reasonable under
the facts and circumstances. Actual results could differ materially from those
estimates made by management.Cash and Cash EquivalentsCash and cash equivalents include short-term investments with original
maturities of three months or less. The homebuilding segment had restricted cash of
$4,613 and $4,539 at December 31, 2009 and 2008, respectively, which relate to customer
deposits for certain home sales and is recorded in Other assets in the accompanying
balance sheets.Marketable SecuritiesAs of December 31, 2009 the Company held marketable securities totaling $219,535.
These securities, which are debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies, are classified by the Company as held-to-maturity,
are measured at amortized cost and mature within one year.Homebuilding InventoryThe carrying value of inventory is stated at the lower of cost or market
value. Cost of lots and completed and uncompleted housing units represent the
accumulated actual cost of the units. Field construction supervisors salaries and
related direct overhead expenses are included in inventory costs. Interest costs are
not capitalized into inventory. Upon settlement, the cost of the unit is expensed on a
specific identification basis. Cost of manufacturing materials is determined on a
first-in, first-out basis.Sold inventory is evaluated for impairment based on the contractual selling price
compared to the total estimated cost to construct. Unsold inventory is evaluated for
impairment by analyzing recent comparable sales prices within the applicable community
compared to the costs incurred to date plus the expected costs to complete. Any
calculated impairments are recorded immediately.
 56




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##### Table of Contents



Contract Land DepositsThe Company purchases finished lots under fixed price purchase agreements
that require deposits that may be forfeited if NVR fails to perform under the contract.
The deposits are in the form of cash or letters of credit in varying amounts and
represent a percentage of the aggregate purchase price of the finished lots.NVR maintains an allowance for losses on contract land deposits that reflects the
Companys judgment of the present loss exposure in the existing contract land deposit
portfolio at the end of the reporting period. To analyze contract land deposit
impairments, NVR utilizes an ASC 450, Contingencies, loss contingency analysis that is
conducted each quarter. In addition to considering market and economic conditions, NVR
assesses contract land deposit impairments on a community-by-community basis pursuant
to the purchase contract terms, analyzing, as applicable, current sales absorption
levels, recent sales gross profit, the dollar differential between the contractual
purchase price and the current market price for lots, a developers financial
stability, a developers financial ability or willingness to reduce lot prices to
current market prices, and the contracts default status by either the Company or the
developer along with an analysis of the expected outcome of any such default.NVRs analysis is focused on whether the Company can sell houses profitably in a
particular community in the current market with which the Company is faced. Because
the Company does not own the finished lots on which the Company has placed a contract
land deposit, if the above analysis leads to a determination that the Company cant
sell homes profitably at the current contractual lot price, the Company then determine
whether it will elect to default under the contract, forfeit the deposit and terminate
the contract, or whether the Company will attempt to restructure the lot purchase
contract, which may require it to forfeit the deposit to obtain contract concessions
from a developer. The Company also assesses whether an impairment is present due to
collectibility issues resulting from a developers non-performance because of financial
or other conditions.During the year ended December 31, 2009, the Company had a net pre-tax recovery of
approximately $6,500 of contract land deposits previously considered to be
uncollectible. During the years ended December 31, 2008 and 2007, the Company incurred
pre-tax charges of approximately $165,000 and $261,800, respectively, related to the
impairment of contract land deposits. These impairment charges were recorded in cost
of sales on the accompanying consolidated statements of income. The contract land
deposit asset on the accompanying consolidated balance sheets is shown net of an
approximate $89,500 and $147,900 impairment valuation allowance at December 31, 2009
and 2008, respectively.Property, Plant, and EquipmentProperty, plant, and equipment are carried at cost less accumulated depreciation
and amortization. Depreciation is based on the estimated useful lives of the assets
using the straight-line method. Amortization of capital lease assets is included in
depreciation expense. Model home furniture and fixtures are generally depreciated over
a two-year period, office facilities and other equipment are depreciated over a period
from three to ten years, manufacturing facilities are depreciated over periods of from
five to forty years and property under capital leases is depreciated in a manner
consistent with the Companys depreciation policy for owned assets, or the lease-term
if shorter.
 57




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Intangible AssetsReorganization value in excess of identifiable assets (excess reorganization
value) is an indefinite life intangible asset that was created upon NVRs emergence
from bankruptcy on September 30, 1993. Based on the allocation of the reorganization
value, the portion of the reorganization value which was not attributed to specific
tangible or intangible assets has been reported as excess reorganization value, which
is treated similarly to goodwill. Excess reorganization value is not subject to
amortization. Rather, excess reorganization value is subject to an impairment
assessment on an annual basis or more frequently if changes in events or circumstances
indicate that impairment may have occurred. Because excess reorganization value was
based on the reorganization value of NVRs entire enterprise upon bankruptcy emergence,
the impairment assessment is conducted on an enterprise basis based on the comparison
of NVRs total equity compared to the market value of NVRs outstanding publicly-traded
common stock. The Company completed its annual assessment of impairment and management
determined that there was no impairment of excess reorganization value.Warranty/Product Liability AccrualsThe Company establishes warranty and product liability reserves (warranty
reserve) to provide for estimated future costs as a result of construction and product
defects, product recalls and litigation incidental to NVRs homebuilding business.
Liability estimates are determined based on managements judgment considering such
factors as historical experience, the likely current cost of corrective action,
manufacturers and subcontractors participation in sharing the cost of corrective
action, consultations with third party experts such as engineers, and discussions with
our general counsel and outside counsel retained to handle specific product liability
cases.Mortgage Loans Held for Sale, Derivatives and Hedging ActivitiesNVR originates several different loan products to its customers to finance
the purchase of a home through its wholly-owned mortgage subsidiary. NVR sells all of
the loans it originates into the secondary market typically within 30 days from
origination. All of the loans that the Company originates are underwritten to the
standards and specifications of the ultimate investor. Insofar as the Company
underwrites its originated loans to those standards, the Company bears no increased
concentration of credit risk from the issuance of loans, except in certain limited
instances where early payment default occurs. The Company employs a quality control
department to ensure that its underwriting controls are effectively operating, and
further assesses the underwriting function as part of its assessment of internal
controls over financial reporting.Mortgage loans held for sale are recorded at fair value at closing in accordance
with GAAP and thereafter are carried at the lower of cost or fair value until sold.In the normal course of business, our mortgage banking segment enters into
contractual commitments to extend credit to buyers of single-family homes with fixed
expiration dates. The commitments become effective when the borrowers lock-in a
specified interest rate within time frames established by NVR. All mortgagors are
evaluated for credit worthiness prior to the extension of the commitment. Market risk
arises if interest rates move adversely between the time of the lock-in of rates by
the borrower and the sale date of the loan to a broker/dealer. To mitigate the effect
of the interest rate risk inherent in providing rate lock commitments to
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borrowers, we enter into optional or mandatory delivery forward sale contracts to sell
whole loans and mortgage-backed securities to broker/dealers. The forward sale
contracts lock in an interest rate and price for the sale of loans similar to the
specific rate lock commitments. NVR does not engage in speculative or trading
derivative activities. Both the rate lock commitments to borrowers and the forward
sale contracts to broker/dealers are undesignated derivatives, and, accordingly, are
marked to fair value through earnings. At December 31, 2009, there were contractual
commitments to extend credit to borrowers aggregating approximately $130,100, and open
forward delivery sale contracts aggregating approximately $141,800. Please refer to
Note 11 herein for a description of our fair value accounting calculation.Earnings per ShareThe following weighted average shares and share equivalents are used to calculate
basic and diluted EPS for the years ended December 31, 2009, 2008 and 2007:
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Weighted average number of
shares outstanding used to
calculate basic EPS
    
    
    5,806,773
    
    
    
    5,379,409
    
    
    
    5,420,159Dilutive securities:Stock options
    
    
    341,996
    
    
    
    540,876
    
    
    
    747,636Weighted average number of
shares and share equivalents
outstanding used to calculate
diluted EPS
    
    
    6,148,769
    
    
    
    5,920,285
    
    
    
    6,167,795
 The assumed proceeds used in the treasury method for calculating NVRs
diluted earnings per share includes the amount the employee must pay upon exercise, the
amount of compensation cost attributed to future services and not yet recognized, and
the amount of tax benefits that would be credited to additional paid-in capital
assuming exercise of the option. The assumed amount credited to additional paid-in
capital equals the tax benefit from assumed exercise after consideration of the
intrinsic value upon assumed exercise less the actual stock-based compensation expense
to be recognized in the income statement from 2006 and future periods.
 Options issued under equity benefit plans to purchase 134,405; 316,747 and 57,277
shares of common stock were outstanding during the years ended December 31, 2009, 2008
and 2007, respectively, but were not included in the computation of diluted earnings
per share because the effect would have been anti-dilutive. In addition, 402,372
performance-based options were outstanding during the year ended December 31, 2007, and
pursuant to GAAP requirements were excluded from the computation of diluted earnings
per share because the performance target had not been achieved. As of December 31,
2008 the performance target was not met and all 348,490 performance-based options
outstanding expired unexercisable.
 Revenues-Homebuilding Operations
 NVR builds single-family detached homes, townhomes and condominium buildings,
which generally are constructed on a pre-sold basis for the ultimate customer. In
accordance with
GAAP, revenues are recognized at the time the unit is settled and title passes to
the customer, adequate cash payment has been received and there is no continuing
involvement. In situations where the buyers financing is originated by NVRM and the
buyer has not made an adequate initial or continuing investment as prescribed by GAAP,
the profit on such settlement is deferred until the sale of the related loan to a
third-party investor has been completed.
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Mortgage Banking FeesMortgage banking fees include income earned by NVRs mortgage banking
operations for originating mortgage loans, servicing mortgage loans held on an interim
basis, title fees, gains and losses on the sale of mortgage loans and mortgage
servicing and other activities incidental to mortgage banking. Mortgage banking fees
are generally recognized after the loan has been sold to an unaffiliated, third party
investor.Income TaxesIncome taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered
or settled. The effect on the deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.Financial InstrumentsExcept as otherwise noted here, NVR believes that insignificant differences
exist between the carrying value and the fair value of its financial instruments. The
estimated fair value of NVRs 5% Senior Notes due 2010 as of December 31, 2009 and 2008
was $134,829 and $161,937, respectively. The estimated fair value is based on a quoted
market price. The carrying value was $133,370 and $163,320 at December 31, 2009 and
2008, respectively.Stock-Based CompensationOn January 1, 2006 (the Effective Date), the Company adopted Statement of
Financial Accounting Standards (SFAS) 123R, Share-Based Payment, which revised SFAS
123, Accounting for Stock-Based Compensation, as codified in Accounting Standards
Codification (ASC) 718, Compensation  Stock Compensation.Prior to fiscal year
2006, NVR followed the intrinsic value method in accounting for its stock-based
employee compensation arrangements as defined by Accounting Principles Board Opinion
(APB) No. 25, Accounting for Stock Issued to Employees .ASC 718 requires an entity to recognize an expense within its income statement for
all share-based payment arrangements, which includes employee stock option plans. The
expense is based on the grant-date fair value of the options granted, and is recognized
ratably over the requisite service period. NVR adopted the standard under the
modified prospective method, which applied to new awards and to awards modified,
repurchased, or cancelled after the required Effective Date, as well as to the unvested
portion of awards outstanding as of the required Effective Date. The Companys stock
option programs are accounted for as equity-classified awards. See Note 9 herein for
further discussion of stock-based compensation plans.Comprehensive IncomeFor the years ended December 31, 2009, 2008 and 2007, comprehensive income equaled
net income; therefore, a separate statement of comprehensive income is not included in
the accompanying Consolidated Financial Statements.
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Recent Accounting PronouncementsIn December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51as codified in ASC 810,
Consolidation. ASC 810 provides guidance on accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.
Specifically, this guidance requires the recognition of a noncontrolling interest as
equity in the consolidated financial statements and separate from the parents equity.
The amount of net income attributable to the noncontrolling interest will be included
in consolidated net income on the face of the income statement, but deducted to arrive
at income available to common shareholders. ASC 810 clarifies that changes in a
parents ownership interest in a subsidiary that do not result in deconsolidation are
equity transactions if the parent retains its controlling financial interest. In
addition, this statement requires that a parent recognize a gain or loss in net income
when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair
value of the noncontrolling equity investment on the deconsolidation date. ASC 810
also includes expanded disclosure requirements regarding the interests of the parent
and its noncontrolling interests. ASC 810 was effective for the Company beginning
January 1, 2009. Its adoption did not have a material impact on the Companys
financial statements.In February 2008, the FASB issued FASB Staff Position No. FAS 157-2 (FSP No.
157-2) Effective Date of FASB Statement No. 157as codified in ASC 820, Fair Value
Measurements and Disclosures, which delayed the effective date of SFAS No. 157
(codified in ASC 820) for non-financial assets and non-financial liabilities to fiscal
years beginning after November 15, 2008. FSP No. 157-2 became effective for the
Company beginning January 1, 2009. The adoption of FSP No. 157-2 did not have a
material impact on the Companys financial statements.In April 2009, the FASB issued FASB Staff Positions No. FAS 107-1 and No. APB 28-1
(FSP No. 107-1 and APB No. 28-1), Interim Disclosures about Fair Value of Financial
Instruments, as codified in ASC 825, Financial Instruments,which enhances the interim
disclosures required for the fair value of financial instruments and requires companies
to disclose the methods and assumptions used to estimate the fair value of financial
instruments. FSP No. 107-1 and APB 28-1 were effective for the Company beginning April
1, 2009. The Company conformed its disclosures to the requirements of FSP No. 107-1
and APB No. 28-1.In April 2009, the FASB issued FASB Staff Position No. FAS 157-4 (FSP No.
157-4), Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly,as codified in ASC 820, Fair Value Measurements and Disclosures. FSP No.
157-4 clarifies the methodology to be used to determine fair value when there is no
active market or where the price inputs being used represent distressed sales. FSP No.
157-4 also reaffirms the objective of fair value measurement as stated in ASC 820,
which is to reflect how much an asset would be sold for in an orderly transaction. FSP
No. 157-4 was effective for the Company beginning April 1, 2009. The adoption of FSP
No. 157-4 did not have a material impact on the Companys financial statements.In April 2009, the FASB issued FASB Staff Positions No. FAS 115-2 and No. FAS
124-2, (FSP No. 115-2 and FSP No. 124-2),
Recognition and Presentation of Other-Than-Temporary Impairment of Certain Investments in Debt and Equity Securities, as codified
in ASC 320, Investments-Debt and Equity.FSP No. 115-2 and FSP No. 124-2 changes the
existing other-than-temporary impairment model for debt securities and expands and
increases the frequency of disclosures for other-than-temporary impairments for debt
and equity securities. It was effective for the Company beginning April 1, 2009. The
adoption of FSP No. 115-2 and FSP No. 124-2 did not have a material impact on the
Companys financial statements.
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In May 2009, the FASB issued SFAS No. 165, Subsequent Events,as codified in ASC 855,
Subsequent Events, which establishes the accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
available to be issued. ASC 855 was effective for
the Company beginning April 1, 2009. The Company has complied
with the
requirements of ASC 855, as amended by Accounting Standards Update
2010-09.In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial
Assets, as codified in ASC 860, Transfers and Servicing, which changes the conditions
for reporting a transfer of a portion of a financial asset as a sale and requires
additional year-end and interim disclosures. ASC 860 is effective for fiscal years
beginning after November 15, 2009, and its implementation of which are not expected to
have a material impact on the Companys financial statements.In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No.
46(R), as codified in ASC 810 through Accounting Standards Update 2009-17. This
statement amends FASB Interpretation 46R related to the consolidation of variable
interest entities (VIEs) and revises the approach to determining the primary
beneficiary of a VIE to be more qualitative in nature and requires companies to more
frequently reassess whether they must consolidate a VIE. The amendment to ASC 810 is
effective for fiscal years beginning after November 15, 2009. The Company is
evaluating the impact of the amendment and currently believes that upon adoption, the
majority of development entities associated with its fixed price purchase agreements
would no longer be required to be consolidated.In July 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, which
supersedes SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, as
codified in ASC 105, Generally Accepted Accounting Principles(ASC 105), which
establishes the FASB Accounting Standards Codification (the Codification). The
Codification is the sole source of authoritative U.S. generally accepted accounting
principles recognized by the FASB. All other accounting literature not included in the
Codification is nonauthoritative. The Codification was effective for interim and
annual periods ending after September 15, 2009.ReclassificationThe presentation of certain prior period amounts has been reclassified to conform to 2009
presentation.2.
    
    Segment Information, Nature of Operations, and Certain Concentrations
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Year Ended December 31,2009
    
    
    2008
    
    
    2007Revenues:Homebuilding Mid Atlantic
    
    $
    1,661,244
    
    
    $
    2,161,764
    
    
    $
    3,099,053Homebuilding North East
    
    
    254,654
    
    
    
    347,142
    
    
    
    433,631Homebuilding Mid East
    
    
    505,431
    
    
    
    659,649
    
    
    
    860,139Homebuilding South East
    
    
    262,138
    
    
    
    470,147
    
    
    
    655,364Mortgage Banking
    
    
    60,381
    
    
    
    54,337
    
    
    
    81,155Total Consolidated Revenues
    
    $
    2,743,848
    
    
    $
    3,693,039
    
    
    $
    5,129,342
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Profit:Homebuilding Mid Atlantic
    
    $
    185,861
    
    
    $
    103,690
    
    
    $
    291,012Homebuilding North East
    
    
    19,572
    
    
    
    13,182
    
    
    
    11,176Homebuilding Mid East
    
    
    38,012
    
    
    
    39,643
    
    
    
    78,547Homebuilding South East
    
    
    7,384
    
    
    
    7,904
    
    
    
    87,701Mortgage Banking
    
    
    38,138
    
    
    
    29,227
    
    
    
    54,576Total Segment Profit
    
    
    288,967
    
    
    
    193,646
    
    
    
    523,012Contract land deposit recovery (impairments) (1)
    
    
    42,939
    
    
    
    (41,134
    )
    
    
    (79,002
    )Stock compensation expense (2)
    
    
    (46,302
    )
    
    
    (41,204
    )
    
    
    (14,189
    )Corporate capital allocation (3)
    
    
    61,753
    
    
    
    108,509
    
    
    
    152,363Unallocated corporate overhead (4)
    
    
    (44,103
    )
    
    
    (52,696
    )
    
    
    (58,990
    )Consolidation adjustments and other (5)
    
    
    4,970
    
    
    
    24,437
    
    
    
    28,846Impairment of goodwill and intangible assets (6)
    
    
    
    
    
    
    (11,686
    )
    
    
    Corporate interest expense
    
    
    (9,810
    )
    
    
    (12,417
    )
    
    
    (12,535
    )Reconciling items sub-total
    
    
    9,447
    
    
    
    (26,191
    )
    
    
    16,493Consolidated Income before Taxes
    
    $
    298,414
    
    
    $
    167,455
    
    
    $
    539,505
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Year Ended December 31,2009
    
    
    2008
    
    
    2007Assets:Homebuilding Mid Atlantic
    
    $
    448,019
    
    
    $
    403,439
    
    
    $
    699,039Homebuilding North East
    
    
    54,132
    
    
    
    53,732
    
    
    
    95,026Homebuilding Mid East
    
    
    94,225
    
    
    
    82,976
    
    
    
    117,722Homebuilding South East
    
    
    37,663
    
    
    
    53,890
    
    
    
    106,627Mortgage Banking
    
    
    52,696
    
    
    
    83,432
    
    
    
    119,183Total Segment Assets
    
    
    686,735
    
    
    
    677,469
    
    
    
    1,137,597Consolidated assets not owned
    
    
    70,430
    
    
    
    114,930
    
    
    
    180,206Cash
    
    
    1,248,689
    
    
    
    1,146,426
    
    
    
    660,709Marketable securities
    
    
    219,535
    
    
    
    
    
    
    
    Deferred taxes
    
    
    200,340
    
    
    
    223,393
    
    
    
    211,808Intangible assets (7)
    
    
    48,927
    
    
    
    48,927
    
    
    
    60,709Contract land deposit and LLCs reserve
    
    
    (94,940
    )
    
    
    (155,858
    )
    
    
    (133,664
    )Consolidation adjustments and other (8)
    
    
    16,054
    
    
    
    47,949
    
    
    
    77,051Reconciling items sub-total
    
    
    1,709,035
    
    
    
    1,425,767
    
    
    
    1,056,819Consolidated Assets
    
    $
    2,395,770
    
    
    $
    2,103,236
    
    
    $
    2,194,416
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Interest IncomeMortgage Banking
    
    $
    2,979
    
    
    $
    3,955
    
    
    $
    4,900Total Segment Interest Income
    
    
    2,979
    
    
    
    3,955
    
    
    
    4,900Other unallocated interest income
    
    
    5,407
    
    
    
    10,909
    
    
    
    14,855Consolidated Interest Income
    
    $
    8,386
    
    
    $
    14,864
    
    
    $
    19,755
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Interest ExpenseHomebuilding Mid Atlantic
    
    $
    41,130
    
    
    $
    73,441
    
    
    $
    106,538Homebuilding North East
    
    
    6,475
    
    
    
    10,084
    
    
    
    14,678Homebuilding Mid East
    
    
    8,873
    
    
    
    12,976
    
    
    
    17,475Homebuilding South East
    
    
    5,661
    
    
    
    12,493
    
    
    
    14,287Mortgage Banking
    
    
    1,184
    
    
    
    754
    
    
    
    681Total Segment Interest Expense
    
    
    63,323
    
    
    
    109,748
    
    
    
    153,659Corporate capital allocation
    
    
    (61,753
    )
    
    
    (108,509
    )
    
    
    (152,363
    )Senior note and other interest
    
    
    9,810
    
    
    
    12,417
    
    
    
    12,535Consolidated Interest Expense
    
    $
    11,380
    
    
    $
    13,656
    
    
    $
    13,831
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Year Ended December 31,2009
    
    
    2008
    
    
    2007Depreciation and Amortization:Homebuilding Mid Atlantic
    
    $
    4,351
    
    
    $
    7,005
    
    
    $
    9,267Homebuilding North East
    
    
    612
    
    
    
    974
    
    
    
    1,582Homebuilding Mid East
    
    
    1,233
    
    
    
    1,626
    
    
    
    2,186Homebuilding South East
    
    
    1,163
    
    
    
    1,715
    
    
    
    1,457Mortgage Banking
    
    
    357
    
    
    
    395
    
    
    
    368Total Segment Depreciation
and Amortization
    
    
    7,716
    
    
    
    11,715
    
    
    
    14,860Unallocated corporate
    
    
    1,997
    
    
    
    1,926
    
    
    
    2,176Consolidated Depreciation and Amortization
    
    $
    9,713
    
    
    $
    13,641
    
    
    $
    17,036
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Expenditures for Property and Equipment:Homebuilding Mid Atlantic
    
    $
    1,511
    
    
    $
    3,142
    
    
    $
    5,785Homebuilding North East
    
    
    414
    
    
    
    508
    
    
    
    799Homebuilding Mid East
    
    
    741
    
    
    
    1,372
    
    
    
    1,637Homebuilding South East
    
    
    269
    
    
    
    1,369
    
    
    
    2,043Mortgage Banking
    
    
    87
    
    
    
    305
    
    
    
    96Total Segment Expenditures for
Property and Equipment
    
    
    3,022
    
    
    
    6,696
    
    
    
    10,360Unallocated corporate
    
    
    22
    
    
    
    203
    
    
    
    185Consolidated Expenditures for
Property and Equipment
    
    $
    3,044
    
    
    $
    6,899
    
    
    $
    10,545
 
 (1)
    
    This item represents changes to the contract land deposit impairment reserve, which is
not allocated to the reportable segments. During both 2009 and 2008, unallocated
reserves decreased from the respective prior years as a result of charging previously
reserved land impairments to the operating segments and to certain recoveries of deposits
previously determined to be impaired.(2)
    
    The increase in stock option expense in 2009 and 2008 compared to 2007 is primarily due
to the reversal of stock-based compensation costs of approximately $31,500 in 2007
related to certain stock options subject to a performance metric. During 2007, the
Company determined that it was improbable that it would meet the performance metric and
accordingly reversed all performance-based option expense recorded through that period.(3)
    
    This item represents the elimination of the corporate capital allocation charge included
in the respective homebuilding reportable segments. The decrease in the corporate
capital allocation charge from 2007 to 2008, and 2008 to 2009 is due to decreases in
segment asset balances in each of the respective years, due to a decline in operating
activity year over year. 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 31,2009
    
    
    2008
    
    
    2007Homebuilding Mid Atlantic
    
    $
    40,765
    
    
    $
    73,042
    
    
    $
    106,032Homebuilding North East
    
    
    6,473
    
    
    
    10,081
    
    
    
    14,669Homebuilding Mid East
    
    
    8,863
    
    
    
    12,902
    
    
    
    17,381Homebuilding South East
    
    
    5,652
    
    
    
    12,484
    
    
    
    14,281Total
    
    $
    61,753
    
    
    $
    108,509
    
    
    $
    152,363
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(4)
    
    The decreases in unallocated corporate overhead year over year are primarily driven
by a reduction in personnel and other overhead costs as part of our focus to size our
organization to meet current activity levels.(5)
    
    The decrease in consolidation adjustments and other in 2009 from 2008 is primarily
attributable to changes in the corporate consolidation entries based on production
volumes year over year, as well as to a decrease in interest income earned related to
lower interest rates in 2009 as compared to 2008.(6)
    
    The 2008 impairment charge relates to the write-off of goodwill and indefinite life
intangible assets related to the Companys 2005 acquisition of Rymarc Homes and the
goodwill related to the 1997 acquisition of Fox Ridge Homes.(7)
    
    The decrease in intangible assets relates to the impairment charge discussed in (6)
above.(8)
    
    The decrease in 2009 from 2008 is primarily attributable to changes in the corporate
consolidation entries based on production volumes year over year. The decrease in 2008
from 2007 is primarily attributable to the inclusion of a bulk purchase of finished lots
made during 2007, of which approximately $29,200 had not yet been allocated to the
reportable segments. At December 31, 2008, all but approximately $5,700 of this purchase
was allocated to the reportable segments. 3. Consolidation of Variable Interest Entities and Limited Liability Corporations
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NVR, Inc.
    
    
    Consolidatedand
    
    
    Entities Not
    
    
    
    
    
    
    ConsolidatedSubsidiaries
    
    
    Owned
    
    
    Eliminations
    
    
    TotalASSETSHomebuilding:Cash and cash equivalents
    
    $
    1,248,689
    
    
    $
    
    
    
    $
    
    
    
    $
    1,248,689Marketable securities
    
    
    219,535
    
    
    
    
    
    
    
    
    
    
    
    219,535Receivables
    
    
    7,995
    
    
    
    
    
    
    
    
    
    
    
    7,995Homebuilding inventory
    
    
    418,718
    
    
    
    
    
    
    
    
    
    
    
    418,718Property, plant and equipment, net
    
    
    20,215
    
    
    
    
    
    
    
    
    
    
    
    20,215Reorganization value in excess of amount
allocable to identifiable assets, net
    
    
    41,580
    
    
    
    
    
    
    
    
    
    
    
    41,580Contract land deposits, net
    
    
    51,184
    
    
    
    
    
    
    
    (1,278
    )
    
    
    49,906Other assets
    
    
    261,896
    
    
    
    
    
    
    
    (3,237
    )
    
    
    258,6592,269,812
    
    
    
    
    
    
    
    (4,515
    )
    
    
    2,265,297Mortgage banking assets:
    
    
    60,043
    
    
    
    
    
    
    
    
    
    
    
    60,043Consolidated entities not owned:Land under development
    
    
    
    
    
    
    70,198
    
    
    
    
    
    
    
    70,198Other assets
    
    
    
    
    
    
    232
    
    
    
    
    
    
    
    232
    
    
    
    70,430
    
    
    
    
    
    
    
    70,430Total assets
    
    $
    2,329,855
    
    
    $
    70,430
    
    
    $
    (4,515
    )
    
    $
    2,395,770LIABILITIES AND SHAREHOLDERS EQUITYHomebuilding:Accounts payable, accrued expenses
and other liabilities
    
    $
    341,816
    
    
    $
    
    
    
    $
    
    
    
    $
    341,816Customer deposits
    
    
    63,591
    
    
    
    
    
    
    
    
    
    
    
    63,591Other term debt
    
    
    2,166
    
    
    
    
    
    
    
    
    
    
    
    2,166Senior notes
    
    
    133,370
    
    
    
    
    
    
    
    
    
    
    
    133,370540,943
    
    
    
    
    
    
    
    
    
    
    
    540,943Mortgage banking liabilities:
    
    
    31,650
    
    
    
    
    
    
    
    
    
    
    
    31,650Consolidated entities not owned:Accounts payable, accrued expenses
and other liabilities
    
    
    
    
    
    
    9,438
    
    
    
    4,474
    
    
    
    13,912Debt
    
    
    
    
    
    
    52,003
    
    
    
    
    
    
    
    52,003Contract land deposits
    
    
    
    
    
    
    5,188
    
    
    
    (5,188
    )
    
    
    Advances from NVR, Inc.
    
    
    
    
    
    
    3,801
    
    
    
    (3,801
    )
    
    
    
    
    
    
    70,430
    
    
    
    (4,515
    )
    
    
    65,915Equity
    
    
    1,757,262
    
    
    
    
    
    
    
    
    
    
    
    1,757,262Total liabilities and shareholders equity
    
    $
    2,329,855
    
    
    $
    70,430
    
    
    $
    (4,515
    )
    
    $
    2,395,770
 70




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##### Table of Contents



NVR, Inc.
    
    
    Consolidatedand
    
    
    Entities Not
    
    
    
    
    
    
    ConsolidatedSubsidiaries
    
    
    Owned
    
    
    Eliminations
    
    
    TotalASSETSHomebuilding:Cash and cash equivalents
    
    $
    1,146,426
    
    
    $
    
    
    
    $
    
    
    
    $
    1,146,426Receivables
    
    
    11,594
    
    
    
    
    
    
    
    
    
    
    
    11,594Homebuilding inventory
    
    
    400,570
    
    
    
    
    
    
    
    
    
    
    
    400,570Property, plant and equipment, net
    
    
    25,658
    
    
    
    
    
    
    
    
    
    
    
    25,658Reorganization value in excess of amount
allocable to identifiable assets, net
    
    
    41,580
    
    
    
    
    
    
    
    
    
    
    
    41,580Contract land deposits, net
    
    
    29,872
    
    
    
    
    
    
    
    (799
    )
    
    
    29,073Other assets
    
    
    247,318
    
    
    
    
    
    
    
    (4,692
    )
    
    
    242,6261,903,018
    
    
    
    
    
    
    
    (5,491
    )
    
    
    1,897,527Mortgage banking assets:
    
    
    90,779
    
    
    
    
    
    
    
    
    
    
    
    90,779Consolidated entities not owned:Land under development
    
    
    
    
    
    
    114,178
    
    
    
    
    
    
    
    114,178Other assets
    
    
    
    
    
    
    752
    
    
    
    
    
    
    
    752
    
    
    
    114,930
    
    
    
    
    
    
    
    114,930Total assets
    
    $
    1,993,797
    
    
    $
    114,930
    
    
    $
    (5,491
    )
    
    $
    2,103,236LIABILITIES AND SHAREHOLDERS EQUITYHomebuilding:Accounts payable, accrued expenses
and other liabilities
    
    $
    332,154
    
    
    $
    
    
    
    $
    
    
    
    $
    332,154Customer deposits
    
    
    59,623
    
    
    
    
    
    
    
    
    
    
    
    59,623Other term debt
    
    
    2,530
    
    
    
    
    
    
    
    
    
    
    
    2,530Senior notes
    
    
    163,320
    
    
    
    
    
    
    
    
    
    
    
    163,320557,627
    
    
    
    
    
    
    
    
    
    
    
    557,627Mortgage banking liabilities:
    
    
    62,381
    
    
    
    
    
    
    
    
    
    
    
    62,381Consolidated entities not owned:Accounts payable, accrued expenses
and other liabilities
    
    
    
    
    
    
    16,826
    
    
    
    12,446
    
    
    
    29,272Debt
    
    
    
    
    
    
    80,167
    
    
    
    
    
    
    
    80,167Contract land deposits
    
    
    
    
    
    
    13,436
    
    
    
    (13,436
    )
    
    
    Advances from NVR, Inc.
    
    
    
    
    
    
    4,501
    
    
    
    (4,501
    )
    
    
    
    
    
    
    114,930
    
    
    
    (5,491
    )
    
    
    109,439Equity
    
    
    1,373,789
    
    
    
    
    
    
    
    
    
    
    
    1,373,789Total liabilities and shareholders equity
    
    $
    1,993,797
    
    
    $
    114,930
    
    
    $
    (5,491
    )
    
    $
    2,103,236
 71




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##### Table of Contents



4. Related Party Transactions
  5. Property, Plant and Equipment, net
 December 31,2009
    
    
    2008Homebuilding:Office facilities and other
    
    $
    13,324
    
    
    $
    13,908Model home furniture and fixtures
    
    
    18,354
    
    
    
    24,003Manufacturing facilities
    
    
    28,581
    
    
    
    27,957Property under capital leases
    
    
    3,976
    
    
    
    3,97664,235
    
    
    
    69,844Less: accumulated depreciation
    
    
    (44,020
    )
    
    
    (44,186
    )$
    20,215
    
    
    $
    25,658Mortgage Banking:Office facilities and other
    
    $
    3,586
    
    
    $
    3,817Less: accumulated depreciation
    
    
    (3,140
    )
    
    
    (3,058
    )$
    446
    
    
    $
    759
  72




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##### Table of Contents



6. Debt
 December 31,2009
    
    
    2008Homebuilding:Working capital revolving credit (a)
    
    $
    
    
    
    $
    Other term debt:Capital lease obligations due in monthly
installments through 2016 (b)
    
    $
    2,166
    
    
    $
    2,530Senior notes (c)
    
    $
    133,370
    
    
    $
    163,320Mortgage Banking:Master repurchase agreement (d)
    
    $
    12,344
    
    
    $
    44,539
 
 (a)
    
    The Company, as borrower, has available an unsecured working capital revolving credit
facility (the Facility). On August 4, 2009, NVR, as borrower, entered into an amendment to
its $600,000 revolving credit agreement with the Lenders party thereto and the Bank of
America, N.A., as Administrative Agent, (the Amended Facility) to reduce the total available
borrowings under the Amended Facility to $300,000, to eliminate the accordion feature to
increase the total commitments available and to amend or eliminate certain non-financial
covenants. The Facility is generally available to fund working capital needs of NVRs
homebuilding segment. Up to $150,000 of the Facility is currently available for issuance in
the form of letters of credit, of which $13,218 and $13,421 were outstanding at December 31,
2009 and 2008, respectively. The Facility expires in December 2010, and outstanding amounts
bear interest at either (i) the prime rate or (ii) the London Interbank Offering Rate
(LIBOR) plus Applicable Margin as defined within the Facility. There were no borrowings
under the Facility during 2009 and 2008. At December 31, 2009, there were no borrowing base
limitations reducing the amount available to the Company for borrowings.  (b)
    
    The capital lease obligations have fixed interest rates ranging from 13.1% to 14.1% and
are collateralized by land, buildings and equipment with a net book value of approximately
$866 and $1,052 at December 31, 2009 and 2008, respectively.  73




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##### Table of Contents



Year ending December 31,2010
    
    $
    4082011
    
    
    6452012
    
    
    6442013
    
    
    6442014
    
    
    669Thereafter
    
    
    563,066Amount representing interest
    
    
    (900
    )$
    2,166
 (c)
    
    On June 17, 2003, NVR completed an offering, at par, for $200,000 of 5% Senior
Notes due 2010 (the Notes) under a shelf registration statement filed in 1998 with the
Securities and Exchange Commission (the SEC). The Notes mature on June 15, 2010 and bear
interest at 5%, payable semi-annually in arrears on June 15 and December 15. The Notes are
general unsecured obligations and rank equally in right of payment with all of NVRs existing
and future unsecured senior indebtedness and indebtedness under NVRs existing credit
facility. The Notes are senior in right of payment to any future subordinated indebtedness
that NVR may incur. The Company may redeem the Notes, in whole or in part, at any time upon
not less than 30 nor more than 60 days notice at a redemption price equal to the greater of
(a) 100% of the principal amount of the Notes to be redeemed, or (b) the discounted present
value of the remaining scheduled payments of the Notes to be redeemed, plus, in each case,
accrued and unpaid interest. The indenture governing the Notes contains certain covenants
which, among other items, restricts the Companys ability to (i) create, incur, assume or
guarantee any secured debt, (ii) enter into sale and leaseback transactions, and (iii) merge
with or into other companies or sell all or substantially all of the Companys assets. At
December 31, 2009 NVR was in compliance with all covenants under the Notes. In December 2008,
the Company repurchased $36,680 of the Notes on the open market at 99.25% of par, resulting in
a pre-tax gain of approximately $251. In April 2009 and August 2009, the Company repurchased
$27,950 and $2,000 of the Notes, respectively, on the open market at par, reducing the Notes
balance at December 31, 2009 to $133,370. On September 8, 2008, the Company filed a shelf registration statement (the 2008 Shelf
Registration) with the SEC to register for future offer and sale, an unlimited amount of debt
securities, common shares, preferred shares, depositary shares representing preferred shares
and warrants. This discussion of the 2008 Shelf Registration does not constitute an offer of
any securities for sale. (d)
    
    On August 5, 2009, NVRM renewed and amended its Master Repurchase Agreement dated
August 5, 2008 with U.S. Bank National Association, as Agent and representative of itself as a
Buyer, and the other Buyers thereto (the Master Repurchase Agreement) pursuant to a First
Amendment to Master Repurchase Agreement with U.S. Bank National Association, as Agent and
representative of itself as Buyer (Agent), and the other Buyers thereto (together with the
Master Repurchase Agreement, the Amended Repurchase Agreement). The purpose of the Amended
Repurchase Agreement is to finance the origination of mortgage loans by NVRM. The Amended
Repurchase Agreement provides for loan purchases up to $100,000, subject to certain sublimits.
In addition, the Amended Repurchase Agreement provides for an accordion feature under which
NVRM may request that the aggregate commitments under the Repurchase Agreement be increased to
an amount up to $125,000. The Amended Repurchase Agreement expires on August 3, 2010.  74




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##### Table of Contents



Year ending December 31,2010
    
    $
    145,8302011
    
    
    4022012
    
    
    4562013
    
    
    5202014
    
    
    616Thereafter
    
    
    56Total
    
    $
    147,880
  7. Common Stock
   75




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##### Table of Contents



8. Income Taxes
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Current:Federal
    
    $
    69,911
    
    
    $
    63,614
    
    
    $
    189,907State
    
    
    8,556
    
    
    
    9,785
    
    
    
    36,231Deferred:Federal
    
    
    23,474
    
    
    
    (5,702
    )
    
    
    (17,356
    )State
    
    
    4,293
    
    
    
    (1,134
    )
    
    
    (3,232
    )$
    106,234
    
    
    $
    66,563
    
    
    $
    205,550
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Income tax benefits arising from
compensation expense for tax
purposes in excess of amounts
recognized for financial
statement purposes
    
    $
    66,448
    
    
    $
    50,240
    
    
    $
    69,046
  December 31,2009
    
    
    2008Deferred tax assets:Other accrued expenses and
contract land deposit reserve
    
    $
    104,907
    
    
    $
    130,338Deferred compensation
    
    
    16,897
    
    
    
    30,334Stock option expense
    
    
    43,149
    
    
    
    32,809Uniform capitalization
    
    
    5,477
    
    
    
    4,171Unrecognized tax benefit
    
    
    25,671
    
    
    
    26,754Other
    
    
    10,480
    
    
    
    8,366Total deferred tax assets
    
    
    206,581
    
    
    
    232,772Less: deferred tax liabilities
    
    
    531
    
    
    
    4,810Net deferred tax position
    
    $
    206,050
    
    
    $
    227,962
   76




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##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Income taxes computed at the
Federal statutory rate
    
    $
    104,445
    
    
    $
    58,609
    
    
    $
    188,827State income taxes, net of Federal
income tax benefit
    
    
    7,467
    
    
    
    6,004
    
    
    
    23,086Other, net
    
    
    (5,678
    )
    
    
    1,950
    
    
    
    (6,363
    )$
    106,234
    
    
    $
    66,563
    
    
    $
    205,550
    Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008Balance at beginning of year
    
    $
    53,339
    
    
    $
    55,662Additions for tax positions for prior years
    
    
    72
    
    
    
    Additions based on tax positions related to the current year
    
    
    2,769
    
    
    
    3,469Reductions for tax positions of prior years
    
    
    (7,511
    )
    
    
    (3,940
    )Settlements
    
    
    
    
    
    
    (1,852
    )Balance at end of year
    
    $
    48,669
    
    
    $
    53,339
   77




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##### Table of Contents



9. Stock Option, Profit Sharing and Deferred Compensation Plans
 Stock Option Plans
   
    
    During 1996, the Companys shareholders approved the Board of Directors
adoption of the Management Long-Term Stock Option Plan (the 1996 Option Plan).
There are 2,000,000 Options authorized under the Management Long Term Stock Option
Plan. All Options were granted at an exercise price equal to the fair market
value of the Companys Shares on the date of grant. The Options expire 10 years
after the dates upon which they were granted, and vest annually in one-third
increments beginning on December 31, 2000, or later depending on the date of
grant.
    
    During 1999, the Companys shareholders approved the Board of Directors
adoption of the 1998 Management Long-Term Stock Option Plan (the 1998 Option
Plan). There are 1,000,000 Options authorized under the 1998 Option Plan. All
Options were granted at an exercise price equal to the fair market value of the
Companys Shares on the date of grant. The Options expire 10 years after the
dates upon which they were granted. Options granted under the 1998 Option Plan
prior to 2003 vest annually in one-third increments beginning on December 31,
2003, or later depending on the date of grant, with vesting contingent upon
continued employment. Options granted after 2002 generally vest in 25% increments
beginning on December 31, 2006, or later depending on the date of grant.
 78




---



##### Table of Contents




    
    During 1999, the Companys shareholders approved the Board of Directors
adoption of the 1998 Directors Long Term Stock Option Plan (the 1998 Directors
Plan). There were 150,000 Options to purchase shares of common stock authorized
for grant to the
Companys outside directors under the 1998 Directors Plan. All Options are
granted at an exercise price equal to the fair market value of the Companys
Shares on the date of grant. The Options were granted for a 10-year period and
generally vest annually in twenty-five percent (25%) increments beginning on
either December 31, 2002, December 31, 2006, or later as determined by the date
of grant.
    
    During 2000, the Board approved the 2000 Broadly-Based Stock Option Plan (the
2000 Plan). The Company did not seek approval from its shareholders for the
2000 Plan. There are 2,000,000 Options authorized under the 2000 Plan. All
Options are granted at an exercise price equal to the fair market value of the
Companys Shares on the date of grant. Grants under the 2000 Plan are available
to both employees and members of the Board. The distribution of Options to key
employees and members of the board, in aggregate, are limited to 50% or less of
the total options authorized under the 2000 Plan. Options granted under the 2000
Plan expire 10 years from the date of grant, and generally vest annually in 25%
increments beginning on December 31, 2006, or later depending on the date of
grant.
    79




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##### Table of Contents



WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contract Life
    
    
    IntrinsicOptions
    
    
    Price
    
    
    (Years)
    
    
    ValueStock OptionsOutstanding at beginning of period
    
    
    1,417,024
    
    
    $
    296.41Granted
    
    
    23,287
    
    
    
    516.65Exercised
    
    
    (418,775
    )
    
    
    189.02Forfeited
    
    
    (19,627
    )
    
    
    489.18Expired
    
    
    (2,767
    )
    
    
    544.26Outstanding at end of period
    
    
    999,142
    
    
    $
    342.08
    
    
    
    3.8
    
    
    $
    368,314Exercisable at end of period
    
    
    668,132
    
    
    $
    259.80
    
    
    
    2.0
    
    
    $
    301,267
  2009
    
    2008
    
    2007Estimated option life
    
    4.70 years
    
    3.95 years
    
    8.87 yearsRisk free interest rate (range)
    
    
    1.78%  3.65
    %
    
    
    1.00%  4.19
    %
    
    
    4.41%  5.09
    %Expected volatility (range)
    
    
    31.83%  41.72
    %
    
    
    31.57%  38.75
    %
    
    
    36.17%  38.87
    %Expected dividend rate
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Weighted average grant-date fair
value per share of options granted
    
    $
    187.10
    
    
    $
    156.85
    
    
    $
    351.10
  80




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##### Table of Contents



2009
    
    2008
    
    2007Aggregate exercise proceeds
    
    $
    79,157
    
    
    $
    70,978
    
    
    $
    67,583Aggregate intrinsic value on exercise dates
    
    $
    135,652
    
    
    $
    175,190
    
    
    $
    218,255
  Profit Sharing Plans
  Deferred Compensation Plans
   81




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##### Table of Contents



10. Commitments and Contingent Liabilities
  Year ended December 31,2010
    
    $
    19,6782011
    
    
    13,0042012
    
    
    9,7382013
    
    
    7,3102014
    
    
    5,917Thereafter
    
    
    14,90470,551Sublease income
    
    
    (435
    )$
    70,116
     Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Warranty reserve, beginning of year
    
    $
    68,084
    
    
    $
    70,284
    
    
    $
    70,175Provision
    
    
    35,688
    
    
    
    40,468
    
    
    
    47,041Payments
    
    
    (39,355
    )
    
    
    (42,668
    )
    
    
    (46,932
    )Warranty reserve, end of year
    
    $
    64,417
    
    
    $
    68,084
    
    
    $
    70,284
 82




---



##### Table of Contents



11. Fair Value
 Financial Instruments
  Derivative Instruments and Mortgage Loans Held for Sale
  83




---



##### Table of Contents



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); andiii)
    
    the value of the servicing rights associated with the loan (level 2).
     84




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##### Table of Contents



Balance
    
    
    FairSheet
    
    
    ValueLocation
    
    
    December 31, 2009Derivative Assets:Forward Sales Contracts
    
    NVRM  Other assets
    
    $
    2,445Derivative Liabilities:Rate Lock Commitments
    
    NVRM  Accounts payable 
and other liabilities
    
    $
    707
  Assumed
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    Total FairNotional or
    
    
    Gain (Loss)
    
    
    Rate
    
    
    Servicing
    
    
    Security
    
    
    ValuePrincipal
    
    
    From Loan
    
    
    Movement
    
    
    Rights
    
    
    Price
    
    
    AdjustmentAmount
    
    
    Sale
    
    
    Effect
    
    
    Value
    
    
    Change
    
    
    Gain/(Loss)Rate lock commitments
    
    $
    130,061
    
    
    $
    (563
    )
    
    $
    (1,756
    )
    
    $
    1,612
    
    
    $
    
    
    
    $
    (707
    )Forward sales contracts
    
    $
    141,757
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,445
    
    
    
    2,445Mortgages held for sale
    
    $
    40,492
    
    
    
    (225
    )
    
    
    (745
    )
    
    
    575
    
    
    
    
    
    
    
    (395
    )Total Fair Value Measurement, December
31, 2009
    
    
    
    
    
    
    (788
    )
    
    
    (2,501
    )
    
    
    2,187
    
    
    
    2,445
    
    
    
    1,343Less: Fair Value Measurement, December
31, 2008
    
    
    
    
    
    
    (1,197
    )
    
    
    2,021
    
    
    
    1,825
    
    
    
    (1,743
    )
    
    
    906Total Fair Value Adjustment for the
period ended December 31, 2009
    
    
    
    
    
    $
    409
    
    
    $
    (4,522
    )
    
    $
    362
    
    
    $
    4,188
    
    
    $
    437
  12. Quarterly Results (unaudited)
  85




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##### Table of Contents



Year Ended December 31, 20094th
    
    3rd
    
    2nd
    
    1stQuarter
    
    Quarter
    
    Quarter
    
    QuarterRevenues-homebuilding
operations
    
    $
    730,140
    
    
    $
    792,510
    
    
    $
    612,488
    
    
    $
    548,329Gross profit  homebuilding
operations
    
    $
    137,919
    
    
    $
    155,868
    
    
    $
    118,248
    
    
    $
    85,699Mortgage banking fees
    
    $
    15,662
    
    
    $
    21,506
    
    
    $
    12,943
    
    
    $
    10,270Net income
    
    $
    60,639
    
    
    $
    72,127
    
    
    $
    41,426
    
    
    $
    17,988Diluted earnings per share
    
    $
    9.61
    
    
    $
    11.59
    
    
    $
    6.79
    
    
    $
    3.02Contracts for sale, net
of cancellations (units)
    
    
    2,000
    
    
    
    2,255
    
    
    
    2,728
    
    
    
    2,426Settlements (units)
    
    
    2,550
    
    
    
    2,671
    
    
    
    2,048
    
    
    
    1,773Backlog, end of period (units)
    
    
    3,531
    
    
    
    4,081
    
    
    
    4,497
    
    
    
    3,817Loans closed
    
    $
    542,147
    
    
    $
    603,317
    
    
    $
    487,618
    
    
    $
    427,294
 Year Ended December 31, 20084th
    
    3rd
    
    2nd
    
    1stQuarter
    
    Quarter
    
    Quarter
    
    QuarterRevenues-homebuilding
operations
    
    $
    899,535
    
    
    $
    928,265
    
    
    $
    941,033
    
    
    $
    869,869Gross profit  homebuilding
operations
    
    $
    23,756
    
    
    $
    122,334
    
    
    $
    168,664
    
    
    $
    142,938Mortgage banking fees
    
    $
    10,639
    
    
    $
    10,946
    
    
    $
    14,690
    
    
    $
    18,062Net (loss) income
    
    $
    (30,457
    )
    
    $
    36,551
    
    
    $
    51,332
    
    
    $
    43,466Diluted (loss) earnings per share
    
    $
    (5.54
    )
    
    $
    6.12
    
    
    $
    8.64
    
    
    $
    7.42Contracts for sale, net
of cancellations (units)
    
    
    1,357
    
    
    
    2,002
    
    
    
    2,670
    
    
    
    2,731Settlements (units)
    
    
    2,776
    
    
    
    2,750
    
    
    
    2,750
    
    
    
    2,465Backlog, end of period (units)
    
    
    3,164
    
    
    
    4,583
    
    
    
    5,331
    
    
    
    5,411Loans closed
    
    $
    623,623
    
    
    $
    610,313
    
    
    $
    593,867
    
    
    $
    523,538
 86