Forestar : Quarterly Report

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 _________________________________________________________

FORM 10-Q

_________________________________________________________

• x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  For the quarterly period ended December 31, 2018

  or

• ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33662 _________________________________________________________

FORESTAR GROUP INC.

(Exact Name of Registrant as Specified in Its Charter) _________________________________________________________

Delaware	26-1336998
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
10700 Pecan Park Blvd., Suite 150, Austin, Texas 78750
(Address of Principal Executive Offices, Including Zip Code)
(Registrant's Telephone Number, Including Area Code)

[phone]

_________________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨

Accelerated filer x

Non-accelerated filer ¨

Smaller reporting company ¨

Emerging growth company ¨

(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨

Yes

x

NoIndicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Title of Each Class

Common Stock, par value $1.00 per share

Number of Shares Outstanding as of January 23, 2019 41,959,866

FORESTAR GROUP INC. TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION 3

Item 1. Financial Statements (Unaudited) 3

Consolidated Balance Sheets 3

Consolidated Statements of Operations 4

Consolidated Statements of Total Equity 5

Consolidated Statements of Cash Flows 6

Notes to Consolidated Financial Statements 7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Item 3. Quantitative and Qualitative Disclosures About Market Risk 29

Item 4. Controls and Procedures 29

PART II - OTHER INFORMATION 30

Item 1. Legal Proceedings 30

Item 6. Exhibits 30

SIGNATURE 31

2

Item 1. Financial Statements

Cash and cash equivalents

Restricted cash

ASSETS

Total cash, cash equivalents and restricted cash

PART I-FINANCIAL INFORMATIONFORESTAR GROUP INC. Consolidated Balance Sheets

(Unaudited)

(In millions, except share data)

$

170.3 335.0

December 31, 2018

September 30, 2018

154.2 $ 318.8

16.116.2

Real estate

Investment in unconsolidated ventures Income taxes receivable

Property and equipment, net Deferred tax asset, net Other assets TOTAL ASSETS

Accounts payable

Earnest money deposits on sales contracts Accrued expenses and other liabilities Debt, net

TOTAL LIABILITIES

LIABILITIES

COMMITMENTS AND CONTINGENCIES (Note 12)

EQUITY

Forestar Group Inc. shareholders' equity:

Common stock, par value $1.00 per share, 200,000,000 authorized shares, 41,959,866 issued at December 31, 2018 and 41,939,403 issued at September 30, 2018

Additional paid-in capital

Retained earnings

Total Forestar Group Inc. shareholders' equity

Noncontrolling interests

TOTAL EQUITY

TOTAL LIABILITIES AND EQUITY

693.2 498.0

7.411.7

4.5 4.4

1.81.7

25.5 26.9

16.015.4

$

918.7

$

893.1

$

7.4 $ 7.9

68.249.4

52.2 49.6

112.9111.7

240.7 218.6

42.0 41.9

506.3506.3

128.4 125.1

676.7673.3

1.3 1.2

678.0674.5

$

918.7

$

893.1

Please read the notes to consolidated financial statements.

3

Revenues Cost of sales

Selling, general and administrative expense Equity in earnings of unconsolidated ventures Gain on sale of assets

Interest expense

Interest and other income

FORESTAR GROUP INC. Consolidated Statements of Operations

(Unaudited)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES

Income tax expense

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES CONSOLIDATED NET INCOME (LOSS)

Less: Net income attributable to noncontrolling interests

NET INCOME (LOSS) ATTRIBUTABLE TO FORESTAR GROUP INC. WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

Basic

Diluted

NET INCOME (LOSS) PER BASIC SHARE

Continuing operations

Discontinued operations

NET INCOME (LOSS) PER BASIC SHARE NET INCOME (LOSS) PER DILUTED SHARE

Continuing operations

Discontinued operations

NET INCOME (LOSS) PER DILUTED SHARE

Three Months Ended December 31,2018

2017

(In millions, except per share amounts)

$

38.5$ 30.9

30.7 22.6

5.724.1

(0.6) (7.0)

(0.9)-

(1.3)

4.9

1.0

3.9 -

3.9

0.6

$

3.3

-

2.1

(0.6)

(10.3)

12.5

(22.8)

7.2

(15.6)

2.0

$

(17.6)

42.0 42.0

42.042.0

$ $ $

0.08$ (0.59)

-

0.08$

$ $ $

0.08$

-

0.08$

$ 0.17

(0.42)

$

(0.59) 0.17

(0.42)Please read the notes to consolidated financial statements.

4

Common Stock

(In millions, except share data)

Balances at September 30, 2018 (41,939,403 shares) $

Net income

Stock issued under employee incentive plans

(20,463 shares)

Stock-based compensation expense Distributions to noncontrolling interests

Balances at December 31, 2018 (41,959,866 shares) $

FORESTAR GROUP INC. Consolidated Statements of Total Equity

(Unaudited)

Additional Paid-in CapitalRetained EarningsTreasury Stock

41.9$ -

506.3$ -

Non-controlling

Interests

Total Equity

125.1$ 3.3

0.1- -

(0.1)0.1 -

• -$

-

-- -

1.2$ 0.6

-

-

-

674.5

3.9

-- (0.5)

-0.1 (0.5)

42.0

$

506.3

$

128.4

$

-

$

1.3

$

678.0

Additional Paid-in CapitalCommon StockRetained EarningsTreasury Stock

Balances at September 30, 2017 (44,803,603 shares) $

Net income (loss)

Settlement of equity awards

Retirement of treasury shares (2,864,667 shares) Stock-based compensation expense Distributions to noncontrolling interestsBalances at December 31, 2017 (41,938,936 shares)

44.8$ - -(2.9) --

(In millions, except share data)

549.4$ - (12.8)(35.1)

4.5---4.5

-

80.4$ (17.6)

---(12.8)

(6.5)

-

$

41.9$

506.0$

56.3$

Please read the notes to consolidated financial statements.

5

Non-controlling

Interests

Total Equity

(44.5)$ -

1.2$ 631.3

2.0 (15.6)

44.5

-

-

-

(1.8) (1.8)

-$

1.4$ 605.6