NVR, Inc. Announces a 28% Increase in Earnings Per Share for the Third Quarter of 2005

NVR, Inc. (Amex: NVR), one of the nation's largest homebuilding and mortgage banking companies, today announced that diluted earnings per share for its third quarter ended September 30, 2005 exceeded the 2004 third quarter by 28%. Net income for the 2005 third quarter was $189,443,000, $24.33 per diluted share, compared to net income of $147,679,000, $19.04 per diluted share, for the same period of 2004. Consolidated revenues increased 18% to $1,373,022,000 for the quarter when compared to $1,166,519,000 for the same period of 2004. The Company reported that new orders increased 7% to 2,897 units for the third quarter of 2005 when compared to the third quarter of 2004. New orders increased in each region, except Washington, D.C., which was negatively impacted by generally weaker market conditions. Backlog at the end of the period increased 14% to 8,875 units when compared to the same time last year. The dollar value of the backlog units totaled $3,831,608,000 at the end of the September 2005 quarter, a 30% increase from a year earlier.

Homebuilding revenues for the three months ended September 30, 2005, totaled $1,350,465,000, 18% higher than the year earlier period. Income before tax from the homebuilding segment totaled $291,721,000, an increase of 26% when compared to the third quarter of the previous year. Gross profit margins improved to 28.1% for the third quarter of 2005 compared to 26.0% for the same quarter of 2004. The margin improvement primarily resulted from the ability to raise prices in certain markets that more than offset rising material and land costs.

The Company reported that closed loan production from its mortgage banking segment increased 17% in the third quarter of 2005 when compared to the third quarter of 2004. The mortgage segment's operating income for the 2005 third quarter increased to $16,250,000, a 10% increase from the same period of 2004. For the nine months ended September 30, 2005, consolidated revenues were $3,604,143,000, 18% higher than the $3,044,688,000 reported for the same period of 2004. Net income for the nine months ended September 30, 2005 was $475,022,000, an increase of 30% when compared to the nine months ended September 30, 2004. Earnings per diluted share for the nine months ended September 30, 2005 was $59.87, an increase of 29% from the $46.36 per diluted share reported for the comparable period of 2004.

The Company has increased its full year 2005 guidance to 30% growth in net income when compared to 2004. The Company also stated that during the first nine months of 2005 it had repurchased approximately 643,000 shares of its common stock.

Some of the statements in this release made by the Company constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "believes," "expects," "may," "will," "should" or "anticipates" or the negative thereof or other variations thereof or comparable terminology, or by discussion of strategies, each of which involves risks and uncertainties. All statements other than those of historical facts included herein, including those regarding market trends, NVR's financial position, business strategy, projected plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of NVR to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to, general economic and business conditions (on both a national and regional level), interest rate changes, access to suitable financing, competition, the availability and cost of land and other raw materials used by NVR in its homebuilding operations, shortages of labor, weather related slow downs, building moratoria, governmental regulation, the ability of NVR to integrate any acquired business, fluctuation and volatility of stock and other financial markets and other factors over which NVR has little or no control. The Company has no obligation to update such forward- looking statements.



NVR, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)


Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004

Homebuilding:
Revenues $1,350,465 $1,146,271 $3,546,965 $2,991,789
Other income 1,224 675 4,157 2,002
Cost of sales (970,437) (848,195) (2,557,268) (2,227,184)
Selling, general
and administrative (86,626) (64,482) (243,276) (187,305)
Operating income 294,626 234,269 750,578 579,302
Interest expense (2,905) (2,925) (8,835) (8,878)
Homebuilding income 291,721 231,344 741,743 570,424

Mortgage Banking:
Mortgage banking fees 22,557 20,248 57,178 52,899
Interest income 1,492 1,035 3,276 2,937
Other income 435 321 1,022 766
General and
administrative (7,957) (6,555) (22,486) (19,037)
Interest expense (277) (262) (730) (879)
Mortgage banking
income 16,250 14,787 38,260 36,686

Income before taxes 307,971 246,131 780,003 607,110

Income tax expense (118,528) (98,452) (304,981) (242,844)

Net income $ 189,443 $ 147,679 $ 475,022 $ 364,266


Basic earnings per
share $ 30.08 $ 23.16 $ 73.73 $ 56.21

Diluted earnings per
share $ 24.33 $ 19.04 $ 59.87 $ 46.36

Basic average shares
outstanding 6,298 6,377 6,443 6,481

Diluted average shares
outstanding 7,787 7,758 7,934 7,858



NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)


September 30, December 31,
2005 2004
(unaudited)
ASSETS

Homebuilding:
Cash and cash equivalents $ 240,340 $ 362,458
Receivables 19,212 14,020
Inventory:
Lots and housing units, covered under
sales agreements with customers 853,709 538,770
Unsold lots and housing units 53,340 40,052
Manufacturing materials and other 9,532 9,718
916,581 588,540

Contract land deposits 514,272 384,959
Assets not owned, consolidated
per FIN 46R 167,184 89,924
Property, plant and equipment, net 25,254 25,330
Reorganization value in excess of amounts
allocable to identifiable assets, net 41,580 41,580
Goodwill and indefinite life
intangibles, net 10,579 6,379
Definite life intangibles, net 406 -
Other assets 120,875 109,778

2,056,283 1,622,968

Mortgage Banking:
Cash and cash equivalents 5,426 4,907
Mortgage loans held for sale, net 143,534 138,595
Mortgage servicing rights, net 94 126
Property and equipment, net 903 996
Reorganization value in excess of amounts
allocable to identifiable assets, net 7,347 7,347
Other assets 2,527 3,028

159,831 154,999

Total assets $ 2,216,114 $ 1,777,967


LIABILITIES AND SHAREHOLDERS' EQUITY

Homebuilding:
Accounts payable $ 281,210 $ 215,002
Accrued expenses and other liabilities 274,278 234,815
Customer deposits 289,152 203,835
Liabilities related to assets not
owned, consolidated per FIN 46R 130,969 63,568
Other term debt 3,349 4,077
Senior notes 200,000 200,000
1,178,958 921,297

Mortgage Banking:
Accounts payable and other liabilities 18,058 11,949
Notes payable 113,699 9,726
131,757 21,675

Total liabilities 1,310,715 942,972


Commitments and contingencies

Shareholders' equity:
Common stock, $0.01 par value;
60,000,000 shares authorized;
20,592,640 and 20,597,709 shares
issued as of September 30, 2005 and
December 31, 2004, respectively 206 206
Additional paid-in-capital 474,613 406,705
Deferred compensation trust -- 547,697
and 549,029 shares of NVR, Inc.
common stock as of September 30, 2005
and December 31, 2004, respectively (76,303) (76,366)
Deferred compensation liability 76,303 76,366
Retained earnings 2,386,091 1,911,069
Less treasury stock at cost --
14,352,072 and 14,023,631 shares as
of September 30, 2005 and December
31, 2004, respectively (1,955,511) (1,482,985)
Total shareholders' equity 905,399 834,995
Total liabilities and
shareholders' equity $ 2,216,114 $ 1,777,967



NVR, Inc.
Operating Activity
(unaudited)
(dollars in thousands)


Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004

Homebuilding data:
New orders (units)
Washington (1) 622 766 2,881 2,907
Baltimore (2) 431 264 1,461 1,094
North (3) 1,225 1,163 4,480 4,040
South (4) 619 525 2,216 1,996
Total 2,897 2,718 11,038 10,037

Average new order price $399.3 $374.3 $403.8 $358.5

Settlements (units)
Washington (1) 964 924 2,570 2,397
Baltimore (2) 388 387 1,046 1,179
North (3) 1,491 1,450 3,889 3,855
South (4) 733 672 2,102 1,721
Total 3,576 3,433 9,607 9,152

Average settlement price $377.5 $332.9 $368.5 $325.9

Backlog (units)
Washington (1) 2,864 2,774
Baltimore (2) 1,231 872
North (3) 3,340 2,810
South (4) 1,440 1,319
Total 8,875 7,775

Average backlog price $431.7 $378.1

Community count
(average) 518 440 501 443
Lots controlled at
end of period 100,000 76,000

Mortgage banking data:
Loan closings $867,864 $739,834 $2,340,177 $1,891,771
Capture rate 85% 85% 87% 84%

Common stock information:
Shares outstanding at
end of period 6,240,568 6,401,581
Weighted average basic
shares outstanding 6,298,000 6,377,000 6,443,000 6,481,000
Weighted average
diluted shares
outstanding 7,787,000 7,758,000 7,934,000 7,858,000
Number of shares
repurchased 137,000 63,570 643,150 615,189
Aggregate cost of
shares repurchased $115,215 $29,858 $510,531 $275,715

(1) Washington, D.C. metropolitan area and adjacent counties in
Maryland, Virginia and West Virginia
(2) Baltimore, MD metropolitan area and adjacent counties in
Pennsylvania
(3) Delaware, Maryland Eastern Shore, New Jersey, New York, Ohio and
Pennsylvania
(4) North Carolina, South Carolina, Tennessee and Richmond, VA

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