Summary of Significant Accounting Policies

Use of Estimates

- The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and these differences could have a significant impact on the financial statements.

Income Recognition from Home and Land Sales

- We are primarily engaged in the development, construction, marketing and sale of residential single-family and multi-family homes where the planned construction cycle is less than

months. For these homes, in accordance with Accounting Standards Codification (“ASC”)

360

20,

“Property, Plant and Equipment - Real Estate Sales,” revenue is recognized when title is conveyed to the buyer, adequate initial and continuing investments have been received and there is

continued involvement. In situations where the buyer’s financing is originated by our mortgage subsidiary and the buyer has

not

made an adequate initial investment or continuing investment as prescribed by ASC

360

20,

the profit on such sales is deferred until the sale of the related mortgage loan to a

third

-party investor has been completed.

Income Recognition from Mortgage Loans -

Our Financial Services segment originates mortgages, primarily for our homebuilding customers. We use mandatory investor commitments and forward sales of mortgage-backed securities (“MBS”) to hedge our mortgage-related interest rate exposure on agency and government loans.

We elected the fair value option for our mortgage loans held for sale in accordance with ASC

825,

“Financial Instruments,” which permits us to measure our loans held for sale at fair value. Management believes that the election of the fair value option for loans held for sale improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them without having to apply complex hedge accounting provisions.

Substantially all of the mortgage loans originated are sold within a short period of time in the secondary mortgage market on a servicing released, nonrecourse basis, although the Company remains liable for certain limited representations, such as fraud, and warranties related to loan sales. Mortgage investors could seek to have us buy back loans or compensate them from losses incurred on mortgages we have sold based on claims that we breached our limited representations and warranties. We have established reserves for probable losses.

Cash and Cash Equivalents

- Cash represents cash deposited in checking accounts. Cash equivalents include certificates of deposit, Treasury bills and government money–market funds with maturities of

days or less when purchased. Our cash balances are held at a few financial institutions and

may,

at times, exceed insurable amounts. We believe we help to mitigate this risk by depositing our cash in major financial institutions. At

October 31, 2018

and

2017,

$199.6

million and

$13.3

million, respectively, of the total cash and cash equivalents was in cash equivalents, the book value of which approximates fair value.

Fair Value of Financial Instruments

- The fair value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. Our financial instruments consist of cash and cash equivalents, restricted cash and cash equivalents, receivables, deposits and notes, accounts payable and other liabilities, customer deposits, mortgage loans held for sale, nonrecourse mortgages, mortgage warehouse lines of credit, revolving credit facility, accrued interest, senior secured term loan and the senior secured notes, senior notes, senior amortizing notes and senior exchangeable notes. The fair value of the senior secured notes, senior notes, senior amortizing notes and senior exchangeable notes is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The fair value of all of our other financial instruments approximates their carrying amounts.

Inventories

- Inventories consist of land, land development, home construction costs, capitalized interest, construction overhead and property taxes. Construction costs are accumulated during the period of construction and charged to cost of sales under specific identification methods. Land, land development and common facility costs are allocated based on buildable acres to product types within each community, then charged to cost of sales equally based upon the number of homes to be constructed in each product type.

We record inventories in our consolidated balance sheets at cost unless the inventory is determined to be impaired, in which case the inventory is written down to its fair value. Our inventories consist of the following

three

components: (

) sold and unsold homes and lots under development, which includes all construction, land, capitalized interest and land development costs related to started homes and land under development in our active communities; (

) land and land options held for future development or sale, which includes all costs related to land in our communities in planning or mothballed communities; and (

) consolidated inventory

not

owned, which includes all costs related to specific performance options, variable interest entities, and other options, which consists primarily of model homes financed with an investor and inventory related to land banking arrangements accounted for as financings.

We decide to mothball (or stop development on) certain communities when we determine that the current performance does

not

justify further investment at the time. When we decide to mothball a community, the inventory is reclassified on our Consolidated Balance Sheets from “Sold and unsold homes and lots under development” to “Land and land options held for future development or sale.” During fiscal

2018,

we did

not

mothball any communities, but we sold

two

previously mothballed communities and re-activated

two

previously mothballed communities. As of

October 31, 2018

and

2017,

the net book value associated with our

and

total mothballed communities was

$24.5

million and

$36.7

million, respectively, which was net of impairment charges recorded in prior periods of

$186.1

million and

$214.1

million, respectively.

From time to time we enter into option agreements that include specific performance requirements, whereby we are required to purchase a minimum number of lots. Because of our obligation to purchase these lots, for accounting purposes in accordance with Accounting Standards Codification (“ASC”)

360

38,

we are required to record this inventory on our Consolidated Balance Sheets. As of

October 31, 2018

and

2017,

we had

specific performance options.

We sell and lease back certain of our model homes with the right to participate in the potential profit when each home is sold to a

third

party at the end of the respective lease. As a result of our continued involvement, for accounting purposes in accordance with ASC

360

38,

these sale and leaseback transactions are considered a financing rather than a sale. Therefore, for purposes of our Consolidated Balance Sheets, at

October 31, 2018

and

2017,

inventory of

$50.5

million and

$58.5

million, respectively, was recorded to “Consolidated inventory

not

owned,” with a corresponding amount of

$43.9

million and

$51.8

million, respectively, recorded to “Liabilities from inventory

not

owned” for the amount of net cash received from the transactions.

We have land banking arrangements, whereby we sell our land parcels to the land banker and they provide us an option to purchase back finished lots on a predetermined schedule. Because of our options to repurchase these parcels, for accounting purposes, in accordance with ASC

360

38,

these transactions are considered a financing rather than a sale. For purposes of our Consolidated Balance Sheets, at

October 31, 2018

and

2017,

inventory of

$37.4

million and

$66.3

million, respectively, was recorded to “Consolidated inventory

not

owned,” with a corresponding amount of

$19.5

million and

$39.3

million, respectively, recorded to “Liabilities from inventory

not

owned” for the amount of net cash received from the transactions.

The recoverability of inventories and other long-lived assets is assessed in accordance with the provisions of ASC

360

10,

“Property, Plant and Equipment – Overall.” ASC

360

requires long-lived assets, including inventories, held for development to be evaluated for impairment based on undiscounted future cash flows of the assets at the lowest level for which there are identifiable cash flows. As such, we evaluate inventories for impairment at the individual community level, the lowest level of discrete cash flows that we measure.

We evaluate inventories of communities under development and held for future development for impairment when indicators of potential impairment are present. Indicators of impairment include, but are

not

limited to, decreases in local housing market values, decreases in gross margins or sales absorption rates, decreases in net sales prices (base sales price net of sales incentives), or actual or projected operating or cash flow losses. The assessment of communities for indication of impairment is performed quarterly. As part of this process, we prepare detailed budgets for all of our communities at least semi-annually and identify those communities with a projected operating loss. For those communities with projected losses, we estimate the remaining undiscounted future cash flows and compare those to the carrying value of the community, to determine if the carrying value of the asset is recoverable.

The projected operating profits, losses or cash flows of each community can be significantly impacted by our estimates of the following:

●

future base selling prices;

●

future home sales incentives;

●

future home construction and land development costs; and

●

future sales absorption pace and cancellation rates.

These estimates are dependent upon specific market conditions for each community. While we consider available information to determine what we believe to be our best estimates as of the end of a quarterly reporting period, these estimates are subject to change in future reporting periods as facts and circumstances change. Local market-specific conditions that

may

impact our estimates for a community include:

●

the intensity of competition within a market, including available home sales prices and home sales incentives offered by our competitors;

●

the current sales absorption pace for both our communities and competitor communities;

●

community-specific attributes, such as location, availability of lots in the market, desirability and uniqueness of our community, and the size and style of homes currently being offered;

●

potential for alternative product offerings to respond to local market conditions;

●

changes by management in the sales strategy of the community;

●

current local market economic and demographic conditions and related trends and forecasts; and

●

existing home inventory supplies, including foreclosures and short sales.

These and other local market-specific conditions that

may

be present are considered by management in preparing projection assumptions for each community. The sales objectives can differ between our communities, even within a given market. For example, facts and circumstances in a given community

may

lead us to price our homes with the objective of yielding a higher sales absorption pace, while facts and circumstances in another community

may

lead us to price our homes to minimize deterioration in our gross margins, although it

may

result in a slower sales absorption pace. In addition, the key assumptions included in our estimate of future undiscounted cash flows

may

be interrelated. For example, a decrease in estimated base sales price or an increase in homes sales incentives

may

result in a corresponding increase in sales absorption pace. Additionally, a decrease in the average sales price of homes to be sold and closed in future reporting periods for

one

community that has

not

been generating what management believes to be an adequate sales absorption pace

may

impact the estimated cash flow assumptions of a nearby community. Changes in our key assumptions, including estimated construction and development costs, absorption pace and selling strategies, could materially impact future cash flow and fair value estimates. Due to the number of possible scenarios that would result from various changes in these factors, we do

not

believe it is possible to develop a sensitivity analysis with a level of precision that would be meaningful to an investor.

If the undiscounted cash flows are more than the carrying value of the community, then the carrying amount is recoverable, and

impairment adjustment is required. However, if the undiscounted cash flows are less than the carrying amount, then the community is deemed impaired and is written down to its fair value. We determine the estimated fair value of each community by determining the present value of its estimated future cash flows at a discount rate commensurate with the risk of the respective community, or in limited circumstances, prices for land in recent comparable sale transactions, market analysis studies, which include the estimated price a willing buyer would pay for the land (other than in a forced liquidation sale), and recent bona fide offers received from outside

third

parties. Our discount rates used for all impairments recorded from

October 31, 2016

October 31, 2018

ranged from

16.8%

19.8%.

The estimated future cash flow assumptions are virtually the same for both our recoverability and fair value assessments. Should the estimates or expectations used in determining estimated cash flows or fair value, including discount rates, decrease or differ from current estimates in the future, we

may

be required to recognize additional impairments related to current and future communities. The impairment of a community is allocated to each lot on a relative fair value basis.

From time to time, we write off deposits and approval, engineering and capitalized interest costs when we determine that it is

longer probable that we will exercise options to buy land in specific locations or when we redesign communities and/or abandon certain engineering costs. In deciding

not

to exercise a land option, we take into consideration changes in market conditions, the timing of required land takedowns, the willingness of land sellers to modify terms of the land option contract (including timing of land takedowns), and the availability and best use of our capital, among other factors. The write-off is recorded in the period it is deemed

not

probable that the optioned property will be acquired. In certain instances, we have been able to recover deposits and other pre-acquisition costs that were previously written off. These recoveries have

not

been significant in comparison to the total costs written off.

Inventories held for sale are land parcels ready for sale in their current condition, where we have decided

not

to build homes but are instead actively marketing for sale. These land parcels represented

$6.4

million and

$23.6

million of our total inventories at

October 31, 2018

and

2017,

respectively, and are reported at the lower of carrying amount or fair value less costs to sell. In determining fair value for land held for sale, management considers, among other things, prices for land in recent comparable sale transactions, market analysis studies, which include the estimated price a willing buyer would pay for the land (other than in a forced liquidation sale) and recent bona fide offers received from outside

third

parties.

Post-Development Completion, Warranty Costs

and

Insurance Deductible Reserves

- In those instances where a development is substantially completed and sold and we have additional construction work to be incurred, an estimated liability is provided to cover the cost of such work. We accrue for warranty costs that are covered under our existing general liability and construction defect policy as part of our general liability insurance deductible. This accrual is expensed as selling, general and administrative costs. For homes delivered in fiscal

2018

and

2017,

our deductible under our general liability insurance is a

$20

million aggregate for construction defect and warranty claims. For bodily injury claims, our deductible per occurrence in fiscal

2018

and

2017

$0.25

million, up to a

million limit. Our aggregate retention for construction defect, warranty and bodily injury claims is

$20

million for fiscal

2018

and

$21

million for fiscal

2017.

We do

not

have a deductible on our worker's compensation insurance. Reserves for estimated losses for construction defects, warranty and bodily injury claims have been established using the assistance of a

third

-party actuary. We engage a

third

-party actuary that uses our historical warranty and construction defect data to assist our management in estimating our unpaid claims, claim adjustment expenses and incurred but

not

reported claims reserves for the risks that we are assuming under the general liability and construction defect programs. The estimates include provisions for inflation, claims handling and legal fees. These estimates are subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to our markets and the types of products we build, claim settlement patterns, insurance industry practices and legal interpretations, among others. Because of the high degree of judgment required in determining these estimated liability amounts, actual future costs could differ significantly from our currently estimated amounts. In addition, we establish a warranty accrual for lower cost-related issues to cover home repairs, community amenities and land development infrastructure that are

not

covered under our general liability and construction defect policy. We accrue an estimate for these warranty costs as part of cost of sales at the time each home is closed and title and possession have been transferred to the homebuyer. See Note

for additional information on the amount of warranty costs recognized in cost of goods sold and administrative expenses.

Interest

- Interest attributable to properties under development during the land development and home construction period is capitalized and expensed along with the associated cost of sales as the related inventories are sold. Interest incurred in excess of interest capitalized, which occurs when assets qualifying for interest capitalization are less than our outstanding debt balances, is expensed as incurred in “Other interest.”

Interest costs incurred, expensed and capitalized were:

	Year Ended
(In thousands)	October 31, 2018	October 31, 2017	October 31, 2016
Interest capitalized at beginning of year	$71,051	$96,688	$123,898
Plus interest incurred(1)	161,048	160,203	166,824
Less cost of sales interest expensed	60,685	88,536	92,391
Less other interest expensed(2)(3)	103,297	97,304	90,967
Less interest contributed to unconsolidated joint venture(4)	-	-	10,676
Interest capitalized at end of year(5)	$68,117	$71,051	$96,688

(

)

Data does

not

include interest incurred by our mortgage and finance subsidiaries.

(

)

Other interest expensed includes interest that does

not

qualify for interest capitalization because our assets that qualify for interest capitalization (inventory under development) do

not

exceed our debt, which amounted to

$76.2

million,

$69.1

million and

$50.4

million for the years ended

October 31, 2018,

2017

and

2016,

respectively. Other interest also includes interest on completed homes, land in planning and fully developed lots without homes under construction, which does

not

qualify for capitalization, and therefore, is expensed. This component of other interest was

$27.1

million,

$28.2

million and

$40.6

million for the years ended

October 31, 2018,

2017

and

2016.

(

)

Cash paid for interest, net of capitalized interest, is the sum of other interest expensed, as defined above, and interest paid by our mortgage and finance subsidiaries adjusted for the change in accrued interest on notes payable, which is calculated as follows:

	Year Ended
(In thousands)	October 31, 2018	October 31, 2017		October 31, 2016
Other interest expensed	$103,297	$97,304		$90,967
Interest paid by our mortgage and finance subsidiaries	2,478	1,944		2,866
Decrease (increase) in accrued interest	6,241	(9,412	)	7,963
Cash paid for interest, net of capitalized interest	$112,016	$89,836		$101,796

(

)

Represents capitalized interest which was included as part of the assets contributed to the joint venture the Company entered into in

November 2015,

as discussed in Note

20.

There was

impact to the Consolidated Statement of Operations as a result of this transaction.

(

)

Capitalized interest amounts are shown gross before allocating any portion of impairments, if any, to capitalized interest.

Land Options -

Costs incurred to obtain options to acquire improved or unimproved home sites are capitalized. Such amounts are either included as part of the purchase price if the land is acquired or charged to “Inventory impairments loss and land option write-offs” if we determine we will

not

exercise the option. If the options are with variable interest entities and we are the primary beneficiary, we record the land under option on the Consolidated Balance Sheets under “Consolidated inventory

not

owned” with an offset under “Liabilities from inventory

not

owned.” If the option includes an obligation to purchase land under specific performance or has terms that require us to record it as financing, then we record the option on the Consolidated Balance Sheets under “Consolidated inventory

not

owned” with an offset under “Liabilities from inventory

not

owned.” In accordance with ASC

810

“Consolidation – Overall,” we record costs associated with other options on the Consolidated Balance Sheets under “Land and land options held for future development or sale.”

Unconsolidated Homebuilding and Land Development Joint Ventures -

Investments in unconsolidated homebuilding and land development joint ventures are accounted for under the equity method of accounting. Under the equity method, we recognize our proportionate share of earnings and losses earned by the joint venture upon the delivery of lots or homes to

third

parties. Our ownership interests in the joint ventures vary but our voting interests are generally

50%

or less. In determining whether or

not

we must consolidate joint ventures where we are the managing member of the joint venture, we assess whether the other partners have specific rights to overcome the presumption of control by us as the manager of the joint venture. In most cases, the presumption is overcome because the joint venture agreements require that both partners agree on establishing the significant operating and capital decisions of the partnership, including budgets, in the ordinary course of business. The evaluation of whether or

not

we control a venture can require significant judgment. In accordance with ASC

323

10,

“Investments - Equity Method and Joint Ventures – Overall,” we assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment below its carrying amount is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for impairment based on the joint venture’s projected cash flows. This process requires significant management judgment and estimates. During fiscal

2017,

we wrote down certain joint venture investments by

$2.8

million. There were

write-downs in fiscal

2018

2016.

Deferred Bond Issuance Costs -

Costs associated with borrowings under our revolving credit facility and senior secured term loan and the issuance of senior secured, senior, senior amortizing and senior exchangeable notes are capitalized and amortized over the term of each note’s issuance. The capitalization of the costs are recorded as a contra liability within our debt balances, except for the revolving credit facility costs, which are recorded as a prepaid asset.

Debt Issued At a Discount -

Debt issued at a discount to the face amount is accreted up to its face amount utilizing the effective interest method over the term of the note and recorded as a component of interest on the Consolidated Statements of Operations.

Debt Issued At a Premium -

Debt issued at a premium to the face amount is accreted down to its face amount utilizing the effective interest method over the term of the note and recorded as a component of interest on the Consolidated Statements of Operations.

Advertising Costs

- Advertising costs are expensed as incurred. During the years ended

October

31,

2018,

2017

and

2016,

advertising costs expensed totaled

$16.4

million,

$17.9

million and

$21.4

million, respectively.

Deferred Income Taxes -

Deferred income taxes are provided for temporary differences between amounts recorded for financial reporting and for income tax purposes. If the combination of future years’ income (or loss) combined with the reversal of the timing differences results in a loss, such losses can be carried back to prior years or carried forward to future years to recover the deferred tax assets. In accordance with ASC

740

10,

“Income Taxes – Overall,” we evaluate our deferred tax assets quarterly to determine if valuation allowances are required. ASC

740

requires that companies assess whether valuation allowances should be established based on the consideration of all available evidence using a “more-likely-than-

not”

standard.

In evaluating the exposures associated with our various tax filing positions, we recognize tax liabilities in accordance with ASC

740

10,

for more likely than

not

exposures. We re-evaluate the exposures associated with our tax positions on a quarterly basis. This evaluation is based on factors such as changes in facts or circumstances, changes in tax law, new audit activity by taxing authorities, and effectively settled issues. Determining whether an uncertain tax position is effectively settled requires judgment. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision. A number of years

may

elapse before a particular matter for which we have established a liability is audited and fully resolved or clarified. We adjust our liability for unrecognized tax benefits and income tax provision in the period in which an uncertain tax position is effectively settled, or the statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available. Due to the complexity of some of these uncertainties, the ultimate resolution

may

result in a liability that is materially different from our current estimate. Any such changes will be reflected as increases or decreases to income tax expense in the period in which they are determined.

Prepaid Expenses -

Prepaid expenses which relate to specific housing communities (model setup, architectural fees, homeowner warranty program fees, etc.) are amortized to cost of sales as the applicable inventories are sold. All other prepaid expenses are amortized over a specific time period or as used and charged to overhead expense.

Allowance for Doubtful Accounts

– We regularly review our receivable balances, which are included in Receivables, deposits and notes on the Consolidated Balance Sheets, for collectability and record an allowance against a receivable when it is deemed that collectability is uncertain. These receivables include receivables from our insurance carriers, receivables from municipalities related to the development of utilities or other infrastructure, and other miscellaneous receivables. The balance for allowance for doubtful accounts was

$11.4

million and

$7.3

million at

October 31, 2018

and

2017,

respectively, which primarily related to allowances for receivables from municipalities and an allowance for a receivable for a prior year land sale. During fiscal

2018

and

2017,

we recorded

$0.6

million and

$0.2

million, respectively, in recoveries. In addition, there were

$0.1

million and

$0.1

million of write-offs in fiscal

2018

and

2017,

respectively. During fiscal

2018,

we recorded

$4.8

million of additional reserves.

Stock Options -

We account for our stock options under ASC

718

10,

“Compensation - Stock Compensation – Overall,” which requires the fair-value based method of accounting for stock awards granted to employees and measures and records the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

Compensation cost arising from nonvested stock granted to employees and from nonemployee stock awards is based on the fair value of the awards at the grant date recognized as expense using the straight-line method over the vesting period.

Per Share Calculations -

Basic earnings per share is computed by dividing net income (loss) (the “numerator”) by the weighted-average number of common shares outstanding, adjusted for nonvested shares of restricted stock (the “denominator”) for the period. Computing diluted earnings per share is similar to computing basic earnings per share, except that the denominator is increased to include the dilutive effects of options and nonvested shares of restricted stock, as well as common shares issuable upon exchange of our Senior Exchangeable Notes issued as part of our

6.0%

Exchangeable Note Units (which matured and were paid in full in fiscal

2018

). Any options that have an exercise price greater than the average market price are considered to be anti-dilutive and are excluded from the diluted earnings per share calculation.

All outstanding nonvested shares that contain nonforfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the

two

-class method. The

two

-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings in periods where we have net income. The Company’s restricted common stock (“nonvested shares”) are considered participating securities.

Recent Accounting Pronouncements

May 2014,

the Financial Accounting Standards Board (“FASB”) issued ASU

No.

2014

09,

“Revenue from Contracts with Customers” (Topic

606

), (“ASU

2014

09”

). ASU

2014

requires entities to recognize revenue that represents the transfer of promised goods or services to customers in an amount equivalent to the consideration to which the entity expects to be entitled to in exchange for those goods or services. The following steps should be applied to determine this amount: (

) identify the contract(s) with a customer; (

) identify the performance obligations in the contract; (

) determine the transaction price; (

) allocate the transaction price to the performance obligations in the contract; and (

) recognize revenue when (or as) the entity satisfies a performance obligation. ASU

2014

supersedes the revenue recognition requirements in ASC

605,

“Revenue Recognition,” and most industry-specific guidance in the Accounting Standards Codification. The FASB has also issued a number of updates to this standard. The standard is effective for us for annual and interim periods beginning

November 1, 2018,

and at that time, we expect to apply the modified retrospective method of adoption. We have substantially completed our evaluation of the impact of adopting ASU

2014

09.

Based on our assessment, we do

not

expect significant changes to our business processes, systems, or internal controls as a result of adopting the standard. We also do

not

expect the adoption of ASU

2014

to have a material impact on our financial statements.

February 2016,

the FASB issued ASU

No.

2016

02,

“Leases (Topic

842

)” (“ASU

2016

02”

), which provides guidance for accounting for leases. ASU

2016

requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than

months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU

2016

is effective for the Company beginning

November 1, 2019.

Early adoption is permitted. In

July 2018,

the FASB issued ASU

No.

2018

“Codification Improvements to Topic

842,

Leases” (“ASU

2018

10”

) and ASU

No.

2018

“Leases (Topic

842

) Targeted Improvements” (“ASU

2018

11”

). ASU

2018

provides certain amendments that affect narrow aspects of the guidance issued in ASU

2016

02.

ASU

2018

allows all entities adopting ASU

2016

to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU

2018

also allows lessors to

not

separate nonlease components from the associated lease component if certain conditions are met. We are currently evaluating both the method and the impact of adopting this guidance on our Consolidated Financial Statements.

August 2016,

the FASB issued ASU

No.

2016

15,

“Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments” (“ASU

2016

15”

). ASU

2016

provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. We early adopted ASU

2016

effective

October 31, 2018

and there was

impact of adopting this guidance on our Consolidated Financial Statements.

November 2016,

the FASB issued ASU

No.

2016

18,

which amends the classification and presentation of changes in restricted cash or restricted cash equivalents in the statement of cash flows. We early adopted ASU

2016

effective

October 31, 2018.

See Note

for further information on the reclassification of prior period amounts.

October 2016,

the FASB issued ASU

No.

2016

16,

“Income Taxes (Topic

740

): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU

2016

16”

). ASU

2016

provides guidance for the accounting of income taxes related to intra-entity transfers of assets other than inventory. ASU

2016

is effective for the Company’s fiscal year beginning

November 1, 2018.

Early adoption is permitted. We do

not

expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements.

July 2018,

the FASB issued ASU

No.

2018

09,

“Codification Improvements” (“ASU

2018

09”

). ASU

2018

provides amendments to a wide variety of topics in the FASB’s Accounting Standards Codification, which applies to all reporting entities within the scope of the affected accounting guidance. The transition and effective date guidance are based on the facts and circumstances of each amendment. Some of the amendments in ASU

2018

not

require transition guidance and were effective upon issuance of ASU

2018

09.

However, many of the amendments do have transition guidance with effective dates for annual periods beginning after

December 15, 2018.

We are currently evaluating the potential impact of adopting the applicable guidance on our Consolidated Financial Statements.

August 2018,

the FASB issued

No.

ASU

2018

13,

“Fair Value Measurement (Topic

820

) - Disclosure Framework” (“ASU

2018

13”

), which improves the disclosure requirements for fair value measurements. ASU

2018

is effective for us beginning

November

2020.

Early adoption is permitted for any removed or modified disclosures. We are currently assessing the impact of adopting this guidance on our Consolidated Financial Statements.

August 2018,

the FASB issued

No.

ASU

2018

“Intangibles-Goodwill and Other-Internal-Use Software (Subtopic

350

): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract” (“ASU

2018

15”

). ASU

2018

aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU

2018

is effective for us beginning

November 1, 2020.

Early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.