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, 2008
 OR
 o
    
    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.
 
  Virginia
    
    54-1394360(State or other jurisdiction of incorporation or organization)
    
    (IRS employer identification number)
 11700 Plaza America Drive, Suite 500Reston, Virginia
    
    20190(Address of principal executive offices)
    
    (Zip Code)
 (703) 956-4000
 
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon stock, par value $0.01 per share
    
    New York Stock Exchange5% Senior Notes due 2010
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
 þ o
 o No þ
 þ o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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INDEX
 PagePART IItem 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    6Item 1B. Unresolved Staff Comments
    
    
    11Item 2. Properties
    
    
    11Item 3. Legal Proceedings
    
    
    12Item 4. Submission of Matters to a Vote of Security Holders
    
    
    12Executive Officers of the Registrant
    
    
    12PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    13Item 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
    
    
    37Item 8. Financial Statements and Supplementary Data
    
    
    40Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    40Item 9A. Controls and Procedures
    
    
    40Item 9B. Other Information
    
    
    40PART IIIItem 10. Directors, Executive Officers, and Corporate Governance
    
    
    41Item 11. Executive Compensation
    
    
    41Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    41Item 13. Certain Relationships and Related Transactions, and Director
Independence
    
    
    42Item 14. Principal Accountant Fees and Services
    
    
    42PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    42
 1




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PART I
 
 Item 1. Business.
 General
      2




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Current Business Environment
 10-K.
 Homebuilding
 Products
  Markets
  Mid Atlantic:
    
    Maryland, Virginia, West Virginia and DelawareNorth East:
    
    New Jersey and eastern PennsylvaniaMid East:
    
    Kentucky, New York, Ohio and western PennsylvaniaSouth East:
    
    North Carolina, South Carolina, and Tennessee
  Backlog
  3




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




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Mortgage Banking
   Competition and Market Factors
  Regulation
  Pipeline
  Employees
  NYSE Certification
  5




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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.
  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.
  7




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##### 



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.
   Our current indebtedness may impact our future operations.
  9




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##### 



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.
    A shortage of building materials or labor, or increases in materials or labor costs may adversely
impact our operations.
  10




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##### 



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.
  Weather-related and other events beyond our control may adversely impact our operations.
  
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
   11




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Item 3. Legal Proceedings.
    
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Executive Officers of the Registrant
 Name
    
    Age
    
    PositionsDwight C. Schar
    
    67
    
    Chairman of the Board of NVRPaul C. Saville
    
    53
    
    President and Chief Executive Officer of NVRWilliam J. Inman
    
    61
    
    President of NVRMDennis M. Seremet
    
    53
    
    Senior Vice President, Chief Financial Officer and Treasurer of NVRRobert W. Henley
    
    42
    
    Vice President and Controller of NVR
 Dwight C. Schar
 12




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Paul C. Saville
 William J. Inman
 Dennis M. Seremet
 Robert W. Henley
 
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
  HIGH
    
    LOWPrices per Share:2008Fourth Quarter
    
    $
    600.00
    
    
    $
    316.82Third Quarter
    
    $
    639.80
    
    
    $
    452.00Second Quarter
    
    $
    679.37
    
    
    $
    498.00First Quarter
    
    $
    661.00
    
    
    $
    436.202007Fourth Quarter
    
    $
    578.00
    
    
    $
    398.96Third Quarter
    
    $
    728.45
    
    
    $
    442.20Second Quarter
    
    $
    851.96
    
    
    $
    658.61First Quarter
    
    $
    747.00
    
    
    $
    585.00
    13




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##### 



Stock Performance Graph
 COMPARISON OF CUMULATIVE TOTAL EQUITYHOLDER RETURN ON EQUITY
  
 (a)
    
    Assumes that $100 was invested in NVR stock and the indices on December 31, 2003.
 14




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##### 



Item 6.
    
    Selected Financial Data.
(dollars in thousands, except per share amounts)
  Year Ended December 31,2008
    
    2007
    
    2006
    
    2005
    
    2004Consolidated Income Statement Data:Homebuilding data:Revenues
    
    $
    3,638,702
    
    
    $
    5,048,187
    
    
    $
    6,036,236
    
    
    $
    5,177,743
    
    
    $
    4,247,503Gross profit
    
    
    457,692
    
    
    
    821,128
    
    
    
    1,334,971
    
    
    
    1,439,713
    
    
    
    1,091,217Mortgage Banking data:Mortgage banking fees
    
    
    54,337
    
    
    
    81,155
    
    
    
    97,888
    
    
    
    84,604
    
    
    
    72,219Interest income
    
    
    3,955
    
    
    
    4,900
    
    
    
    7,704
    
    
    
    5,014
    
    
    
    4,249Interest expense
    
    
    754
    
    
    
    681
    
    
    
    2,805
    
    
    
    1,759
    
    
    
    1,088Consolidated data:Income from continuing
operations (1)
    
    $
    100,892
    
    
    $
    333,955
    
    
    $
    587,412
    
    
    $
    697,559
    
    
    $
    523,204Income from continuing
operations per diluted share (2)
    
    $
    17.04
    
    
    $
    54.14
    
    
    $
    88.05
    
    
    $
    89.61
    
    
    $
    66.42
 December 31,2008
    
    2007
    
    2006
    
    2005
    
    2004Consolidated Balance Sheet Data:Homebuilding inventory
    
    $
    400,570
    
    
    $
    688,854
    
    
    $
    733,616
    
    
    $
    793,975
    
    
    $
    588,540Contract land deposits, net
    
    
    29,073
    
    
    
    188,528
    
    
    
    402,170
    
    
    
    517,241
    
    
    
    362,990Total assets
    
    
    2,103,236
    
    
    
    2,194,416
    
    
    
    2,473,808
    
    
    
    2,237,669
    
    
    
    1,755,998Notes and loans payable
    
    
    210,389
    
    
    
    286,283
    
    
    
    356,632
    
    
    
    463,141
    
    
    
    213,803Shareholders equity
    
    
    1,373,789
    
    
    
    1,129,375
    
    
    
    1,152,074
    
    
    
    677,162
    
    
    
    834,995Cash dividends per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No.
123(R), Share-Based Payment, pursuant to which we recognized $31,560, $11,669 and $37,982 of
stock-based compensation costs, net of tax, during 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 periods prior to 2006 presented
above do not include any stock-based compensation expense.(2)
    
    For the years ended December 31, 2008, 2007, 2006, 2005 and 2004, income from continuing
operations per diluted share was computed based on 5,920,285; 6,167,795; 6,671,571; 7,784,382;
and 7,876,869 shares, respectively, which represents the weighted average number of shares and
share equivalents outstanding for each year. 15




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
(dollars in thousands, except per share data)
 Results of Operations for the Years Ended December 31, 2008, 2007, and 2006
 Overview
 Business
  Mid Atlantic:
    
    Maryland, Virginia, West Virginia and DelawareNorth East:
    
    New Jersey and eastern PennsylvaniaMid East:
    
    Kentucky, New York, Ohio and western PennsylvaniaSouth East:
    
    North Carolina, South Carolina, and Tennessee
   Overview of Current Business Environment
  16




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17




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Homebuilding Operations
  Year Ended December 31,2008
    
    2007
    
    2006Revenues
    
    $
    3,638,702
    
    
    $
    5,048,187
    
    
    $
    6,036,236Cost of sales
    
    $
    3,181,010
    
    
    $
    4,227,059
    
    
    $
    4,701,265Gross profit margin percentage
    
    
    12.6
    %
    
    
    16.3
    %
    
    
    22.1
    %Selling, general and administrative expenses
    
    $
    308,739
    
    
    $
    343,520
    
    
    $
    432,319Settlements (units)
    
    
    10,741
    
    
    
    13,513
    
    
    
    15,139Average settlement price
    
    $
    338.4
    
    
    $
    373.2
    
    
    $
    398.2New orders (units)
    
    
    8,760
    
    
    
    12,270
    
    
    
    13,217Average new order price
    
    $
    311.3
    
    
    $
    352.0
    
    
    $
    377.4Backlog (units)
    
    
    3,164
    
    
    
    5,145
    
    
    
    6,388Average backlog price
    
    $
    316.9
    
    
    $
    371.3
    
    
    $
    412.4
 Consolidated Homebuilding Revenues
   Consolidated Homebuilding New Orders
   18




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Consolidated Homebuilding Gross Profit
   Consolidated Homebuilding Selling, General and Administrative (SG&A)
   Consolidated Homebuilding Backlog
  19




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Consolidated Homebuilding  Other Charges
  Reportable Homebuilding Segments
  20




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##### 



Year Ended December 31,2008
    
    2007
    
    2006Mid Atlantic:Revenues
    
    $
    2,161,764
    
    
    $
    3,099,053
    
    
    $
    3,825,960Settlements (units)
    
    
    5,240
    
    
    
    6,634
    
    
    
    7,491Average settlement price
    
    $
    412.5
    
    
    $
    467.0
    
    
    $
    510.4New Orders (units)
    
    
    4,290
    
    
    
    5,695
    
    
    
    6,182Average new order price
    
    $
    373.4
    
    
    $
    436.5
    
    
    $
    479.6Backlog (units)
    
    
    1,776
    
    
    
    2,726
    
    
    
    3,665Average backlog price
    
    $
    371.3
    
    
    $
    447.2
    
    
    $
    499.7Gross profit margin
    
    $
    294,708
    
    
    $
    547,757
    
    
    $
    979,362Gross profit margin percentage
    
    
    13.63
    %
    
    
    17.67
    %
    
    
    25.60
    %Segment profit
    
    $
    108,561
    
    
    $
    296,049
    
    
    $
    687,904North East:Revenues
    
    $
    347,142
    
    
    $
    433,631
    
    
    $
    657,338Settlements (units)
    
    
    1,086
    
    
    
    1,247
    
    
    
    1,682Average settlement price
    
    $
    319.7
    
    
    $
    347.7
    
    
    $
    390.7New Orders (units)
    
    
    884
    
    
    
    1,212
    
    
    
    1,438Average new order price
    
    $
    298.5
    
    
    $
    338.7
    
    
    $
    371.4Backlog (units)
    
    
    303
    
    
    
    505
    
    
    
    540Average backlog price
    
    $
    288.8
    
    
    $
    338.8
    
    
    $
    359.6Gross profit margin
    
    $
    46,608
    
    
    $
    57,860
    
    
    $
    120,531Gross profit margin percentage
    
    
    13.43
    %
    
    
    13.34
    %
    
    
    18.34
    %Segment profit
    
    $
    14,761
    
    
    $
    12,618
    
    
    $
    64,246Mid East:Revenues
    
    $
    659,649
    
    
    $
    860,139
    
    
    $
    965,626Settlements (units)
    
    
    2,762
    
    
    
    3,321
    
    
    
    3,571Average settlement price
    
    $
    237.4
    
    
    $
    257.7
    
    
    $
    268.8New Orders (units)
    
    
    2,380
    
    
    
    3,160
    
    
    
    3,244Average new order price
    
    $
    229.5
    
    
    $
    248.2
    
    
    $
    267.7Backlog (units)
    
    
    731
    
    
    
    1,113
    
    
    
    1,274Average backlog price
    
    $
    223.9
    
    
    $
    245.4
    
    
    $
    270.6Gross profit margin
    
    $
    104,762
    
    
    $
    155,738
    
    
    $
    160,494Gross profit margin percentage
    
    
    15.88
    %
    
    
    18.11
    %
    
    
    16.62
    %Segment profit
    
    $
    42,296
    
    
    $
    80,969
    
    
    $
    69,911South East:Revenues
    
    $
    470,147
    
    
    $
    655,364
    
    
    $
    587,312Settlements (units)
    
    
    1,653
    
    
    
    2,311
    
    
    
    2,395Average settlement price
    
    $
    284.4
    
    
    $
    283.6
    
    
    $
    245.2New Orders (units)
    
    
    1,206
    
    
    
    2,203
    
    
    
    2,353Average new order price
    
    $
    261.2
    
    
    $
    290.0
    
    
    $
    263.9Backlog (units)
    
    
    354
    
    
    
    801
    
    
    
    909Average backlog price
    
    $
    260.5
    
    
    $
    308.6
    
    
    $
    290.7Gross profit margin
    
    $
    60,173
    
    
    $
    144,254
    
    
    $
    129,127Gross profit margin percentage
    
    
    12.80
    %
    
    
    22.01
    %
    
    
    21.99
    %Segment profit
    
    $
    9,286
    
    
    $
    89,785
    
    
    $
    79,948
 21




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Mid Atlantic
 2008 versus 2007
  Overview
 2007 versus 2006
  Overview
 22




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North East
 2008 versus 2007
  Overview
 2007 versus 2006
   23




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Mid East
 2008 versus 2007
  Overview
 2007 versus 2006
   24




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South East
 2008 versus 2007
   2007 versus 2006
   25




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Homebuilding Segment Reconciliations to Consolidated Homebuilding Operations
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Homebuilding Consolidated Gross Profit:Homebuilding Mid Atlantic
    
    $
    294,708
    
    
    $
    547,757
    
    
    $
    979,362Homebuilding North East
    
    
    46,608
    
    
    
    57,860
    
    
    
    120,531Homebuilding Mid East
    
    
    104,762
    
    
    
    155,738
    
    
    
    160,494Homebuilding South East
    
    
    60,173
    
    
    
    144,254
    
    
    
    129,127Consolidation adjustments and other (1)
    
    
    (48,559
    )
    
    
    (84,481
    )
    
    
    (54,543
    )Consolidated homebuilding gross profit
    
    $
    457,692
    
    
    $
    821,128
    
    
    $
    1,334,971Homebuilding Consolidated Profit Before Tax:Homebuilding Mid Atlantic
    
    $
    108,561
    
    
    $
    296,049
    
    
    $
    687,904Homebuilding North East
    
    
    14,761
    
    
    
    12,618
    
    
    
    64,246Homebuilding Mid East
    
    
    42,296
    
    
    
    80,969
    
    
    
    69,911Homebuilding South East
    
    
    9,286
    
    
    
    89,785
    
    
    
    79,948Reconciling items:Contract land deposit impairments (2)
    
    
    (41,134
    )
    
    
    (79,002
    )
    
    
    (27,717
    )Stock option expense (3)
    
    
    (38,681
    )
    
    
    (13,542
    )
    
    
    (54,514
    )Corporate capital allocation (4)
    
    
    108,509
    
    
    
    152,363
    
    
    
    184,908Unallocated corporate overhead (5)
    
    
    (63,181
    )
    
    
    (69,975
    )
    
    
    (86,363
    )Consolidation adjustments and other (6)
    
    
    24,437
    
    
    
    28,842
    
    
    
    (3,340
    )Impairment of goodwill and intangible assets (7)
    
    
    (11,686
    )
    
    
    
    
    
    
    Corporate interest expense
    
    
    (12,417
    )
    
    
    (12,531
    )
    
    
    (17,145
    )Reconciling items sub-total
    
    
    (34,153
    )
    
    
    6,155
    
    
    
    (4,171
    )Homebuilding consolidated profit
before taxes
    
    $
    140,751
    
    
    $
    485,576
    
    
    $
    897,838
 
 (1)
    
    This line item contains contract land deposit impairment charges that have not yet been
charged to the reportable segments. The variance in 2007 compared to 2006 is due to year
over year increases in contract land deposit impairments recorded at the corporate level
of approximately $51,000, offset partially by changes in operating activity year to year.
During 2008, unallocated reserves decreased approximately $41,100 as a result of
charging previously reserved land impairments to the reportable segments.(2)
    
    This item represents contract land deposit reserves which have not yet been charged to
reportable segments.(3)
    
    The change in 2007 compared to 2006 and 2008 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 we did not expect to meet the
performance metric and accordingly reversed all performance-based option expense recorded
through that period (see Note 9 to the accompanying consolidated financial statements for
additional discussion). 26




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##### 



(4)
    
    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 2006 to 2007 and from 2007 to 2008 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 31,2008
    
    
    2007
    
    
    2006Homebuilding Mid Atlantic
    
    $
    73,042
    
    
    $
    106,032
    
    
    $
    131,823Homebuilding North East
    
    
    10,081
    
    
    
    14,669
    
    
    
    19,533Homebuilding Mid East
    
    
    12,902
    
    
    
    17,381
    
    
    
    21,235Homebuilding South East
    
    
    12,484
    
    
    
    14,281
    
    
    
    12,317Total
    
    $
    108,509
    
    
    $
    152,363
    
    
    $
    184,908
 
 (5)
    
    The decreases in unallocated corporate overhead year over year are primarily driven by a
reduction in management incentive costs and reduced personnel and other overhead costs as
part of our focus to size our organization to meet current activity levels.(6)
    
    The favorable variance from 2006 to 2007 is primarily due to increased interest income
due to a higher average cash balances and decreased operating activity.(7)
    
    The 2008 impairment charge relates to the 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 (see Note 1 to the accompanying consolidated financial
statements for additional discussion). 27




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##### 



Mortgage Banking Segment
  2008
    
    
    2007
    
    
    2006Loan closing volume:Total principal
    
    $
    2,351,341
    
    
    $
    3,225,324
    
    
    $
    3,918,206Loan volume mix:Adjustable rate mortgages
    
    
    5
    %
    
    
    17
    %
    
    
    37
    %Fixed-rate mortgages
    
    
    95
    %
    
    
    83
    %
    
    
    63
    %Operating Profit:Segment Profit
    
    $
    29,227
    
    
    $
    54,576
    
    
    $
    68,753Stock option expense
    
    
    (2,523
    )
    
    
    (647
    )
    
    
    (3,620
    )Mortgage banking
income before tax
    
    $
    26,704
    
    
    $
    53,929
    
    
    $
    65,133Capture rate:
    
    
    85
    %
    
    
    85
    %
    
    
    86
    %Mortgage Banking Fees:Net gain on sale of loans
    
    $
    38,921
    
    
    $
    60,128
    
    
    $
    72,700Title services
    
    
    14,581
    
    
    
    20,304
    
    
    
    24,081Servicing fees
    
    
    835
    
    
    
    723
    
    
    
    1,107$
    54,337
    
    
    $
    81,155
    
    
    $
    97,888
 2008 versus 2007
    28




---



##### 



2007 versus 2006
    Mortgage Banking  Other
   Seasonality
  29




---



##### 



Effective Tax Rate
  Recent Accounting Pronouncements Pending Adoption
     Liquidity and Capital Resources
 Lines of Credit and Notes Payable
  30




---



##### 



31




---



##### 



Equity Repurchases
  Cash Flows
      Off Balance Sheet Arrangements
 Lot Acquisition Strategy
  32




---



##### 



Bonds and Letters of Credit
  Mortgage Commitments and Forward Sales
  33




---



##### 



Contractual Obligations
  Payments due by periodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsDebt (a)
    
    $
    220,108
    
    
    $
    52,705
    
    
    $
    167,403
    
    
    $
    
    
    
    $
    Capital leases (b)
    
    
    3,939
    
    
    
    637
    
    
    
    1,289
    
    
    
    1,288
    
    
    
    725Operating leases (c)
    
    
    69,289
    
    
    
    22,478
    
    
    
    26,924
    
    
    
    14,486
    
    
    
    5,401Purchase obligations (d)
    
    
    18,000
    
    
        
    *

    
        
    *

    
        
    *

    
        
    *Executive officer employment
contracts (e)
    
    
    5,035
    
    
    
    3,330
    
    
    
    1,705
    
    
    
    
    
    
    
    Other long-term liabilities (f)
    
    
    24,322
    
    
    
    23,386
    
    
    
    936
    
    
    
    
    
    
    
    Total
    
    $
    340,693
    
    
    $
    102,536
    
    
    $
    198,257
    
    
    $
    15,774
    
    
    $
    6,126
 
 (a)
    
    Payments include interest payments due on the 5% Senior Notes due 2010. See Note 6 to
the Consolidated Financial Statements included herein 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 to the Consolidated Financial Statements for additional information regarding
capital lease obligations.(c)
    
    See Note 10 to the 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 four 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 50% in 2009 and
100% thereafter 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, except for our
Executive Chairman. Effective February 4, 2009, the Companys Executive Chairman relinquished
the title of Executive Officer but will continue to serve as Chairman of the Board. Based on
the terms of his employment agreement, he will receive a payment in 2009 upon the
relinquishment of the Executive Officer role, and is reflected as such in the table above.
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, $3,800 of which is recorded in the Mortgage Banking accounts
payable and other liabilities line item. 34




---



##### 



Critical Accounting Policies
 General
  Variable Interest Entities
 ,
  Homebuilding Inventory
  35




---



##### 



Contract Land Deposits
  Intangible Assets
  Warranty / Product Liability Accruals
  36




---



##### 



Stock Option Expense
    Impact of Inflation, Changing Prices and Economic Conditions
  
 Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
    37




---



##### 



38




---



##### 



Maturities (000s)
 Fair2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    ValueMortgage banking segmentInterest rate sensitive assets:Mortgage loans held for sale
    
    $
    71,118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    71,118
    
    
    $
    72,488Average interest rate
    
    
    5.6
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.6
    %Interest rate sensitive liabilities:Variable rate repurchase agreement
    
    $
    44,539
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    44,539
    
    
    $
    44,539Average interest rate (a)
    
    
    1.9
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9
    %Other:Forward trades of mortgage-backed
securities (b)
    
    $
    (1,743
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,743
    )
    
    $
    (1,743
    )Forward loan commitments (b)
    
    
    1,279
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,279
    
    
    
    1,279Homebuilding segmentInterest rate sensitive assets:Interest-bearing deposits
    
    $
    1,114,701
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,114,701
    
    
    $
    1,114,701Average interest rate
    
    
    0.6
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    %Interest rate sensitive liabilities:Fixed rate obligations (c)
    
    $
    127
    
    
    $
    163,673
    
    
    $
    402
    
    
    $
    456
    
    
    $
    520
    
    
    $
    672
    
    
    $
    165,850
    
    
    $
    164,467Average interest rate
    
    
    5.1
    %
    
    
    5.2
    %
    
    
    13.1
    %
    
    
    13.2
    %
    
    
    13.3
    %
    
    
    13.3
    %
    
    
    5.2
    %
 
 (a)
    
    Average interest rate is net of credits received for compensating cash balances.(b)
    
    Represents the fair value recorded pursuant to SFAS 133.(c)
    
    The $163,673 maturing in 2010 includes $163,320 for NVRs 5% Senior Notes due June 2010. 39




---



##### 



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.
  40




---



##### 



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
    
    
    152,779
    
    
    $
    358.53
    
    
    
    58,707Equity compensation plans
not approved by security
holders
    
    
    1,264,245
    
    
    $
    288.90
    
    
    
    118,588Total
    
    
    1,417,024
    
    
    $
    296.41
    
    
    
    177,295
 41




---



##### 



Notes to Consolidated Financial Statements
 
 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).
 42




---



##### 



ExhibitNumber
    
    Description10.1*
    
    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.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-Kfiled 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.10.9*
    
    The Form of Non-Qualified Stock Option Agreement under the 1998
Directors Long-Term Stock Option Plan. Filed as Exhibit 10.1 to NVRs Form 8-K
filed on August 3, 2005 and incorporated herein by reference.10.10*
    
    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.10.11*
    
    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.10.12*
    
    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.10.13
    
    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.10.14*
    
    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.10.15*
    
    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.
 43




---



##### 



ExhibitNumber
    
    Description10.16
    
    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.10.17
    
    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.10.18
    
    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.10.19*
    
    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.10.20*
    
    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.10.21*
    
    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.10.22
    
    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.10.23*
    
    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.10.24*
    
    Amendment No. 4 to Employment Agreement between NVR, Inc. and Dwight C. Schar
dated January 1, 2009. Filed herewith.10.25*
    
    Amendment No. 1 to Employment Agreement between NVR, Inc. and Paul C. Saville
dated January 1, 2009. Filed herewith.10.26*
    
    Amendment No. 1 to Employment Agreement between NVR, Inc. and William J. Inman
dated January 1, 2009. Filed herewith.10.27*
    
    Amendment No. 1 to Employment Agreement between NVR, Inc. and Dennis M. Seremet
dated July 30, 2008. Filed herewith.10.28*
    
    Amendment No. 2 to Employment Agreement between NVR, Inc. and Dennis M. Seremet
dated January 1, 2009. Filed herewith.10.29*
    
    Summary of 2009 Named Executive Officer annual incentive compensation plan.
Filed herewith.21
    
    NVR, Inc. Subsidiaries. Filed herewith.23
    
    Consent of KPMG LLP (Independent Registered Public Accounting Firm).
Filed herewith.
 44




---



##### 



ExhibitNumber
    
    Description31.1
    
    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. 45




---



##### 



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 25, 2009/s/ C. E. Andrews
    
    DirectorC. E. Andrews
    
    
    
    February 25, 2009/s/ C. Scott Bartlett, Jr.
    
    DirectorC. Scott Bartlett, Jr.
    
    
    
    February 25, 2009/s/ Robert C. Butler
    
    DirectorRobert C. Butler
    
    
    
    February 25, 2009/s/ Timothy M. Donahue
    
    DirectorTimothy M. Donahue
    
    
    
    February 25, 2009/s/ Alfred E. Festa
    
    DirectorAlfred E. Festa
    
    
    
    February 25, 2009/s/ Manuel H. Johnson
    
    DirectorManuel H. Johnson
    
    
    
    February 25, 2009/s/ William A. Moran
    
    DirectorWilliam A. Moran
    
    
    
    February 25, 2009/s/ David A. Preiser
    
    DirectorDavid A. Preiser
    
    
    
    February 25, 2009/s/ W. Grady Rosier
    
    DirectorW. Grady Rosier
    
    
    
    February 25, 2009
 46




---



##### 



Signature
    
    Title
    
    Date/s/ John M. Toups
    
    DirectorJohn M. Toups
    
    
    
    February 25, 2009/s/ Paul W. Whetsell
    
    DirectorPaul W. Whetsell
    
    
    
    February 25, 2009/s/ Paul C. Saville
    
    Principal Executive OfficerPaul C. Saville
    
    
    
    February 25, 2009/s/ Dennis M. Seremet
    
    Principal Financial OfficerDennis M. Seremet
    
    
    
    February 25, 2009/s/ Robert W. Henley
    
    Principal Accounting OfficerRobert W. Henley
    
    
    
    February 25, 2009
 47




---



##### 



Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework .
  
 48




---



##### 



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




---



##### 



NVR, Inc.
 December 31,2008
    
    
    2007ASSETSHomebuilding:Cash and cash equivalents
    
    $
    1,146,426
    
    
    $
    660,709Receivables
    
    
    11,594
    
    
    
    10,855Inventory:Lots and housing units, covered under
sales agreements with customers
    
    
    335,238
    
    
    
    573,895Unsold lots and housing units
    
    
    57,639
    
    
    
    105,838Manufacturing materials and other
    
    
    7,693
    
    
    
    9,121400,570
    
    
    
    688,854Contract land deposits, net
    
    
    29,073
    
    
    
    188,528Assets not owned, consolidated per FIN 46R
    
    
    114,930
    
    
    
    180,206Property, plant and equipment, net
    
    
    25,658
    
    
    
    32,911Reorganization value in excess of amounts
allocable to identifiable assets, net
    
    
    41,580
    
    
    
    41,580Goodwill and indefinite life intangibles, net
    
    
    
    
    
    
    11,686Definite life intangibles, net
    
    
    
    
    
    
    96Deferred tax assets, net
    
    
    223,393
    
    
    
    211,808Other assets
    
    
    19,233
    
    
    
    40,6532,012,457
    
    
    
    2,067,886Mortgage Banking:Cash and cash equivalents
    
    
    1,217
    
    
    
    3,500Mortgage loans held for sale, net
    
    
    72,488
    
    
    
    107,338Property and equipment, net
    
    
    759
    
    
    
    881Reorganization value in excess of amounts
allocable to identifiable assets, net
    
    
    7,347
    
    
    
    7,347Other assets
    
    
    8,968
    
    
    
    7,46490,779
    
    
    
    126,530Total assets
    
    $
    2,103,236
    
    
    $
    2,194,416
   50




---



##### 



NVR, Inc.
 December 31,2008
    
    
    2007LIABILITIES AND SHAREHOLDERS EQUITYHomebuilding:Accounts payable
    
    $
    137,285
    
    
    $
    219,048Accrued expenses and other liabilities
    
    
    194,869
    
    
    
    251,475Liabilities related to assets not owned,
consolidated per FIN 46R
    
    
    109,439
    
    
    
    164,369Customer deposits
    
    
    59,623
    
    
    
    125,315Other term debt
    
    
    2,530
    
    
    
    2,820Senior notes
    
    
    163,320
    
    
    
    200,000667,066
    
    
    
    963,027Mortgage Banking:Accounts payable and other liabilities
    
    
    17,842
    
    
    
    18,551Notes payable
    
    
    44,539
    
    
    
    83,46362,381
    
    
    
    102,014Total liabilities
    
    
    729,447
    
    
    
    1,065,041Commitments and contingenciesShareholders equity:Common stock, $0.01 par value;
60,000,000 shares authorized; 20,561,187
and 20,592,640 shares issued for December 31,
2008 and 2007, respectively
    
    
    206
    
    
    
    206Additional paid-in-capital
    
    
    722,265
    
    
    
    663,631Deferred compensation trust- 514,470 and 516,085
shares of NVR, Inc. common stock as of
December 31, 2008 and 2007, respectively
    
    
    (74,978
    )
    
    
    (75,636
    )Deferred compensation liability
    
    
    74,978
    
    
    
    75,636Retained earnings
    
    
    3,630,887
    
    
    
    3,529,995Less treasury stock at cost  15,028,335 and
15,455,086 shares as of December 31, 2008
and 2007, respectively
    
    
    (2,979,569
    )
    
    
    (3,064,457
    )Total shareholders equity
    
    
    1,373,789
    
    
    
    1,129,375Total liabilities and shareholders equity
    
    $
    2,103,236
    
    
    $
    2,194,416
  51




---



##### 



NVR, Inc.
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Homebuilding:Revenues
    
    $
    3,638,702
    
    
    $
    5,048,187
    
    
    $
    6,036,236Other income
    
    
    16,386
    
    
    
    21,118
    
    
    
    13,609Cost of sales
    
    
    (3,181,010
    )
    
    
    (4,227,059
    )
    
    
    (4,701,265
    )Selling, general and administrative
    
    
    (308,739
    )
    
    
    (343,520
    )
    
    
    (432,319
    )Operating income
    
    
    165,339
    
    
    
    498,726
    
    
    
    916,261Interest expense
    
    
    (12,902
    )
    
    
    (13,150
    )
    
    
    (18,423
    )Goodwill and intangible asset impairment
    
    
    (11,686
    )
    
    
    
    
    
    
    Homebuilding income
    
    
    140,751
    
    
    
    485,576
    
    
    
    897,838Mortgage Banking:Mortgage banking fees
    
    
    54,337
    
    
    
    81,155
    
    
    
    97,888Interest income
    
    
    3,955
    
    
    
    4,900
    
    
    
    7,704Other income
    
    
    745
    
    
    
    1,060
    
    
    
    1,334General and administrative
    
    
    (31,579
    )
    
    
    (32,505
    )
    
    
    (38,988
    )Interest expense
    
    
    (754
    )
    
    
    (681
    )
    
    
    (2,805
    )Mortgage banking income
    
    
    26,704
    
    
    
    53,929
    
    
    
    65,133Income before taxes
    
    
    167,455
    
    
    
    539,505
    
    
    
    962,971Income tax expense
    
    
    (66,563
    )
    
    
    (205,550
    )
    
    
    (375,559
    )Net income
    
    $
    100,892
    
    
    $
    333,955
    
    
    $
    587,412Basic earnings per share
    
    $
    18.76
    
    
    $
    61.61
    
    
    $
    104.08Diluted earnings per share
    
    $
    17.04
    
    
    $
    54.14
    
    
    $
    88.05Basic weighted average
shares outstanding
    
    
    5,379
    
    
    
    5,420
    
    
    
    5,644Diluted weighted average
shares outstanding
    
    
    5,920
    
    
    
    6,168
    
    
    
    6,672
  52




---



##### 



NVR, Inc.
 Additional
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    DeferredCommon
    
    
    Paid-in
    
    
    Retained
    
    
    Treasury
    
    
    Compensation
    
    
    CompensationStock
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    Trust
    
    
    Liability
    
    
    TotalBalance, December 31, 2005
    
    $
    206
    
    
    $
    473,886
    
    
    $
    2,608,628
    
    
    $
    (2,405,558
    )
    
    $
    (76,303
    )
    
    $
    76,303
    
    
    $
    677,162Net income
    
    
    
    
    
    
    
    
    
    
    587,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    587,412Deferred compensation
activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    441
    
    
    
    (441
    )
    
    
    Purchase of common stock
for treasury
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (287,064
    )
    
    
    (4,629
    )
    
    
    4,629
    
    
    
    (287,064
    )Stock-based compensation
    
    
    
    
    
    
    58,134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,134Tax benefit from stock options
exercised and deferred
compensation distributions
    
    
    
    
    
    
    95,979
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,979Stock option activity
    
    
    
    
    
    
    20,451
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,451Treasury stock issued
upon option exercise
    
    
    
    
    
    
    (63,012
    )
    
    
    
    
    
    
    63,012
    
    
    
    
    
    
    
    
    
    
    
    Balance, 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
    
    
    $
    1,373,789
  53




---



##### 



NVR, Inc.
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Cash flows from operating activities:Net income
    
    $
    100,892
    
    
    $
    333,955
    
    
    $
    587,412Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    13,641
    
    
    
    17,036
    
    
    
    14,158Excess income tax benefit from exercise of stock options
    
    
    (50,240
    )
    
    
    (69,046
    )
    
    
    (95,979
    )Stock option compensation expense
    
    
    41,204
    
    
    
    14,189
    
    
    
    58,134Contract land deposit impairments and write-offs
    
    
    165,024
    
    
    
    261,760
    
    
    
    173,819Gain on sales of loans
    
    
    (38,921
    )
    
    
    (60,128
    )
    
    
    (72,700
    )Loss on sale of fixed assets
    
    
    472
    
    
    
    1,383
    
    
    
    8Gain on extinguishment of debt
    
    
    (251
    )
    
    
    
    
    
    
    Impairment of goodwill and intangible assets
    
    
    11,686
    
    
    
    
    
    
    
    Deferred tax benefit
    
    
    (12,048
    )
    
    
    (43,343
    )
    
    
    (74,539
    )Mortgage loans closed
    
    
    (2,046,575
    )
    
    
    (2,392,395
    )
    
    
    (2,595,158
    )Proceeds from sales of mortgage loans
    
    
    2,115,607
    
    
    
    2,515,973
    
    
    
    2,658,879Principal payments on mortgage loans held for sale
    
    
    4,321
    
    
    
    7,393
    
    
    
    22,079Net change in assets and liabilities:Decrease in inventories
    
    
    288,284
    
    
    
    44,762
    
    
    
    60,359Decrease
(increase) in contract land deposits
    
    
    29
    
    
    
    (31,893
    )
    
    
    (31,000
    )(Increase)
decrease in receivables
    
    
    (1,016
    )
    
    
    2,730
    
    
    
    28,013Decrease in
accounts payable, accrued
expenses and customer deposits
    
    
    (157,111
    )
    
    
    (39,351
    )
    
    
    (59,028
    )Other, net
    
    
    27,363
    
    
    
    (4,259
    )
    
    
    8,506Net cash provided by operating activities
    
    
    462,361
    
    
    
    558,766
    
    
    
    682,963Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (6,899
    )
    
    
    (10,545
    )
    
    
    (23,431
    )Proceeds from the sale of property, plant and equipment
    
    
    1,401
    
    
    
    1,230
    
    
    
    833Net cash used by investing activities
    
    
    (5,498
    )
    
    
    (9,315
    )
    
    
    (22,598
    )Cash flows from financing activities:Purchase of treasury stock
    
    
    
    
    
    
    (507,472
    )
    
    
    (287,064
    )Purchase of NVR common stock for deferred compensation plan
    
    
    (128
    )
    
    
    (169
    )
    
    
    (4,629
    )Net repayments under notes payable and credit lines
    
    
    (39,214
    )
    
    
    (70,349
    )
    
    
    (106,509
    )Repurchase of Senior Notes
    
    
    (36,405
    )
    
    
    
    
    
    
    Excess income tax benefit from exercise of stock options
    
    
    50,240
    
    
    
    69,046
    
    
    
    95,979Exercise of stock options
    
    
    52,078
    
    
    
    67,583
    
    
    
    20,451Net cash provided (used) by financing activities
    
    
    26,571
    
    
    
    (441,361
    )
    
    
    (281,772
    )Net increase in cash and cash equivalents
    
    
    483,434
    
    
    
    108,090
    
    
    
    378,593Cash and cash equivalents, beginning of year
    
    
    664,209
    
    
    
    556,119
    
    
    
    177,526Cash and cash equivalents, end of year
    
    $
    1,147,643
    
    
    $
    664,209
    
    
    $
    556,119Supplemental disclosures of cash flow information:Interest paid during the year
    
    $
    12,656
    
    
    $
    12,744
    
    
    $
    21,000Income taxes paid during the year, net of refunds
    
    $
    65,128
    
    
    $
    157,081
    
    
    $
    430,773Supplemental disclosures of non-cash activities:Change in net assets not owned, consolidated per FIN 46R
    
    $
    (10,346
    )
    
    $
    (15,777
    )
    
    $
    (28,408
    )
  54




---



##### 



1. Summary of Significant Accounting Policies
 Principles of Consolidation
  Use of Estimates in the Preparation of Financial Statements
  Cash and Cash Equivalents
  Homebuilding Inventory
  Contract Land Deposits
   55




---



##### 



Property, Plant, and Equipment
  Warranty/Product Liability Accruals
  Intangible Assets
 ,
 Mortgage Loans Held for Sale, Derivatives and Hedging Activities
  56




---



##### 



Earnings per Share
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Weighted average number of
shares outstanding used to
calculate basic EPS
    
    
    5,379,409
    
    
    
    5,420,159
    
    
    
    5,644,068Dilutive securities:Stock options
    
    
    540,876
    
    
    
    747,636
    
    
    
    1,027,503Weighted average number of
shares and share equivalents
outstanding used to calculate
diluted EPS
    
    
    5,920,285
    
    
    
    6,167,795
    
    
    
    6,671,571
 .
 57




---



##### 



Revenues-Homebuilding Operations
  Mortgage Banking Fees
  Income Taxes
  Financial Instruments
  Stock-Based Compensation
 . .
 58




---



##### 



Comprehensive Income
  Recent Accounting Pronouncements
    59




---



##### 



,
 2. Segment Information, Nature of Operations, and Certain Concentrations
   60




---



##### 



61




---



##### 



Year Ended December 31,2008
    
    
    2007
    
    
    2006Revenues:Homebuilding Mid Atlantic
    
    $
    2,161,764
    
    
    $
    3,099,053
    
    
    $
    3,825,960Homebuilding North East
    
    
    347,142
    
    
    
    433,631
    
    
    
    657,338Homebuilding Mid East
    
    
    659,649
    
    
    
    860,139
    
    
    
    965,626Homebuilding South East
    
    
    470,147
    
    
    
    655,364
    
    
    
    587,312Mortgage Banking
    
    
    54,337
    
    
    
    81,155
    
    
    
    97,888Total Consolidated Revenues
    
    $
    3,693,039
    
    
    $
    5,129,342
    
    
    $
    6,134,124
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Profit:Homebuilding Mid Atlantic
    
    $
    108,561
    
    
    $
    296,049
    
    
    $
    687,904Homebuilding North East
    
    
    14,761
    
    
    
    12,618
    
    
    
    64,246Homebuilding Mid East
    
    
    42,296
    
    
    
    80,969
    
    
    
    69,911Homebuilding South East
    
    
    9,286
    
    
    
    89,785
    
    
    
    79,948Mortgage Banking
    
    
    29,227
    
    
    
    54,576
    
    
    
    68,753Total Segment Profit
    
    
    204,131
    
    
    
    533,997
    
    
    
    970,762Contract land deposit impairments (1)
    
    
    (41,134
    )
    
    
    (79,002
    )
    
    
    (27,717
    )Stock compensation expense (2)
    
    
    (41,204
    )
    
    
    (14,189
    )
    
    
    (58,134
    )Corporate capital allocation (3)
    
    
    108,509
    
    
    
    152,363
    
    
    
    184,908Unallocated corporate overhead (4)
    
    
    (63,181
    )
    
    
    (69,975
    )
    
    
    (86,363
    )Consolidation adjustments and other (5)
    
    
    24,437
    
    
    
    28,842
    
    
    
    (3,340
    )Impairment of goodwill and intangible assets (6)
    
    
    (11,686
    )
    
    
    
    
    
    
    Corporate interest expense
    
    
    (12,417
    )
    
    
    (12,531
    )
    
    
    (17,145
    )Reconciling items sub-total
    
    
    (36,676
    )
    
    
    5,508
    
    
    
    (7,791
    )Consolidated Income before Taxes
    
    $
    167,455
    
    
    $
    539,505
    
    
    $
    962,971
 
 (1)
    
    This item represents contract land deposit impairment charges that have not yet been
charged to reportable segments.(2)
    
    The change in 2007 compared to 2006 and 2008 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 did
not expect to meet the performance metric and accordingly reversed all performance-based
option expense recorded through that period (refer to Note 9 for further information).(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 2006 to 2007, and 2007 to 2008 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 31,2008
    
    
    2007
    
    
    2006Homebuilding Mid Atlantic
    
    $
    73,042
    
    
    $
    106,032
    
    
    $
    131,823Homebuilding North East
    
    
    10,081
    
    
    
    14,669
    
    
    
    19,533Homebuilding Mid East
    
    
    12,902
    
    
    
    17,381
    
    
    
    21,235Homebuilding South East
    
    
    12,484
    
    
    
    14,281
    
    
    
    12,317Total
    
    $
    108,509
    
    
    $
    152,363
    
    
    $
    184,908
 62




---



##### 



(4)
    
    The decreases in unallocated corporate overhead year over year are primarily driven by a
reduction in management incentive costs and reduced personnel and other overhead costs as
part of our focus to size our organization to meet current activity levels.(5)
    
    The favorable variance from 2006 to 2007 is primarily due to increased interest income
due to a higher average cash balances and decreased operating activity.(6)
    
    The 2008 impairment charge relates to the goodwill and indefinite life intangible assets
related to the Companys acquisitions of Rymarc Homes and Fox Ridge Homes. See Note 1
for further discussion. Year Ended December 31,2008
    
    
    2007
    
    
    2006Assets:Homebuilding Mid Atlantic
    
    $
    403,391
    
    
    $
    698,955
    
    
    $
    873,260Homebuilding North East
    
    
    53,732
    
    
    
    95,026
    
    
    
    117,192Homebuilding Mid East
    
    
    72,249
    
    
    
    117,722
    
    
    
    137,113Homebuilding South East
    
    
    53,889
    
    
    
    106,626
    
    
    
    115,937Mortgage Banking
    
    
    83,432
    
    
    
    119,183
    
    
    
    188,891Total Segment Assets
    
    
    666,693
    
    
    
    1,137,512
    
    
    
    1,432,393Assets not owned, consolidated per FIN 46R
    
    
    114,930
    
    
    
    180,206
    
    
    
    276,419Cash
    
    
    1,146,426
    
    
    
    660,709
    
    
    
    551,738Deferred taxes
    
    
    223,393
    
    
    
    211,808
    
    
    
    169,901Intangible assets (7)
    
    
    48,927
    
    
    
    60,709
    
    
    
    60,863Land reserve
    
    
    (155,858
    )
    
    
    (133,664
    )
    
    
    (59,636
    )Consolidation adjustments and other (8)
    
    
    58,725
    
    
    
    77,136
    
    
    
    42,130Reconciling items sub-total
    
    
    1,436,543
    
    
    
    1,056,904
    
    
    
    1,041,415Consolidated Assets
    
    $
    2,103,236
    
    
    $
    2,194,416
    
    
    $
    2,473,808
 
 (7)
    
    The decrease in intangible assets relates to the impairment charge discussed in (6)
above.(8)
    
    The 2007 balance includes the 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. Year Ended December 31,2008
    
    
    2007
    
    
    2006Interest IncomeMortgage Banking
    
    $
    3,955
    
    
    $
    4,900
    
    
    $
    7,704Total Segment Interest Income
    
    
    3,955
    
    
    
    4,900
    
    
    
    7,704Other unallocated interest income
    
    
    10,909
    
    
    
    14,855
    
    
    
    2,639Consolidated Interest Income
    
    $
    14,864
    
    
    $
    19,755
    
    
    $
    10,343
 63




---



##### 



Year Ended December 31,2008
    
    
    2007
    
    
    2006Interest ExpenseHomebuilding Mid Atlantic
    
    $
    73,441
    
    
    $
    106,538
    
    
    $
    132,394Homebuilding North East
    
    
    10,084
    
    
    
    14,678
    
    
    
    19,605Homebuilding Mid East
    
    
    12,976
    
    
    
    17,475
    
    
    
    21,863Homebuilding South East
    
    
    12,493
    
    
    
    14,287
    
    
    
    12,324Mortgage Banking
    
    
    754
    
    
    
    681
    
    
    
    2,805Total Segment Interest Expense
    
    
    109,748
    
    
    
    153,659
    
    
    
    188,991Corporate capital allocation
    
    
    (108,509
    )
    
    
    (152,363
    )
    
    
    (184,908
    )Senior note and other interest
    
    
    12,417
    
    
    
    12,535
    
    
    
    17,145Consolidated Interest Expense
    
    $
    13,656
    
    
    $
    13,831
    
    
    $
    21,228
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Depreciation and Amortization:Homebuilding Mid Atlantic
    
    $
    6,969
    
    
    $
    9,260
    
    
    $
    7,410Homebuilding North East
    
    
    974
    
    
    
    1,582
    
    
    
    1,300Homebuilding Mid East
    
    
    1,626
    
    
    
    2,186
    
    
    
    2,192Homebuilding South East
    
    
    1,715
    
    
    
    1,457
    
    
    
    1,027Mortgage Banking
    
    
    395
    
    
    
    368
    
    
    
    436Total
Segment Depreciation and Amortization
    
    
    11,679
    
    
    
    14,853
    
    
    
    12,365Unallocated corporate
    
    
    1,962
    
    
    
    2,183
    
    
    
    1,793Consolidated Depreciation and Amortization
    
    $
    13,641
    
    
    $
    17,036
    
    
    $
    14,158
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Expenditures for Property and Equipment:Homebuilding Mid Atlantic
    
    $
    3,142
    
    
    $
    5,739
    
    
    $
    13,355Homebuilding North East
    
    
    508
    
    
    
    799
    
    
    
    2,545Homebuilding Mid East
    
    
    1,372
    
    
    
    1,637
    
    
    
    3,483Homebuilding South East
    
    
    1,369
    
    
    
    2,043
    
    
    
    2,311Mortgage Banking
    
    
    305
    
    
    
    96
    
    
    
    612Total Segment Expenditures for
Property and Equipment
    
    
    6,696
    
    
    
    10,314
    
    
    
    22,306Unallocated corporate
    
    
    203
    
    
    
    231
    
    
    
    1,125Consolidated Expenditures for
Property and Equipment
    
    $
    6,899
    
    
    $
    10,545
    
    
    $
    23,431
 3. Consolidation of Variable Interest Entities
 ,
 64




---



##### 



65




---



##### 



Assets not owned, consolidated per
FIN 46R Liabilities related to assets not owned,
consolidated per FIN 46R
 Assets not owned, consolidated per FIN 46R Liabilities related to assets not owned, consolidated per
FIN 46R
 66




---



##### 



NVR, Inc.and
    
    
    FIN 46R
    
    
    
    
    
    
    ConsolidatedSubsidiaries
    
    
    Entities
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    90,779FIN 46R Entities: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
    
    
    
    
    
    
    
    
    
    
    
    62,381FIN 46R Entities:Accounts payable, accrued expenses
and other liabilities
    
    
    
    
    
    
    15,665
    
    
    
    
    
    
    
    15,665Debt
    
    
    
    
    
    
    41,826
    
    
    
    
    
    
    
    41,826Contract land deposits
    
    
    
    
    
    
    13,436
    
    
    
    (13,436
    )
    
    
    Advances from NVR, Inc.
    
    
    
    
    
    
    4,501
    
    
    
    (4,501
    )
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    51,948
    
    
    
    51,948
    
    
    
    75,428
    
    
    
    34,011
    
    
    
    109,439Equity
    
    
    1,373,789
    
    
    
    39,502
    
    
    
    (39,502
    )
    
    
    1,373,789Total liabilities and shareholders
equity
    
    $
    1,993,797
    
    
    $
    114,930
    
    
    $
    (5,491
    )
    
    $
    2,103,236
 67




---



##### 



NVR, Inc.and
    
    
    FIN 46R
    
    
    
    
    
    
    ConsolidatedSubsidiaries
    
    
    Entities
    
    
    Eliminations
    
    
    TotalASSETSHomebuilding:Cash and cash equivalents
    
    $
    660,709
    
    
    $
    
    
    
    $
    
    
    
    $
    660,709Receivables
    
    
    10,855
    
    
    
    
    
    
    
    
    
    
    
    10,855Homebuilding inventory
    
    
    688,854
    
    
    
    
    
    
    
    
    
    
    
    688,854Property, plant and equipment, net
    
    
    32,911
    
    
    
    
    
    
    
    
    
    
    
    32,911Reorganization value in excess of amount
allocable to identifiable assets, net
    
    
    41,580
    
    
    
    
    
    
    
    
    
    
    
    41,580Goodwill and intangibles, net
    
    
    11,782
    
    
    
    
    
    
    
    
    
    
    
    11,782Contract land deposits, net
    
    
    194,925
    
    
    
    
    
    
    
    (6,397
    )
    
    
    188,528Other assets
    
    
    261,901
    
    
    
    
    
    
    
    (9,440
    )
    
    
    252,4611,903,517
    
    
    
    
    
    
    
    (15,837
    )
    
    
    1,887,680Mortgage banking assets:
    
    
    126,530
    
    
    
    
    
    
    
    
    
    
    
    126,530FIN 46R Entities:Land under development
    
    
    
    
    
    
    176,909
    
    
    
    
    
    
    
    176,909Other assets
    
    
    
    
    
    
    3,297
    
    
    
    
    
    
    
    3,297
    
    
    
    180,206
    
    
    
    
    
    
    
    180,206Total assets
    
    
    2,030,047
    
    
    
    180,206
    
    
    
    (15,837
    )
    
    
    2,194,416LIABILITIES AND SHAREHOLDERS EQUITYHomebuilding:Accounts payable, accrued expenses
and other liabilities
    
    
    470,523
    
    
    
    
    
    
    
    
    
    
    
    470,523Customer deposits
    
    
    125,315
    
    
    
    
    
    
    
    
    
    
    
    125,315Other term debt
    
    
    2,820
    
    
    
    
    
    
    
    
    
    
    
    2,820Senior notes
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    200,000798,658
    
    
    
    
    
    
    
    
    
    
    
    798,658Mortgage banking liabilities:
    
    
    102,014
    
    
    
    
    
    
    
    
    
    
    
    102,014FIN 46R Entities:Accounts payable, accrued expenses
and other liabilities
    
    
    
    
    
    
    26,703
    
    
    
    
    
    
    
    26,703Debt
    
    
    
    
    
    
    61,612
    
    
    
    
    
    
    
    61,612Contract land deposits
    
    
    
    
    
    
    20,904
    
    
    
    (20,904
    )
    
    
    Advances from NVR, Inc.
    
    
    
    
    
    
    7,949
    
    
    
    (7,949
    )
    
    
    Minority interest
    
    
    
    
    
    
    
    
    
    
    76,054
    
    
    
    76,054
    
    
    
    117,168
    
    
    
    47,201
    
    
    
    164,369Equity
    
    
    1,129,375
    
    
    
    63,038
    
    
    
    (63,038
    )
    
    
    1,129,375Total liabilities and shareholders
equity
    
    $
    2,030,047
    
    
    $
    180,206
    
    
    $
    (15,837
    )
    
    $
    2,194,416
 68




---



##### 



December 31,2008
    
    2007
    
    2006Finished lots purchased  dollars
    
    $
    12,159
    
    
    $
    9,074
    
    
    $
    13,771Finished lots purchased  units
    
    
    41
    
    
    
    38
    
    
    
    82
 4. Related Party Transactions
  69




---



##### 



5. Property, Plant and Equipment, net
 December 31,2008
    
    
    2007Homebuilding:Office facilities and other
    
    $
    13,908
    
    
    $
    14,636Model home furniture and fixtures
    
    
    24,003
    
    
    
    30,394Manufacturing facilities
    
    
    27,957
    
    
    
    26,592Property under capital leases
    
    
    3,976
    
    
    
    4,00569,844
    
    
    
    75,627Less: accumulated depreciation
    
    
    (44,186
    )
    
    
    (42,716
    )$
    25,658
    
    
    $
    32,911Mortgage Banking:Office facilities and other
    
    $
    3,817
    
    
    $
    3,771Less: accumulated depreciation
    
    
    (3,058
    )
    
    
    (2,890
    )$
    759
    
    
    $
    881
  6. Debt
 December 31,2008
    
    
    2007Homebuilding:Working capital revolving credit (a)
    
    $
    
    
    
    $
    Other term debt:Capital lease obligations due in monthly
installments through 2016 (b)
    
    $
    2,530
    
    
    $
    2,820Senior notes (c)
    
    $
    163,320
    
    
    $
    200,000Mortgage Banking:Master repurchase agreement (d)
    
    $
    44,539
    
    
    $
    Mortgage warehouse revolving credit (e)
    
    $
    
    
    
    $
    83,463
  70




---



##### 



Year ending December 31,2009
    
    $
    4622010
    
    
    6442011
    
    
    6452012
    
    
    6442013
    
    
    644Thereafter
    
    
    7253,764Amount representing interest
    
    
    (1,234
    )$
    2,530
    71




---



##### 



Year ending December 31,2009
    
    $
    44,6662010
    
    
    163,6732011
    
    
    4022012
    
    
    4562013
    
    
    520Thereafter
    
    
    672Total
    
    $
    210,389
  72




---



##### 



7. Common Stock
   8. Income Taxes
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Current:Federal
    
    $
    63,614
    
    
    $
    189,907
    
    
    $
    373,866State
    
    
    9,785
    
    
    
    36,231
    
    
    
    74,691Deferred:Federal
    
    
    (5,702
    )
    
    
    (17,356
    )
    
    
    (61,294
    )State
    
    
    (1,134
    )
    
    
    (3,232
    )
    
    
    (11,704
    )$
    66,563
    
    
    $
    205,550
    
    
    $
    375,559
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Income tax benefits arising from
compensation expense for tax
purposes in excess of amounts
recognized for financial
statement purposes
    
    $
    50,240
    
    
    $
    69,046
    
    
    $
    95,979
 73




---



##### 



December 31,2008
    
    
    2007Deferred tax assets:Other accrued expenses and
contract land deposit reserve
    
    $
    130,338
    
    
    $
    126,385Deferred compensation
    
    
    30,334
    
    
    
    30,405Stock option expense
    
    
    32,809
    
    
    
    20,873Uniform capitalization
    
    
    4,171
    
    
    
    8,240Unrecognized tax benefit
    
    
    26,754
    
    
    
    25,897Other
    
    
    8,366
    
    
    
    7,497Total deferred tax assets
    
    
    232,772
    
    
    
    219,297Less: deferred tax liabilities
    
    
    4,810
    
    
    
    3,399Net deferred tax position
    
    $
    227,962
    
    
    $
    215,898
    Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Income taxes computed at the
Federal statutory rate
    
    $
    58,609
    
    
    $
    188,827
    
    
    $
    337,040State income taxes, net of Federal
income tax benefit
    
    
    6,004
    
    
    
    23,086
    
    
    
    43,491Other, net
    
    
    1,950
    
    
    
    (6,363
    )
    
    
    (4,972
    )$
    66,563
    
    
    $
    205,550
    
    
    $
    375,559
   74




---



##### 



Year Ended
    
    
    Year EndedDecember 31, 2008
    
    
    December 31, 2007Balance at beginning of year
    
    $
    55,662
    
    
    $
    52,077Additions for tax positions for prior years
    
    
    
    
    
    
    581Additions based on tax positions related to the current year
    
    
    3,469
    
    
    
    6,631Reductions for tax positions of prior years
    
    
    (3,940
    )
    
    
    (3,223
    )Settlements
    
    
    (1,852
    )
    
    
    (404
    )Balance at end of year
    
    $
    53,339
    
    
    $
    55,662
    9. Stock Option, Profit Sharing and Deferred Compensation Plans
 Stock Option Plans
  75




---



##### 




    
    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.
    
    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 will 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.
    
    During 2005, the Companys shareholders approved the Board of Directors
adoption of the 2005 Stock Option Plan (the 2005 Plan). There are 500,000
Options authorized under the 2005 Plan. All Options under the Plan were granted
at the fair market value underlying the Shares at the date of grant and were
subject to two vesting conditions. The first vesting condition required that the
Company satisfy a performance target based on growth in earnings per share (EPS
Target) as of December 31, 2008. The EPS Target was set at a level that
reflected a growth rate in diluted earnings per share of ten percent per year for
four years, based on NVRs 2004 diluted earnings per share of $66.42. The
aggregate EPS Target was $339.00 per share, the measurement of which was based on
the sum of the actual diluted earnings per share results for the four annual
periods ending December 31, 2005 through 2008. As of December 31, 2008 the EPS
Target was not met and all Options in this plan expired unexercisable. As a
result of failing to meet the EPS Target, the plan was terminated effective
December 31, 2008 and no future Options can be issued from this plan.
 76




---



##### 



WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contract Life
    
    
    IntrinsicOptions
    
    
    Price
    
    
    (Years)
    
    
    ValueStock OptionsOutstanding at beginning of period
    
    
    2,050,453
    
    
    $
    325.13Granted
    
    
    290,384
    
    
    
    515.14Exercised
    
    
    (426,751
    )
    
    
    166.32Cancelled
    
    
    (348,490
    )
    
    
    729.78Forfeited or expired
    
    
    (148,572
    )
    
    
    477.40Outstanding at end of period
    
    
    1,417,024
    
    
    $
    296.41
    
    
    
    4.0
    
    
    $
    226,497Exercisable at end of period
    
    
    708,966
    
    
    $
    231.50
    
    
    
    2.7
    
    
    $
    159,340
  77




---



##### 



2008
    
    2007
    
    2006Estimated option life
    
    3.95 years


    
    8.87 years
    
    8.72 yearsRisk free interest rate (range)
    

    1.00% - 4.19%

    

    4.41% - 5.09%

    

    4.46% - 5.24%Expected volatility (range)
    

    31.57% - 38.75%

    

    36.17% - 38.87%

    

     32.01% - 34.00%Expected dividend rate
    

    0.00%

    

    0.00%

    

    0.00%Weighted average grant-date fair
value per share of options granted
    
    $
    156.85
    
    
    $
    351.10
    
    
    $
    331.73
    2008
    
    2007
    
    2006Aggregate exercise proceeds
    
    $
    70,978
    
    
    $
    67,583
    
    
    $
    20,451Aggregate intrinsic value on exercise dates
    
    $
    175,190
    
    
    $
    218,255
    
    
    $
    241,693
  Profit Sharing Plans
  78




---



##### 



Deferred Compensation Plans
   10. Commitments and Contingent Liabilities
  Year ended December 31,2009
    
    $
    23,0362010
    
    
    15,8612011
    
    
    11,3932012
    
    
    8,2182013
    
    
    6,326Thereafter
    
    
    5,40170,235Sublease income
    
    
    (946
    )$
    69,289
   79




---



##### 



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Warranty reserve, beginning of year
    
    $
    70,284
    
    
    $
    70,175
    
    
    $
    60,112Provision
    
    
    40,468
    
    
    
    47,041
    
    
    
    57,222Payments
    
    
    (42,668
    )
    
    
    (46,932
    )
    
    
    (47,159
    )Warranty reserve, end of year
    
    $
    68,084
    
    
    $
    70,284
    
    
    $
    70,175
    80




---



##### 



11. Fair Value of Derivative Instruments
         81




---



##### 



Assumed
    
    
    InterestNotional or
    
    
    Gain (Loss)
    
    
    Rate
    
    
    Servicing
    
    
    Security
    
    
    Total FairPrincipal
    
    
    From Loan
    
    
    Movement
    
    
    Rights
    
    
    Price
    
    
    ValueAmount
    
    
    Sale
    
    
    Effect
    
    
    Value
    
    
    Change
    
    
    AdjustmentRate lock commitments
    
    $
    109,195
    
    
    $
    (725
    )
    
    $
    954
    
    
    $
    1,050
    
    
    $
    
    
    
    $
    1,279Forward sales contracts
    
    
    255,689
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,743
    )
    
    
    (1,743
    )Mortgages held for sale
    
    
    70,577
    
    
    
    (472
    )
    
    
    1,067
    
    
    
    775
    
    
    
    
    
    
    
    1,370Total
    
    
    
    
    
    $
    (1,197
    )
    
    $
    2,021
    
    
    $
    1,825
    
    
    $
    (1,743
    )
    
    $
    906
   12. Quarterly Results (unaudited)
  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
 82




---



##### 



Year Ended December 31, 20074th
    
    3rd
    
    2nd
    
    1stQuarter
    
    Quarter
    
    Quarter
    
    QuarterRevenues-homebuilding
operations
    
    $
    1,405,466
    
    
    $
    1,270,471
    
    
    $
    1,297,140
    
    
    $
    1,075,110Gross profit  homebuilding
operations
    
    $
    181,153
    
    
    $
    183,072
    
    
    $
    235,203
    
    
    $
    221,700Mortgage banking fees
    
    $
    21,931
    
    
    $
    21,617
    
    
    $
    19,528
    
    
    $
    18,079Net income
    
    $
    67,274
    
    
    $
    91,113
    
    
    $
    90,747
    
    
    $
    84,821Diluted earnings per share
    
    $
    11.72
    
    
    $
    15.26
    
    
    $
    14.14
    
    
    $
    12.96Contracts for sale, net
of cancellations (units)
    
    
    1,948
    
    
    
    2,660
    
    
    
    3,745
    
    
    
    3,917Settlements (units)
    
    
    3,874
    
    
    
    3,476
    
    
    
    3,463
    
    
    
    2,700Backlog, end of period (units)
    
    
    5,145
    
    
    
    7,071
    
    
    
    7,887
    
    
    
    7,605Loans closed
    
    $
    867,106
    
    
    $
    793,749
    
    
    $
    849,430
    
    
    $
    715,039
 83